Sellers in the European market have felt it firsthand this year—small profits are hard to come by, and bulk stocking is becoming increasingly unprofitable.

This is not an isolated issue in individual niches. Conversations among European station sellers have shifted from “how to rank hot products” to “how much profit can I make from each order.” Many are downsizing European teams, shifting inventory to the US and other markets, or staying on the sidelines, hoping for a policy turnaround.

Yet no turnaround has come.

Effective July 1, 2026, the EU scrapped the duty exemption for goods priced under 150 euros and imposed a temporary €3 tariff per order. An additional €2 processing fee will be introduced in November. This marks the official end of the duty-free era and the old operating rules for cross-border sellers.

This is more than a routine policy adjustment—it is a fundamental reset of European market logic. The era of threshold-free, low-margin arbitrage is over, replaced by a new phase that prioritizes compliance, branding, and localized operational capabilities.

Fixed Costs Break the Logic of Small Profits and High Volume

A simple calculation shows the true impact of the new policy.

Previously, shipping a €15 T-shirt to Germany incurred zero tariffs, with VAT applied at the standard rate. Sellers could sustain operations relying on high sales volume despite thin margins. Today, every order faces a €3 temporary tariff, plus an extra €2 processing fee starting in November. Combined with VAT calculated on the total goods value, shipping, and tariffs, the additional tax cost per T-shirt reaches approximately €5.

What does €5 mean? It is roughly the total profit margin of a white-label T-shirt sourced from Guangzhou’s wholesale markets, from factory to parcel. In short, fixed extra costs have completely wiped out the thin margins from high-volume sales. The more you sell, the more you lose—making the traditional small-profit, high-volume model unsustainable.

A large number of bulk-stocking European sellers have scaled back operations drastically. Some cut their SKU count from thousands to hundreds, while others shut down their European stations entirely. The widespread complaint of “losing money on every order” is no exaggeration, but a factual result of the new cost structure.

About You‘s New Policies Send Clear Platform Signals

While sellers are retreating, mainstream platforms are adjusting their strategies. Europe’s leading fashion e-commerce platform, About You, offers a clear industry direction.

Covering over 20 European countries with more than 13 million active users, About You holds a significant share in the European fashion e-commerce sector. It rolled out a series of new policies for third-party sellers around the launch of the 2026 EU tariff reform.

Expanded delivery service coverage. 

Previously, providing local last-mile delivery only in Germany and Austria, the platform has now expanded services to Poland, the Czech Republic, and Portugal. The expansion comes with strict requirements: sellers must complete final-mile delivery within 72 to 96 hours and offer a 30-day return label. The message is clear: traffic is only available to sellers with mature shipping and delivery capabilities.

Upgraded the official warehousing and delivery system. 

About You has extended its FBAY warehousing and distribution services to 12 countries, including Germany, Austria, the Netherlands, Belgium, France, Spain, and Italy. Sellers who stock goods in the platform’s official warehouses in Germany, Slovakia, or Poland can enjoy one-stop warehousing, delivery, and returns, along with standardized pricing guidelines and OSS tax compliance support. This greatly reduces sellers’ burden of multi-country VAT declaration and ensures tax compliance.

1% to 5% commission reduction for selected categories. 

Against the backdrop of rising tariff costs, the platform cut commissions on core categories to subsidize sellers and encourage official warehouse stocking. This is not a charitable measure, but a deliberate push to guide sellers toward compliant, localized, and branded operations.

Currently, About You adopts an invitation-only recruitment model, prioritizing Chinese sellers with EU entity status and local delivery capabilities. It focuses on apparel and home accessories, requiring more than 2,000 SKUs. The platform is moving away from bulk-stocking sellers and favoring brand-oriented merchants with stable supply chains, unique product styles, and reliable quality control.

About You is not an isolated case. Major European e-commerce platforms are rolling out similar adjustments: raising entry thresholds, strengthening local delivery requirements, and retaining high-quality sellers through tax compliance services. All platforms are moving in the same direction, with only minor differences in implementation timelines.

Three Core Metrics for the New Market Track

The old low-profit model is no longer viable. To sustain growth in the new era, sellers must meet three essential requirements: compliant entity status, localized inventory, and differentiated product positioning.

Compliant entity status: A basic entry ticket, not an advantage. 

Registering a local EU company—such as a German or French limited liability company—is not for tax avoidance, but a prerequisite for VAT deferment and official platform settlement. Without an EU entity, sellers cannot access exclusive platform investment channels. Even if store access is available, the high costs and complexity of multi-country VAT declarations will erode all profits. European sellers should complete compliance preparations in advance rather than make last-minute adjustments.

Local delivery capability: A solid line of defense for stable profits. 

About You prioritizes warehouses in Germany, Slovakia, and Poland for good reason. Located in central Europe, these countries serve as key logistics hubs, enabling 3- to 4-day delivery across the continent. In contrast, 7- to 15-day delivery for cross-border direct mail has lost all market competitiveness. European consumers are willing to pay a premium for fast delivery but refuse to tolerate long waiting times. Sellers without local warehousing can only compete on price—yet new tariffs have completely locked down profit margins, forming a dead end.

Brand tonality: The only way out of price competition. 

European consumers are increasingly rejecting homogeneous low-cost products. Rising tariff costs have eliminated the price advantage of generic goods, while local shoppers now pay more attention to style, material quality, and brand narrative.

Many small and medium sellers regard branding as a high-threshold task, yet branding in the European market does not require large-scale advertising or designer collaborations. Unified product styling, detailed material descriptions, high-quality packaging, and standardized after-sales service are enough to help stores stand out from low-price homogenization.

For those looking to go deeper into refined European operations, a stable local network environment is equally essential. Many sellers leverage high-quality IP resources from 1024proxy to conduct efficient market research and maintain smooth store operations.

The End of Low-Price Involution Means Opportunities for Quality Sellers

The four-month window before the new processing fee takes effect in November is critical for strategic adjustment.

This period is not for waiting or expecting policy reversals. Instead, sellers need to switch warehousing modes, complete EU entity registration, and streamline SKUs to focus on core categories.

The tax reform is not a market disaster—it is a watershed. It separates the old fast-profit model, which relied on information and traffic dividends, from the new long-term profitable model driven by compliance and brand accumulation.

Low-price competition has never been a sustainable path. Loose market rules once made this model feasible, but the new policy has closed that chapter. Although fewer sellers remain in the market, those who do can achieve higher-quality development.

Conclusion

Every rule reshuffle brings market restructuring. Sellers clinging to fast-profit, crude operations will eventually be phased out, while those willing to deepen their capabilities embrace the best market entry opportunity.

The next four months are a critical decision-making period. Sellers can either clear inventory and exit the European market, or complete compliance registration and localized warehousing upgrades to restart business development. Both choices are reasonable, corresponding to different business plans—and every seller needs to make a rational judgment.

For those choosing to stay, three core keywords determine long-term development: compliance, local fulfillment, and brand tonality. These are the passcodes for the next phase of the European market—and the most reliable long-term edge for leaving price wars behind.