The ACCC is calling for reforms around unfair trading practices in online markets, but does not consider the recent billion-dollar surge of Shein and Temu as a current concern.
This comes amid the release of the ACCC's tenth and final report, called the ‘Digital Platform Services Inquiry’.
The report targets global online marketplaces that are surging in Australia, including eBay, Amazon, Shein and Temu, alongside other digital technology areas such as private messaging, ad tech and online gaming.
In the report, the ACCC wrote that it does not consider any general online retail marketplace currently holds a dominant position in Australia.
“At this time, these services need not be a priority for the proposed digital competition regime,” the report read.
“However, the services provided feature high capital investments, strong economies of scale and network effects, which limit new entry and could lead to positions of dominance by existing participants.
“The ACCC remains concerned about the potential for self-preferencing of a marketplace’s own products in ranking, search, or display. Accordingly, it is critical that the proposed regime enable the ACCC to continue to monitor competition issues in general online retail marketplaces.”
These comments come despite the same report noting that Shein and Temu have benefited from an alternative business model, whereby products are shipped directly and individually from suppliers in China to consumers in Australia, rather than being stored in the online marketplace’s warehouse.
“This model is called ‘direct-to-consumer shipping’ and reduces import costs, though slows delivery times,” the report read. "Temu and Shein purchases are rarely subject to import taxes, because products shipped individually to consumers have a low dollar value. Temu and Shein are reportedly responsible for 30 per cen of all duty-free shipments in the US.
“According to the European Commission, in 2023 there were 2.3 billion items under the import duty threshold imported to the EU. Australia generally has no import taxes, duties or charges in place for most products $1,000 or less.”
This comes as Temu’s annual revenue in Australia hit $1.7 billion in 2024 since entering a year earlier, as reported by Roy Morgan. Shein launched in Australia in 2021, and in 2023 it had a reported Australian annual revenue of $978.9 million. In 2024, Shein's total sales rose 20 per cent to $1.22 billion for the year ending December 31, 2024 compared to 2023.
The ACCC report then goes on to mention how the European Union and the United States have both proposed shifts in import duties, as well as how the French legislature approved a bill that would apply advertising restrictions and an environmental levy to purchases of ‘ultra-fast fashion’ from Shein and Temu, among other retailers. That bill is still to be scrutinised by the French senate.
“In addition, sustainability advocates have argued that the commercial success of business models using ‘direct-to-consumer’ shipping raises environmental concerns,” the report read.
“While ‘direct-to-consumer’ shipping can be a competitive advantage, there are concerns this shipping method can have a more significant environmental impact than other distribution strategies. This is because overseas air cargo shipping has a greater environmental impact than local delivery of products shipped in bulk to local warehouses.
“Generally, expedited shipping of parcels ‘as soon as possible’ can result in ‘additional vehicle detours to accommodate real-time demand’, causing increased fuel consumption and emissions.”
The ACCC report then spotlighted that Amazon’s business model is different from Temu and Shein in their storage, processing and shipment of purchased products.
Amazon provides a ‘Fulfilment by Amazon’ service to all sellers on the Amazon store, where sellers store their products at an Amazon fulfilment centre. Amazon then packs, ships and delivers the product to the customer.
“Amazon developed its first Australian-based robotic fulfilment site in Western Sydney, and is constructing a second site in Melbourne,” the report read.
Amazon Australia’s revenue grew 18 per cen in calendar year 2023, with the revenue for the Amazon Marketplace growing 22 per cent to $1.567 billion and third-party seller services – such as commissions and delivery charges paid by sellers – growing 79 per cent to $569 million.
The ACCC’s lack of strong concern over the surge of global online marketplaces in Australia comes amid industry calls for regulation to level the playing field for local retailers, particularly for small businesses.
Australian Fashion Council CEO Jaana Quaintance-James told Ragtrader earlier this year that Shein's surge to over $1 billion in annual sales in Australia in just three years poses a significant challenge to the local $28 billion fashion industry.
"The playing field isn’t level," Quaintance-James said. "Global ultra-fast fashion platforms benefit from structural advantages (including lighter regulatory requirements, questionable supply chain practices and duty thresholds) that enables aggressive pricing undercutting the true cost of responsible production.
"By contrast, Australian brands operate under stringent local standards for quality, labour, and environmental responsibility, all while facing global supply chain pressures, rising costs, and evolving consumer demands across both physical and digital retail."
She added that Australian fashion is built on craftsmanship, innovation, and sustainability – values that resonate highly with global consumers.
"Our industry employs 500,000 Australians, generates $7.2 billion in exports, and contributes $15 billion in wages annually," Quaintance-James said.
"With Shein and similar platforms now redirecting billions in consumer spending away from local businesses, it’s critical that we strengthen the competitive position of Australian fashion. This includes investing in local manufacturing to reduce reliance on fragile global supply chains and amplifying the quality, longevity, and ethics that ultra-fast fashion simply can’t match.
"The $1 billion spent with Shein last year could have supported thousands of local jobs, businesses, and communities - a reality that demands greater focus from both industry and governments as we work toward our projected growth to $38 billion by 2035."
Despite all this, the ACCC’s latest report did indicate that harm to competition could still occur in the supply of online marketplaces.
A recent report by the ACCC expressed concern regarding hybrid marketplaces, noting that harm to competition could stem from preferential treatment of these marketplaces’ own products over third-party sellers’ products.
“These marketplaces may have the ability and incentive to favour their own products in ranking or display of products using algorithms or policies,” the ACCC wrote. “Consumers may not be aware of this self-preferencing and may assume that rankings are based on their search criteria or needs.”
In a consumer survey by the ACCC, only 29 per cent of recent online marketplace users believed online marketplaces clearly explained how product search results were sorted and displayed by default. This figure was even lower for older Australians (14 per cent of online marketplace users aged 75 and up) and people who rated their own confidence with technology as 5 or below out of 10 (20 per cent).