The rapid growth of China’s ultra-low-cost cross-border e-commerce model is beginning to slow, signaling a possible end to the era of rapid expansion. According to an analysis of Chinese customs statistics prepared by the Trade and Transport Group and published by Reuters, exports of low-cost goods via e-commerce channels fell 10.9% year-over-year in April to $9.81 billion. This marks the fifth consecutive month of negative growth, heightening concerns about a structural reversal of the trend.
The segment, which has grown in recent years thanks to aggressive price dumping and direct air shipments from China, is increasingly facing constraints related to logistics and fuel costs. It is becoming increasingly difficult to pass these costs on to the end consumer, which is directly putting pressure on the profit margins of major players—Shein, Temu, and AliExpress.
Against this backdrop, companies are being forced to restructure their supply chains. Analysts are observing a gradual shift from a direct-shipping model to local warehousing hubs. For example, Shein is actively expanding its infrastructure in Europe by growing its network of distribution centers, including a new warehouse in Cannock, UK.
The EU regulatory environment is creating additional pressure. Starting July 1, 2026, a flat fee of 3 euros will be imposed on small packages valued at up to 150 euros, which is intended to limit the flow of cheap imports and support European manufacturers. At the same time, the European Commission is stepping up oversight under the Digital Services Act, tightening requirements for platforms regarding product verification and recommendation algorithms.
Financial results also point to a cooling market: Shein increased revenue by 19% in 2024, but net profit fell by 40%. At Temu, despite scaling up sales, profitability remains limited, especially in the European market.
An additional source of uncertainty is the growing regulatory and legal risks, including EU fines and investigations into product safety and copyright issues.
Taken together, these developments indicate that the industry is transitioning from a phase of exponential growth to a period of structural restructuring, where the key challenge is no longer scaling up but maintaining profitability.
