Chinese ecommerce platforms Temu and Shein are redirecting their efforts to Europe and the UK due to regulatory and trade policies affecting their operations in the US.

Both companies have reported declines in consumer spending and app usage in the US, prompting this strategic shift.

Recent data from Consumer Edge Research shows that Temu’s consumer spending in the US fell by 36% year-over-year in May 2025, while Shein experienced a 13% decline.

In contrast, both companies are growing in Europe, with Temu’s consumer spending in the EU increasing by 63% and Shein’s by 19% over the same period.

In the UK, Temu and Shein reported year-over-year growth of 38% and 42%, respectively.

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🔗 Source: CNBC

🧠 Food for thought

1️⃣ Ultra-fast fashion’s regulatory collision course in Europe

The EU is creating a comprehensive regulatory framework specifically targeting ultra-cheap e-commerce platforms, going beyond the proposed €2 customs fee that makes headlines.

Europe is developing multiple regulations that will significantly impact Temu and Shein’s operations, including the Corporate Sustainability Due Diligence Directive (requiring supply chain human rights verification), the General Product Safety Regulation, and the European Accessibility Act12.

France, now Temu’s fastest-growing European market according to Consumer Edge data, is specifically rewriting its “anti-fast fashion” legislation to target ultra-cheap platforms like Shein and Temu3.

These regulations are part of a broader EU strategy to create what one analyst calls “a high-quality e-commerce market,” which contrasts with the volume-driven, low-margin approach these platforms typically employ4.

For these platforms, Europe represents a critical growth opportunity as US sales decline (36% for Temu and 13% for Shein year-over-year), but the regulatory landscape may force fundamental business model adjustments3.

2️⃣ Contrasting consumer behaviors show market complexity

The simultaneous decline of ultra-fast fashion platforms in the US alongside their rapid growth in Europe reveals striking market differences rather than simple regulatory arbitrage.

Consumer Edge data shows Temu and Shein customers in the US shifting spending to legacy department stores and traditional fast fashion retailers, while European spending on these platforms grows dramatically – 63% in the EU and 38% in the UK for Temu3.

This divergence reflects Europe’s unique fashion market dynamics, where consumers are increasingly value-conscious amid inflation (Europe’s fashion market growth slowed to just 2.2% in 2023)5.

France particularly exemplifies this trend as Europe’s third-largest e-commerce market, with projected sales of €69.43 billion and 80% of its population shopping online6.

However, European consumers also show growing environmental concerns, with sustainability driving interest in alternatives like resale and rental platforms. This creates a fundamental tension for ultra-cheap fashion platforms that must be resolved5.

3️⃣ Fast fashion’s unsustainable economic and environmental equation

Temu and Shein’s European expansion occurs against a backdrop of mounting data about fast fashion’s environmental impact that makes regulatory intervention increasingly likely.

The fast fashion industry produces a staggering 100-150 billion individual items annually and is responsible for 8.8% of global CO2 emissions. This exceeds international aviation and maritime shipping combined7.

The global fast fashion market, valued at $150.82 billion and growing at 10.74% annually, faces intensifying scrutiny as consumers now wear garments only 7-10 times before disposal—a 35% decline in usage over 15 years8.

European regulators are responding with initiatives like the Digital Product Passport (DPP), which will require detailed disclosure of environmental impacts, and the Corporate Sustainability Reporting Directive (CSRD), mandating circular economy performance reporting9.

These regulatory changes represent significant challenges for ultra-cheap fashion platforms operating on razor-thin margins, potentially forcing business model revisions to remain viable in the European market4.

Recent Temu developments

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