“The competition in Europe has become dangerously imbalanced.”

Three questions to Daniel Enke, Director Public Affairs & Corporate Citizenship at Zalando

For quite some time now, Asian ultra fast fashion retailers have increasingly pushed into the European market. Daniel, what is Zalando’s position on the competition?

We do not shy away from competition – quite the opposite. Fair competition is good and important, but it also implies that all market participants need to comply with the same set of rules. Unfortunately, we are witnessing some Asian companies that do not comply with the rules that apply within the European Union (EU) or that these rules are not sufficiently monitored or enforced. These rules include strict frameworks on import duties, price transparency, product safety and consumer protection. This puts European consumers at risk, puts European companies that conform to the rules at a disadvantage and deprives public budgets of millions of Euro in tax and customs revenue. As a result, the competition in Europe has become dangerously imbalanced – to the detriment of domestic companies that have a hard time keeping up.

Speaking of imbalance: Where do you witness unfair competition?

One example, of many, is the EU customs fee: if a parcel contains goods with a declared value below EUR 150 the sender is not required to pay. Logistics experts estimate that the two leading ultra fast fashion companies from China alone send around 500,000 parcels to German customers every day without being properly monitored.

According to the E.U. Directorate-General For Taxation & Customs Union, a total of 2 billion of these parcels landed in Europe last year. The parcels in question are usually under-declared or split into several shipments. This is how the senders circumvent the 150 Euro de minimis rule, as the buyers in Europe act as importers. The existing control mechanisms within the EU are not designed for this flood of parcels and this type of business relationship.

This way, Chinese companies receive a free discount, so to speak, while the European taxpayers lose out on considerable revenue. In addition, given the overwhelming flood of parcels, it is nearly impossible to check what the shipments actually contain. This can quickly become dangerous for consumers. Thus, it must be possible to trace which goods are being sent to the EU and whether they meet European safety standards.

We therefore advocate the elimination of the EUR 150 customs regulation well before 2028 and for stricter controls, especially on product safety. This is the only way to effectively protect European consumers. The European Commission has made a proposal on this, which is supported by many EU member states - unfortunately, Germany is not yet among them.

You are talking about stricter control and enforcement. Where do policymakers need to start?

The monitoring of individual shipments needs to improve and become much more efficient. For example, the governments have no knowledge of imported quantities or proportions by country of origin because there is simply no legal basis for recording them. This has to change.

The risk of making it much easier for non-European companies to do business in Europe than for local services is very real. Non-European companies with Direct-To-Consumer business models must therefore have a representative office within the EU and take full responsibility for products imported directly to consumers through their platforms in the absence of other EU-based economic operators.

Enforcing EU rules should be the norm, not the exception. Today, there is a lack of effective law enforcement tools that work effectively in all member states. One approach could be to centralise some enforcement competencies at EU Commission level to better target businesses operating on a pan-European scale. By increasing the effectiveness of newly adopted tools, the Commission can better protect the integrity of EU rules.

It would also increase enforcement impact for the customs, tax and consumer protection authorities of the EU member states to cooperate even more closely and systematically collect and exchange vital information. Currently, we observe that public investigations are being launched in different Member States or legal complaints being filed by consumer organisations, which indicates that the lack of compliance is not an isolated incident, but a systemic problem and should be tackled at the EU level.

What’s important: this is not only about Zalando or the economic interests of the European e-commerce industry. Even seemingly minor breaches have a significant impact on EU businesses and consumers, especially when they occur at a large scale. Consumers should be able to trust that all businesses operating within the EU comply with European law and that European supervisory authorities are able to enforce this law, especially when it comes to product safety.

Thank you very much for the conversation, Daniel!