Shein, the Chinese online retail giant known for its low prices, is facing challenges due to a new €3 fee imposed on packages shipped from outside the European Union, effective July 1. This fee applies to each type of item in a package, creating potential obstacles for the company as it looks to navigate changing market conditions, according to reports from El Pais.
The company acknowledged that this fee could hinder its growth, particularly for orders under €150, which have seen a decline in several European countries since the beginning of July. If a package contains multiple items, such as a t-shirt and a pair of shoes, the fee would be charged separately for each item, whereas if it contains only t-shirts, the fee would apply just once.
In light of these changes, Shein is considering price increases on its platform. The company disclosed this in documentation sent to the Hong Kong Stock Exchange as part of its ongoing efforts to go public.
Shein Considers Additional Charges
Prior to the fee introduction, Shein’s products benefitted from a simplified VAT declaration system in the EU as well as customs exemptions for items valued under €150. Additionally, the company is contemplating a processing fee of €2 to €4 in the coming months.
Shein stated, “As a result of these measures, products purchased through our platform and shipped to Europe, which previously enjoyed exemptions, are now subject to higher costs. We may need to adjust our business practices accordingly.” The company expressed concern over the potential negative impact on its financial and operational results, noting that most items sold on its platform in Romania originate from mainland China.
Compensation for Increased Costs
Registered in the Cayman Islands, Shein highlighted that it is planning to raise prices in Europe to offset some of the added costs. The company anticipates that this will ultimately affect its sales performance on the continent.
“In the short term, we may experience a negative impact on our sales volumes due to these measures. While it is still too early for a complete assessment, the trend in the European Union is likely to be equal to or worse than the impact observed in the United States,” the company added.
Shein has also experienced challenges in the U.S. market, attributing some issues to former President Donald Trump’s changes in trade policy with China. Previously, products valued at up to $800 could enter the U.S. without incurring customs duties, a regime that platforms like Shein and Temu capitalized on to offer consumers extremely low prices.
Europe’s Importance to Shein
Europe remains Shein’s largest market, accounting for over 32% of total revenue in the first quarter of this year. Although the €3 fee applies to all products from outside the EU, it specifically targets large Chinese companies such as Shein, Temu, and Aliexpress.
This EU charge aims to reduce the influx of products, primarily from China via platforms like Temu and Shein, that do not always meet European standards. However, this fee is temporary and will remain in place until a comprehensive reform of the European customs system is expected in two years.
Increasing Volume of Packages from China
Projected data from the European Commission indicates that by 2025, approximately 5.9 billion packages valued at €150 or less will have been delivered to Europe, with 90% originating from China. According to an industry association in Spain, Spaniards are the leading customers of Shein in Europe.
For Romanian customers, Shein specifies on its site that it charges a handling fee of 26.28 lei (around €5) for each order valued at or below €177. Products shipped from European warehouses do not incur additional customs fees, as per the company’s policies.
