When listing a potential best-selling garment on SHEIN, many sellers dream of orders flooding in. However, one non-compliant product could erase those dreams overnight. The European Union's Digital Services Act (DSA) has now turned its regulatory focus toward SHEIN, marking not just a compliance upgrade for the platform but a critical challenge for all cross-border e-commerce sellers.
The European Commission has officially designated SHEIN as a Very Large Online Platform (VLOP), bringing it under the DSA's regulatory scope. VLOPs are defined as platforms with over 45 million monthly active users in the EU. With SHEIN's European user base exceeding 108 million, its classification as a digital "giant" is undeniable. The DSA aims to create a fair and transparent digital market, with particularly stringent oversight for VLOPs like SHEIN.
Key Impacts on SHEIN and Its Sellers
1. Stricter Product Scrutiny: SHEIN must implement more rigorous measures to eliminate illegal products from its platform, particularly counterfeit goods and items infringing intellectual property rights. Sellers must ensure product legality and provide comprehensive documentation or face removal or account suspension.
2. Frequent Risk Assessments: SHEIN must submit detailed risk assessment reports to the European Commission every four months, outlining measures to prevent counterfeit goods and IP violations. This requires enhanced risk management systems and stricter seller vetting.
3. Transparent Content Moderation: SHEIN must disclose content moderation decisions and provide traceability information about platform merchants. Seller activities will become more transparent, making violations easier to detect.
4. Robust Age Verification: For age-restricted products, SHEIN must implement effective age verification systems to prevent underage purchases. Sellers must accurately categorize products and cooperate with verification processes.
Other platforms including ByteDance, X (formerly Twitter), and Booking.com have also received VLOP designations, signaling the EU's sustained regulatory focus on large digital platforms. Cross-border sellers must adapt to this new reality.
Leonard Lin, SHEIN's Global Head of Public Affairs, stated the company shares the European Commission's goal of ensuring safe online shopping for EU consumers and pledged commitment to platform safety and compliance. However, SHEIN's business model—built on affordable merchandise and social media marketing—faces significant compliance challenges.
Essential Actions for SHEIN Sellers
- Conduct Comprehensive Audits: Review all products to ensure compliance with EU regulations, particularly regarding intellectual property, product safety, and consumer protection.
- Prepare Documentation: Gather all required certifications, including brand authorizations and product testing reports, to facilitate platform reviews.
- Enhance Product Quality: Move beyond price competition by focusing on product quality and design to build brand competitiveness.
- Monitor Regulatory Updates: Stay informed about EU policy changes and adjust business strategies accordingly to avoid violations.
As global e-commerce regulations intensify, compliance has transitioned from optional to essential for cross-border sellers. Only by adhering to evolving standards can businesses maintain competitiveness in this regulated marketplace.