Etsy, the popular online marketplace known for its unique handmade goods, has been facing challenges and declining sales in the face of competition from fast-fashion giants Shein and Temu. The company laid off a significant portion of its workforce in December 2023 and saw a drop in gross merchandise sales in the first quarter of 2024. Etsy’s CEO has pointed to the aggressive advertising tactics of Shein and Temu as a major factor impacting the e-commerce market. Despite these challenges, Etsy remains hopeful that consumers will return to their platform for high-quality, heirloom-style products.
The rise of fast-fashion companies like Shein and Temu has not only impacted Etsy but has also caused concern among fashion executives worldwide. In South Africa, the head of e-commerce giant Takealot is worried about foreign companies bypassing import duties, while in the UK, business leaders are calling for regulations to prevent exploitation of de minimis exemptions for low-value imports. In the United States, lawmakers and stakeholders are working to tighten de minimis rules to address the influx of low-value shipments and prevent tariff avoidance.
Lawmakers in the United States have introduced several bills aimed at addressing the challenges posed by foreign fast-fashion companies and the de minimis exemption. The Import Security and Fairness Act and the Americas Trade and Investment Act seek to prevent certain countries, including China, from using the de minimis exemption. Other bills focus on tracking imports for illicit or forced labor and preventing the exemption from applying to goods subject to trade enforcement tariffs. The debate over the de minimis threshold and its impact on revenue and compliance rates continues among lawmakers and experts.
In the European Union, lawmakers are considering implementing Extended Producer Responsibility (EPR) fees on clothing, footwear, and textile producers to cover recycling costs. The European Commission and the European Parliament have differing views on the scope and implementation of these fees. The EPR rules are set to start on January 1, 2025, and environmental groups are pushing for measures to ensure that producers are incentivized to create more sustainable products.
France has taken a bold step towards regulating fast fashion by approving a bill that would impose fines on fast-fashion producers and restrict advertising within the country. This legislation, if passed by the French Senate, could set a precedent for other countries to follow suit. In Ireland, discussions are already underway about introducing a fast-fashion levy similar to the one proposed in France. The global fashion industry is facing increasing pressure to address the environmental and social impacts of fast fashion production and consumption.
