The European Union has launched a coordinated action against Chinese ecommerce giant Shein, citing concerns over consumer protection rules and health and safety risks. The move is part of a broader effort by the EU to tackle the surge in low-value ecommerce activity in recent years, which has led to a "tsunami" of cheap imports flooding the market with products that fail to meet the bloc's standards.

The action, announced by the European Commission on Wednesday, is being conducted with reference to the EU's Unfair Commercial Practices Directive, Consumer Rights Directive, Unfair Contracts Terms Directive, Price Indication Directive, and e-commerce Directive. Although the specific concerns about Shein's marketplace are not clear, the EU has warned that a significant proportion of products sold on online platforms fail to meet its safety standards, posing health and safety risks to European consumers.

Examples of hazardous products cited by the EU include toys with small detachable parts that could pose a choking risk, electrical appliances with inadequate insulation, and chemicals in clothing. According to rule-of-law commissioner Michael McGrath, up to 96% of products tested and sold on these platforms are not fully compliant with the EU's rules and safety standards.

The EU says some 4.6 billion "low-value consignments" (goods with a value not exceeding €150) entered the market in recent years, equivalent to 12 million parcels per day. This surge in ultra-low-cost ecommerce is also raising environmental and competition concerns in the EU.

In response to these issues, the Commission has presented a package of measures and reforms aimed at tackling the risks attached to low-value ecommerce activity. The proposal includes a "Comprehensive EU Toolbox for Safe and Sustainable E-commerce", which spans big-ticket issues like custom reforms and targeted measures for imported goods, as well as calling for consumer protection and competition enforcement to be stepped up in this area.

The Commission is also urging adoption of the first action plan on the Ecodesign for Sustainable Products Regulation, to help respond to environmental challenges posed by the surge in ecommerce. Additionally, it is pushing for its EU co-legislators to get behind a proposed amendment to the Waste Framework Directive, which focuses on dealing with textile waste.

Shein, which has faced scrutiny in the EU over consumer protection rules, was contacted for comment on the CPCN action. In a statement, the company wrote that it shares the CPC Network's goal of ensuring European consumers can shop online with peace of mind, and intends to work closely with the CPC Network and the Commission to address any concerns.

The EU has already taken some actions in this area, including sending requests for information to Shein and another low-cost ecommerce platform, Temu, last June, under the Digital Services Act (DSA). The Commission has also had an open DSA investigation into online marketplace AliExpress, another importer of cheap goods into the bloc, since March 2024.

The EU's efforts to tackle the risks attached to low-value ecommerce activity are likely to have significant implications for the ecommerce industry as a whole. As the EU seeks to ensure that online marketplaces operate in a safe and sustainable manner, companies like Shein will need to adapt to the changing regulatory landscape.

In the coming months, the EU is likely to continue to push for reforms and enforcement actions aimed at addressing the risks posed by low-value ecommerce activity. As the bloc seeks to create a safer and more sustainable online shopping environment, companies operating in this space will need to prioritize consumer protection and environmental sustainability.