Latest news with #BloombergSecondMeasure
Yahoo
08-07-2025
- Business
- Yahoo
BofA lifts Uber target on tax relief and other tailwinds
-- Bank of America raised its price target for Uber (NYSE:UBER) to $115 from $97 per share in a note Tuesday, citing multiple catalysts including driver tax savings, accelerating bookings, and growing autonomous vehicle (AV) momentum. 'Uber remains a top pick for 2025,' BofA analysts wrote, reiterating a Buy rating and noting their revised valuation is based on '24x 2026 FCF (vs. 20x prior) given FANG multiple expansion.' A key boost is said to come from the Big Beautiful Bill's No Tax on Tips provision, which includes 1099 gig workers. 'Federal income tax savings will be available even for those who don't itemize, with a max deduction of $25k,' BofA said. The firm estimates Uber drivers in the U.S. will earn about $42 billion this year, with $5.7 billion coming from tips. That translates to '~$1.0bn in tax savings for drivers, assuming an 18% avg. tax rate, for a 2.5% pay bump.' The bank also highlights Uber-backed Moove's move to raise $1.2 billion to finance autonomous vehicles in partnership with Waymo. 'Moove is one of Uber's most critical fleet management partners,' analysts noted. While details remain unclear, BofA said the development is 'consistent with our view that there will be multiple AV suppliers long-term.' In addition, the bank stated that 'data from Bloomberg Second Measure shows modestly accelerating bookings growth for Uber, up ~140pts vs. 1Q,' with both the Mobility and Delivery segments reportedly showing improvements. 'Optimism on Uber's AV position can grow,' the analysts wrote, citing over 20 global AV partnerships and signs of Level 4 technology scaling. They concluded: 'Strong bookings growth & Uber One traction suggest subscriber lock in.' Related articles BofA lifts Uber target on tax relief and other tailwinds SoFi mirrors Robinhood with push into private markets; stock gains Why Tesla's robotaxi stumble is a win for Lyft Sign in to access your portfolio
Yahoo
07-07-2025
- Business
- Yahoo
Saks Is Ceding Ground to Luxury Rivals After Buying Neiman Marcus
(Bloomberg) -- The $2.7 billion acquisition of Neiman Marcus by Saks Fifth Avenue's owner last year was supposed to create a luxury powerhouse. Instead, both department stores are losing customers and sales to competitors including Bloomingdale's and Nordstrom. Are Tourists Ruining Europe? How Locals Are Pushing Back Foreign Buyers Swoop on Cape Town Homes, Pricing Out Locals Trump's Gilded Design Style May Be Gaudy. But Don't Call it 'Rococo.' Massachusetts to Follow NYC in Making Landlords Pay Broker Fees In California, Pro-Housing 'Abundance' Fans Rewrite an Environmental Landmark Sales at Saks Fifth Avenue fell 16% during the quarter that ended in June from a year earlier, according to Bloomberg Second Measure, which tracks debit and credit purchases. During the same period, combined sales at Neiman Marcus and Bergdorf Goodman sank 10%. The slowdown accelerated over the three months, with June showing the biggest drop at the three retailers. Meanwhile, sales at Bloomingdale's, owned by Macy's Inc., and Nordstrom Inc. both rose more than 10% during the same quarter, according to Second Measure. The declining revenue figures show the magnitude of the challenges facing Saks Global, as the combination of the department store chains is called. The closely held company is trying to reverse the sales decline and just took on more debt in part to pay vendors $275 million in overdue bills. Bloomberg Second Measure data may not fully capture the sales trends at these retailers because it analyzes more debit than credit card purchases. Shoppers at Neiman Marcus, Bergdorf Goodman and Saks customers often use credit cards more frequently than middle-income shoppers at other outlets. That means the sales slowdown in the Bloomberg Second Measure data could be sharper than it really is. And the sales increase could appear stronger at Bloomingdale's and Nordstrom, where more shoppers use debit cards. But the Bloomberg Second Measure data is still helpful to show the trajectory of revenue trends. In June, sales fell 28% at Saks and 26% at Neiman Marcus and Bergdorf Goodman. At Bloomingdale's, sales rose 13%. After Saks borrowed $2.2 billion in December to finance its acquisition of longtime rival Neiman Marcus, executives had planned to spend this year working to combine the two iconic chains, cutting costs and streamlining technology and supply-chain operations to position the new juggernaut to take an even greater share of luxury spending in the US. But the company has also been contending with some vendors who are slowing or holding back their shipments, worried about not getting paid. Investors, concerned about Saks' ability to pay its bills, have sent the price of its bonds plummeting in recent months. The challenges aren't all homegrown. The broader luxury sector is undergoing a slowdown, too. That's hit sales at LVMH Moët Hennessy Louis Vuitton SE and Gucci owner Kering SA — brands that sell large quantities of products at Saks Global. Saks Global has seen green shoots recently, including an uptick in vendor shipments after the company secured new financing. It expects 'this trend to continue as we execute on our plan to begin paying outstanding balances in July,' a Saks Global spokesperson said in a statement. 'As inventory flow approaches normalized levels, we are confident that we can deliver for our customers.' Also, Saks' recently launched storefront on is starting to show a positive response, the spokesperson said. Client Complaints Even if Saks repays overdue bills and persuades enough vendors to restart or increase their shipments of merchandise, the company still has another uphill battle: win back clients who have shifted their shopping to rivals in recent months or pulled back on spending altogether because of economic jitters. Complaints about receiving orders in damaged boxes, charging for returns and rejected or delayed refunds from Saks and Neiman Marcus have increased since the beginning of the year, said Bloomberg Intelligence analyst Mary Ross Gilbert, who has looked through online reviews. That points to how Saks' efforts to conserve cash and cut costs are starting to undermine what's supposed to be a high-end shopping experience, she said. 'Bankruptcy risk remains given what appears to be a multitude of execution problems impacting customer experience,' Ross Gilbert said. 'It's just so much easier to shop elsewhere.' Although online reviews about retailers in general skew negative, those raised about Bloomingdale's tend to focus on late package deliveries and are more benign than customers' frustration with Saks Global, Ross Gilbert said. The Saks spokesperson said the company's fulfillment centers have implemented new processes that 'reduce the time for processing returns within 7 to 10 days, while ensuring customers receive high-quality merchandise in future orders.' Saks Fifth Avenue has had steep revenue declines since early 2023, with sales falling an average of nearly 21% each quarter versus a year earlier, according to Bloomberg Second Measure. At Neiman Marcus and Bergdorf Goodman, revenue trends have been choppier. Sales were up in the final quarter of 2024 and again in the first quarter of 2025 versus a year earlier, but then turned negative in the most recent one. Meanwhile, Bloomingdale's and Nordstrom have increased year-over-year sales every quarter during the last year. Holiday Season The pressure on Saks is particularly acute now because it's filling its warehouses and stores with products to sell during the crucial holiday season from November through January. If vendors hold back on shipments to Saks now – because they don't want to risk not being paid or being paid late – that would leave the department stores without enough luxury goods on shelves during the holiday shopping season, which would likely accelerate shoppers' shift to Bloomingdale's and Nordstrom. Saks is using $600 million in fresh financing to start to make $275 million in overdue payments to brands this month and, separately, is starting to pay them for new products they've shipped since the beginning of the year. 'We're in the window where, I think, investors and brands are looking to see how the proposed game plan is actually going to play out in real life,' said Jeff Abrams, founder and chief executive officer of Los Angeles apparel company Rails, which sells its products at Saks. 'This next month or two will be very telling.' Rails has continued to ship merchandise to Saks despite being owed a couple million dollars because Abrams sees an opportunity to expand the availability of Rails products at the department store as other brands scale back, wary of not getting paid. But Abrams is also continuing to open up more Rails stores across the US in part to be less reliant on selling its products at third-party retailers. Rails has started to receive some recent payments from Saks, via its financial intermediary, called a factor, which guarantees orders from retailers. Vendors, particularly smaller ones that have less financial room to maneuver, are between a rock and a hard place with Saks. To ship or not to ship, that's the question they're asking themselves. They don't want to risk more unpaid bills but, at the same time, Rails and others want Saks – which needs more inventory – to succeed. 'If Saks can stabilize and thrive,' Abrams said, 'that benefits us and many other vendors as well.' --With assistance from Matt Townsend. (Updates with additional context starting in fifth paragraph.) SNAP Cuts in Big Tax Bill Will Hit a Lot of Trump Voters Too For Brazil's Criminals, Coffee Beans Are the Target Sperm Freezing Is a New Hot Market for Startups Pistachios Are Everywhere Right Now, Not Just in Dubai Chocolate China's Homegrown Jewelry Superstar ©2025 Bloomberg L.P.
Yahoo
07-07-2025
- Business
- Yahoo
Saks Is Ceding Ground to Luxury Rivals After Buying Neiman Marcus
(Bloomberg) -- The $2.7 billion acquisition of Neiman Marcus by Saks Fifth Avenue's owner last year was supposed to create a luxury powerhouse. Instead, both department stores are losing customers and sales to competitors including Bloomingdale's and Nordstrom. Are Tourists Ruining Europe? How Locals Are Pushing Back Foreign Buyers Swoop on Cape Town Homes, Pricing Out Locals Trump's Gilded Design Style May Be Gaudy. But Don't Call it 'Rococo.' Massachusetts to Follow NYC in Making Landlords Pay Broker Fees In California, Pro-Housing 'Abundance' Fans Rewrite an Environmental Landmark Sales at Saks Fifth Avenue fell 16% during the quarter that ended in June from a year earlier, according to Bloomberg Second Measure, which tracks debit and credit purchases. During the same period, combined sales at Neiman Marcus and Bergdorf Goodman sank 10%. The slowdown accelerated over the three months, with June showing the biggest drop at the three retailers. Meanwhile, sales at Bloomingdale's, owned by Macy's Inc., and Nordstrom Inc. both rose more than 10% during the same quarter, according to Second Measure. The declining revenue figures show the magnitude of the challenges facing Saks Global, as the combination of the department store chains is called. The closely held company is trying to reverse the sales decline and just took on more debt in part to pay vendors $275 million in overdue bills. Bloomberg Second Measure data may not fully capture the sales trends at these retailers because it analyzes more debit than credit card purchases. Shoppers at Neiman Marcus, Bergdorf Goodman and Saks customers often use credit cards more frequently than middle-income shoppers at other outlets. That means the sales slowdown in the Bloomberg Second Measure data could be sharper than it really is. And the sales increase could appear stronger at Bloomingdale's and Nordstrom, where more shoppers use debit cards. But the Bloomberg Second Measure data is still helpful to show the trajectory of revenue trends. In June, sales fell 28% at Saks and 26% at Neiman Marcus and Bergdorf Goodman. At Bloomingdale's, sales rose 13%. After Saks borrowed $2.2 billion in December to finance its acquisition of longtime rival Neiman Marcus, executives had planned to spend this year working to combine the two iconic chains, cutting costs and streamlining technology and supply-chain operations to position the new juggernaut to take an even greater share of luxury spending in the US. But the company has also been contending with some vendors who are slowing or holding back their shipments, worried about not getting paid. Investors, concerned about Saks' ability to pay its bills, have sent the price of its bonds plummeting in recent months. The challenges aren't all homegrown. The broader luxury sector is undergoing a slowdown, too. That's hit sales at LVMH Moët Hennessy Louis Vuitton SE and Gucci owner Kering SA — brands that sell large quantities of products at Saks Global. Saks Global has seen green shoots recently, including an uptick in vendor shipments after the company secured new financing. It expects 'this trend to continue as we execute on our plan to begin paying outstanding balances in July,' a Saks Global spokesperson said in a statement. 'As inventory flow approaches normalized levels, we are confident that we can deliver for our customers.' Also, Saks' recently launched storefront on is starting to show a positive response, the spokesperson said. Client Complaints Even if Saks repays overdue bills and persuades enough vendors to restart or increase their shipments of merchandise, the company still has another uphill battle: win back clients who have shifted their shopping to rivals in recent months or pulled back on spending altogether because of economic jitters. Complaints about receiving orders in damaged boxes, charging for returns and rejected or delayed refunds from Saks and Neiman Marcus have increased since the beginning of the year, said Bloomberg Intelligence analyst Mary Ross Gilbert, who has looked through online reviews. That points to how Saks' efforts to conserve cash and cut costs are starting to undermine what's supposed to be a high-end shopping experience, she said. 'Bankruptcy risk remains given what appears to be a multitude of execution problems impacting customer experience,' Ross Gilbert said. 'It's just so much easier to shop elsewhere.' Although online reviews about retailers in general skew negative, those raised about Bloomingdale's tend to focus on late package deliveries and are more benign than customers' frustration with Saks Global, Ross Gilbert said. The Saks spokesperson said the company's fulfillment centers have implemented new processes that 'reduce the time for processing returns within 7 to 10 days, while ensuring customers receive high-quality merchandise in future orders.' Saks Fifth Avenue has had steep revenue declines since early 2023, with sales falling an average of nearly 21% each quarter versus a year earlier, according to Bloomberg Second Measure. At Neiman Marcus and Bergdorf Goodman, revenue trends have been choppier. Sales were up in the final quarter of 2024 and again in the first quarter of 2025 versus a year earlier, but then turned negative in the most recent one. Meanwhile, Bloomingdale's and Nordstrom have increased year-over-year sales every quarter during the last year. Holiday Season The pressure on Saks is particularly acute now because it's filling its warehouses and stores with products to sell during the crucial holiday season from November through January. If vendors hold back on shipments to Saks now – because they don't want to risk not being paid or being paid late – that would leave the department stores without enough luxury goods on shelves during the holiday shopping season, which would likely accelerate shoppers' shift to Bloomingdale's and Nordstrom. Saks is using $600 million in fresh financing to start to make $275 million in overdue payments to brands this month and, separately, is starting to pay them for new products they've shipped since the beginning of the year. 'We're in the window where, I think, investors and brands are looking to see how the proposed game plan is actually going to play out in real life,' said Jeff Abrams, founder and chief executive officer of Los Angeles apparel company Rails, which sells its products at Saks. 'This next month or two will be very telling.' Rails has continued to ship merchandise to Saks despite being owed a couple million dollars because Abrams sees an opportunity to expand the availability of Rails products at the department store as other brands scale back, wary of not getting paid. But Abrams is also continuing to open up more Rails stores across the US in part to be less reliant on selling its products at third-party retailers. Rails has started to receive some recent payments from Saks, via its financial intermediary, called a factor, which guarantees orders from retailers. Vendors, particularly smaller ones that have less financial room to maneuver, are between a rock and a hard place with Saks. To ship or not to ship, that's the question they're asking themselves. They don't want to risk more unpaid bills but, at the same time, Rails and others want Saks – which needs more inventory – to succeed. 'If Saks can stabilize and thrive,' Abrams said, 'that benefits us and many other vendors as well.' --With assistance from Matt Townsend. (Updates with additional context starting in fifth paragraph.) SNAP Cuts in Big Tax Bill Will Hit a Lot of Trump Voters Too For Brazil's Criminals, Coffee Beans Are the Target Sperm Freezing Is a New Hot Market for Startups Pistachios Are Everywhere Right Now, Not Just in Dubai Chocolate China's Homegrown Jewelry Superstar ©2025 Bloomberg L.P.
Business of Fashion
20-06-2025
- Business
- Business of Fashion
Temu US Sales Plunge 25% Amid Tariff Barrage
Temu's sales decline in the US is deepening as the online marketplace drastically cuts spending on advertising targeting American consumers, signalling a shift in focus after President Donald Trump's tariff barrage. Compared to a year ago, Temu's weekly sales dropped more than 25 percent in the period from May 11 through June 8, according to Bloomberg Second Measure, which analyses credit and debit card data. That's in contrast to other e-commerce platforms run by Shein, Walmart Inc. and Inc., where weekly sales have all returned to year-on-year growth since Trump's trade truce with China in mid-May. The deepening sales decline comes alongside Temu's cut in advertising spending, an abrupt turnaround in strategy after it spent big last year to attract the attention of US shoppers, including running commercials on Super Bowl night. From creating thousands to tens of thousands of new advertisements daily before April 10, the numbers are now down to dozens or even single digits, with some days in June seeing no new commercials, according to analytics company AppGrowing Global. ADVERTISEMENT 'Temu's sales growth has always been glued to their aggressive advertisements,' said Wu Yanwei, chief content director of AppGrowing's parent YouCloud. 'The abrupt slowdown in advertisement spending is likely turning its growth engines off' in the US, Wu said, noting that Temu was channeling ad spending toward other markets including Europe. While declining to specifically comment on sales and ad numbers, a spokesperson for Temu said the company has been working with local merchants across regions to deliver stable pricing to consumers. Temu and Chinese e—commerce shopping platforms such as Shein had for years relied on a tariff exemption on small parcels to ship cheap clothing and household goods to American consumers duty-free. After President Donald Trump plugged that loophole this year, they largely lost the discount-appeal that drew US shoppers in droves. Still, Shein's US sales have fared relatively better in recent months. It has managed to reverse a drop in sales to return to growth from June 1, Bloomberg Second Measure data showed. Shein's single-digit growth since then is similar to levels posted by Walmart's e-commerce platform. Shein's advertising in the US has remained more stable than Temu, with the number of new commercials most days this year being anywhere between dozens to a few hundreds, according to AppGrowing Global. Learn more: French Senate Backs Law to Curb Ultra Fast-Fashion If implemented, the law would ban advertising by fast-growing Chinese e-commerce platforms like Shein and Temu.
Business of Fashion
03-06-2025
- Business
- Business of Fashion
China's Temu and Shein Want to Crack Europe, But the US Is Too Big to Quit
Huang Lun was one of the original architects of his Guangzhou-based company's push into the US market, helping it to sell underwear and yoga pants via the online commerce platforms Amazon, Temu and Shein. The American market now makes up 70 percent of the company's total sales, but in March, with US President Donald Trump threatening imminent tariffs on Chinese imports, Huang was tasked with finding new markets in Europe and Australia to help soften the inevitable blow. Huang's company is one of hundreds of thousands that collectively ship billions of dollars worth of goods to the US, taking advantage of digital marketplaces, low-cost, high-volume manufacturing operations in China, US consumers' voracious appetite for cheap clothing, electronics, toys and homeware, and a 'de minimis' exemption on import taxes for low-value packages. The Trump administration's on-again, off-again trade war with China threatens the economics of the business, making it far more expensive to ship products to customers, and putting a tax on every imported product that either the consumer or the retailer will need to pay. To mitigate the risk, Chinese e-commerce platforms are shifting resources to Europe and other markets, spending heavily on promotions to try to woo European consumers. European regulators and retailers are braced for a flood of low-cost goods. But that may be slow to come. The merchants in China — the companies that actually buy, sell and ship apparel, electronics, decorations and toys — are more focused on shoring up their core markets in the US, preferring to take higher risks and lower margins rather than tackle the complexity and bureaucracy of Europe. Huang is among them. When the Trump administration announced 145 percent tariffs on Chinese imports and cancelled the de minimis exemption, the company initially dropped its sales targets for the US. But soon after, Huang was pulled back to work part-time on the American market again. Trump suspended some tariffs for 90 days, and the company rushed to get new production orders to its factories and booked container space to ship a few more months' worth of inventory to the US. 'We still need to keep an eye on other markets to always prepare in case things get worse again, but it's less urgent now,' he said. 'We feel the US market is back, at least for this year.' Price Hikes After the Trump administration's tariff announcement, many Chinese sellers on e-commerce platforms increased their US prices. The average price of 98 products on Shein tracked by Bloomberg News rose by more than 20 percent by early May from two weeks prior. Observed sales on Shein were 16 percent lower for the 28 days ended May 22, compared to the same period a year ago, according to Bloomberg Second Measure, which analyses credit and debit card transactions in the US. Temu's sales fell about 19 percent in the same period from 2024 levels. To try to convince merchants in China to refocus on European consumers, Shein, Temu and TikTok turned to the same tactics they used to build their markets in the US, spending heavily on advertising and subsidies to sellers and customers. According to data from advertising analytics company AppGrowing Global, the number of new adverts booked by Shein and Temu in the US market fell more than 90 percent in the first three weeks of May, compared to the same period last year. In April and May, Temu's monthly ad volume in Europe was up 12 times from a year earlier, and up more than four times in the UK. Both platforms have bought more adverts in the UK than the US in the past two months. Temu, Shein and Tiktok have offered to pay part or all of the shipping costs to European markets, as well as directly subsidising some purchases. Merchants who spoke to Bloomberg said Temu had offered €2.99 ($3.38) in subsidies on orders below €30, while TikTok was willing to subsidise sales via its newly-launched UK store by £3.48 ($4.66). However, interviews with six Chinese merchants selling on Temu, Shein, TikTok and Amazon suggest that these subsidies aren't enough to convince them to devote significant resources to Europe yet. Those merchants who have tried have found the experience frustrating. Last year, Roy Chen, founder of Shenzhen-based smoke detector maker Sensereo, started selling in Europe via Amazon and his own website. 'I realised I entered a hell mode,' Chen said. 'I now deeply understand why everyone loved starting their overseas businesses in the US market.' To sell in Europe, he had to register for value added tax in each individual market, offer a range of plugs, and translate his instruction manuals into at least five different languages. Rules and product standards kept changing, meaning he had to keep tweaking the product. 'In this highly-fragmented market, there's nowhere to generate such fat profits as people do in the huge single market like the US.' Although he'd originally discounted the US market as too competitive, Chen started selling in the US via his own website — after the tariff announcements. He's still selling in Europe and expects to grow there, but sees the US market as a better prospect in the short term. He expects other Chinese merchants will come to the same conclusion. 'Imagine a Chinese factory boss or merchant who started their US business in the early years and used to earn $100 million per year from just one market,' Chen said. 'Now he has to start from zero, to learn all the complicated rules from Italy, Germany to Spain, and only make a fraction of the money from each market.' Many merchants are in precisely that situation, having spent years establishing themselves in the US, building their relationships with factories and platforms, and understanding what local consumers want, Wang Xin, head of the Shenzhen Cross-border E-commerce Association, said. That's a sunk cost. 'Everyone is now putting all their efforts into prioritising the US market, busy producing and booking containers to ship as much inventory as possible,' Wang said. 'Taking good care of the US business, getting cash flows and surviving, that's the most important and urgent thing now. Exploring other markets is important too, but not urgent, and it's not something you can rush to do.' Dumping Fears Some of the frustrations that Chinese companies have found in trying to enter European markets are there by design. The EU and UK typically have more rules on product standards and consumer protections than the US — non-tariff barriers that Trump has referenced in his trade disputes with the continent. European regulators have already begun cracking down. The Commission is formally investigating Temu for potential breaches related to the sale of illegal products and manipulative user interface designs. In May, a separate enforcement action found that Shein used tactics such as fake discounts and misleading sustainability claims. Shein has one month to respond or face possible fines based on its EU turnover. The US' tariffs on China and the end of the de minimis rule has increased a sense of urgency in the EU, but the bloc's concerns predate the trade war. In 2024, about 4.6 billion parcels valued at €150 or less — the EU's de minimis threshold — entered the bloc, almost double the 2023 total. More than 90 percent originated from China. Policymakers tend to argue that enforcing European standards protect consumers and mean that imported products can't undercut local manufacturers by producing inferior, unsafe goods. 'It's not about trying to prevent affordable products or blocking clever business models that we ourselves didn't come up with,' Bernhard Kluttig, a deputy German economy minister, said. 'It's really just about making sure that everyone plays by the same rules.' When the Darmstadt Regional Council, a regional authority in Germany, tested 800 products from Asian e-commerce platforms, they found 95 percent of them didn't meet European standards. Among the products were laser pointers that exceeded legal output limits by up to 300 times. 'If you get that in your eye, then your eyesight is gone,' Angelika Küster, head of the council's department for market surveillance, product and chemical safety, said. Other checks found toys with 100 times the permitted concentration of toxic chemicals. The council has stepped up inspections and hired more staff to examine products from e-commerce sites, Küster said, 'but it's clear that we can't compete with the sheer volume of products being introduced.' The European Commission has launched a new initiative called Priority Control Areas to carry out surprise cross-border checks and launched a web crawler tool, which it hopes can help to identify harmful products listed on e-commerce sites. Other potential solutions under discussion at the Commission include introducing a handling fee for e-commerce platforms and implementing a digital product passport, which may provide supply chain transparency through a QR code linked to detailed product information. The EU is in the process of reviewing stricter rules and the elimination of the €150 de minimis customs duty exemption. But as the US has already closed its equivalent in May, there's a risk that the e-commerce players now exploit Europe as a dumping ground while it's still possible. 'We're often not as quick as Donald Trump,' Kluttig said. 'We can't issue executive orders that apply immediately and across all of Europe. We have different elaborate and complex legal processes. Which is important — but decisions take longer.' Similar conversations are going on in the UK, where the de minimis threshold is £135, and where industry groups have long argued that online retailers selling Chinese goods are undercutting local companies by skirting duties and safety checks. Exports of 'low-value' parcels from China to the UK rose 53 percent in April, according to an analysis of China's customs trade database. Parcels under the £135 threshold generally pass through customs with limited inspection. In research published in October 2024, the British Toy and Hobby Association found 85 percent of the 75 toys it tested from third party sellers on 11 marketplaces, were non-compliant with EU and UK safety standards. 'It's difficult enough to pay all the taxes that we do without facing competition from people who pay none, particularly when they're supplying goods that are demonstrably not up to UK safety standards,' said Andrew Goodacre, chief executive officer of Teal Group, which owns toy retailer The Entertainer. A Temu spokesperson said that the company takes product safety seriously, with 'a robust seller onboarding process, regular monitoring, and enforcement actions to ensure compliance,' and that it works with testing and certification agencies. 'We are committed to fair competition and supporting local businesses,' the spokesperson said. 'Our platform allows European and UK-based sellers to reach new customers through a low-cost channel, with half of our UK sales expected to come from local sellers and warehouses by the end of 2025. We're expanding this model across Europe, aiming for 80 percent of our European sales to come from local sellers over time.' A Shein spokesperson said that the company is 'fully committed to ensuring the products we offer are safe and compliant,' and that it is investing $15 million this year in product safety and compliance initiatives, performing 2.5 million product safety and quality tests, and expanding its partnerships with testing agencies. AliExpress did not respond to a request for comment. Britain has taken action in recent years. Responsibility for collecting VAT has been shifted onto platforms, as sellers are now required to collect the tax upfront when dispatching parcels. Ollie Marshall, managing director of online electronics retailer Maplin, said that this has lessened competition and led 'Chinese direct sellers on platforms like Amazon actually becoming less prevalent.' However, just as in the EU, the US' dropping of its de minimis rule has increased fears of goods being rerouted and dumped in the UK. The Labour government announced a review of its policy in late April. So far, retailers and trade groups say there isn't much evidence that dumping is happening. Martino Pessina, CEO of Takko Fashion, a German discount clothing chain, said he's actually found short-term benefits from the US policy changes, as the temporary slowing of US demand has meant he's getting more favourable pricing from his own suppliers in China. This speaks to a point that isn't always reflected in the arguments over de minimis rules and the threat of dumped goods via Chinese platforms. 'We already buy in our local stores in the UK and the EU cheap Chinese goods, it's the same goods, often made in the same place,' Anna Jerzewska, customs and trade adviser to the EU and the UK, and director of consultancy Trade & Borders, said. Safety concerns are valid, as is the need to have a level playing field on regulations, she said, 'but the cheap Chinese goods isn't the problem. It's the profits of the UK retailers or the EU retailers.' Constant Disruption Chinese online platforms are unlikely to see the increasing regulatory complexity in developed economies as an insurmountable barrier, according to Mark Greeven, dean of Asia at IMD Business School. The companies are expanding their warehouse capacity in Europe, he said, and Temu has begun to explore different business models, including working with small businesses in European markets. In April, the company signed a memorandum of understanding with DHL to develop its logistics on the continent. 'Part of their advantage which they had in the US, they're trying to transplant to Europe, but they're also reinventing themselves a bit,' Greeven said. It will be challenging to build in Europe the 'proximity with the consumer' that the platforms have achieved in the US, he said, and their model of ultra-low price, algorithmically-marketed products may need to change. It could take a year or more to figure out how to navigate tariffs and tailor their offering to European markets. But the expertise that the Chinese platforms have built in logistics and supply chains means that they are powerful, highly adaptable businesses that will be hard to regulate out of existence, because they've dealt with constant disruption throughout their existence. 'It's been round after round after round, and I think they got pretty good at focusing on their core capabilities,' Greeven said. 'It's a mess, but a mess is an opportunity from the point of view of Chinese entrepreneurs. I think that typically in this situation, Chinese companies prosper because they're not afraid of it, they're used to it.' The future of the US tariff regime is uncertain. In late May, a court ruled that the Trump administration's import taxes were illegal. The government has appealed. For the merchants, the timing of any short-term shift to Europe will be dictated by the simple metric of the US tariff numbers, Wang, from the Shenzhen Cross-border E-commerce Association said. When tariffs were set at 54 percent, that was the point most exporters couldn't make a profit, he said. 'Before reaching that level, people were struggling with thinner profits, but would rather stay in the US for cash flows and meanwhile start doing research on new markets,' Wang said. 'But let's say the tariffs return to figures higher than that again, you'll just be forced to completely exit and jump to other markets as you'll die faster if you stay.'
