The EU Is Breaking Temu & Shein — Plus Google's Hidden AI Metric

Episode Transcript

00:00:00 Mike:
Welcome to another episode of Growing Ecommerce. We have a good one for you today. We’re going to talk about news on Chinese e-commerce and how that’s shaping up here in Europe and potentially elsewhere. We’ll also talk about a feature that you probably didn’t hear about at Google Marketing Live, but you should have. And with that, I’m one of your hosts, Mike Ryan.

00:00:22 Chris:
My name is Chris, and it’s a pleasure to be here, sir.

Mike: The pleasure is all mine. You want to talk about China?

Chris: Yes, don’t you? “Trump, Trump, Trump,” as he likes to call them.

Mike: Yes, that’s right. I told you not to do the impression, but you did it. Damn it.

Chris: Well, it’s done. I’m not a big fan of this Chinese e-commerce expansion.

00:00:48 Mike:
No, we have both been very clear on that. I gave a webinar last month called “The 2026 E-commerce Squeeze,” and that was one of the big themes I touched on—one we’ve been covering on this podcast for a long time. So, let’s set the stage.

00:01:09 Chris:
We both believe—and it’s proven by numbers—that the Chinese are not messing around. They have some issues with domestic demand for many reasons, so they look for global expansion. This isn’t just in the field of e-commerce; you can see it everywhere. It feels like these giants are going hard on Europe and eating lunch off of our beloved European online retailers and B2C players.

00:01:42 Chris:
But there’s a light at the end of the tunnel. It feels like the EU has woken up. It seems like there might be a political wall these Chinese companies are hitting, which I’m all for because it’s an unfair game.

00:02:06 Chris:
I’m not aware of any big European online player who is a dominant player on the Chinese market. I don’t know of a single one. There are some actions now from the EU which I don’t think will hurt them right away, but I think it’s a sign of things to come.

00:02:30 Chris:
The most interesting thing is that we already see some impact, at least according to the data on the auction landscape, which is a good sign for all the retailers of Europe.

00:02:49 Chris:
What is your take, Mike? Before we jump into the details, what is your take on this Chinese e-commerce expansion and the EU’s take on it?

00:03:13 Mike:
As I talked about in the webinar, CPCs are getting really high and impressions seem to be down. It’s very tight in e-commerce advertising in Europe. One of the big contributing factors is Chinese e-commerce players. We’ve talked about Temu, Shein, and AliExpress, but also JoyBuy.

00:03:36 Mike:
I want to circle back to them in a minute. I did a little extra research for that webinar where I pulled a large amount of auction data from Google Shopping. If I can nerd out for one second—a lot of people know me because of the podcast, but my primary job is actually as an analyst.

00:04:04 Mike:
I am in a closed beta feature in Google Sheets which lets me have 20 million cells of data. It’s heaven! With Excel, you can only have just over a million rows. With this, I can have up to 20 million rows.

00:04:34 Mike:
I pulled out thousands upon thousands of advertisers in Google Shopping here in Europe and used AI to help me categorize them. When you look at it as a whole, it’s very challenging because they are flooding this channel. Whether they are Chinese-owned, China-orbiting, or effectively Chinese drop-sellers and marketplaces, it goes on and on.

00:05:03 Chris:
This is a very important piece of context. We always talk about the big dogs, but even the small shops out of China are very aggressive. Most of them—likely due to government subsidies—seem like they don’t care about profitability or a sustainable business model, with the exception of JoyBuy, perhaps.

00:05:48 Mike:
Exactly. Some of these, for example, are Amazon sellers that have grown so fast that they are branching out. Regarding the political side, Europe has the DSA (Digital Services Act), which is designed to tackle digital marketplaces. They have a special category for “Very Large Online Platforms” which has teeth. Temu and Shein are in this category.

00:06:16 Mike:
And they’ve started to use those teeth a little bit more, which is good.

00:06:36 Chris:
Let’s be precise here. Don’t be fooled; the numbers we are talking about are a drop in the ocean for these big players, but it’s a sign of what’s to come. For instance, Shein was hit with a €1 million fine in Italy for misleading environmental claims—rightfully so.

00:07:02 Chris:
The French are always more serious; they issued a €40 million fine for deceptive promotions. Temu is also facing intense DSA proceedings over non-compliance, staring down potential fines of up to 6% of global turnover.

00:07:44 Chris:
That is not just European turnover; that is global. This is serious. Temu was also recently hit with a 200 million won fine for dangerous products. Their influencer practices are also under question. There are so many dimensions to it.

00:08:26 Chris:
These signs are important. The EU has the power to take a certain share of global revenue, and then it gets interesting immediately. We saw this with Google a couple of years ago with the CSS.

00:08:56 Chris:
Even more recently, when Google became subject to the DSA, there were measures they had to take regarding privacy and tracking. The Chinese are not playing a fair game, in my opinion. Mike, looking at the numbers, average CPCs dropped by 2.3% week-over-week across multiple major retail categories in May 2026.

00:09:21 Chris:
2.3% is not a lot, but it’s a strong indicator. In some categories, the drops are closer to 5% or more. That’s getting big. The question is: how sustainable is this? CPCs have been a major hangover for every retailer except the Chinese ones, because they seemingly don’t care.

00:09:49 Chris:
If you were in a direct conversation with one of our clients, Mike, what would you do with this data? What playbook could you come up with?

00:10:11 Mike:
Great question. It’s a case-by-case thing. You should look at your Auction Insights to see how dominant these companies have been in your specific auctions. Look at your overlap rate and your ranking share—who is winning when you go head-to-head?

00:10:37 Mike:
The other big horizon is July 1st, which is when the exemption ends in Europe. Currently, shipments under €150 value have no customs duties, but soon they’ll have to pay. Exactly.

00:11:03 Mike:
At scale, that is a lot of money for businesses with likely non-existent margins. If someone orders a cheap package and you have to add €3 in customs, that changes the math.

00:11:22 Mike:
I think this is going to be a much bigger turning point in auction dynamics. I would wait to see what happens in July. Are these advertisers pulling back? Then the question is, what do you want to do about it? You can enjoy the greater efficiency, but when we saw major exits from advertisers in the past, other bidders were waiting to soak up that demand.

00:11:47 Mike:
My playbook would be: let it be you. You should try to get that market share. If you wait all day for lower CPCs, you might wait a lifetime.

00:12:08 Chris:
The Google reps would love you for that statement! But jokes aside, I’m fully with you. Hardly any retailer is looking just at efficiency right now; they are in a squeeze and need growth.

00:12:49 Chris:
If the auction is opening up, be more aggressive now because the window of opportunity will close. Others are waiting for that. Speaking of that, I’m concerned about JoyBuy. They aren’t a “Very Large Online Platform” yet, so they aren’t regulated the same way.

00:13:14 Mike:
They have deep pockets and are following the Amazon model: local inventory, fast delivery, and low prices. They likely won’t be affected by the customs minimum to the same extent. This could be a big chance for JoyBuy.

00:13:59 Chris:
It might make the window of opportunity smaller. We’ve been critical of “demand-led growth,” which is basically Google’s open-budget idea, but it could be a thing here. It’s a way to potentially stimulate your campaigns to spend more.

00:14:50 Chris:
AI Max (PMax) search technology might also tap into search volume you haven’t been on before. These are two technologies you could look at.

00:15:13 Mike:
Another one I’ve been critical of in the past but am changing my mind on is “smart bidding exploration.” If you aren’t familiar with it, when you set a ROAS target, the algorithm does a combination of exploration and exploitation.

00:15:37 Mike:
Exploitation targets clicks and queries with high certainty. Exploration is the gamble—it’s more incremental, but certainty is lower. Performance could be worse because there will be swings and misses.

00:16:01 Mike:
Smart bidding exploration lets you encourage the algorithm to go further on the exploration side. Google is reshaping this feature in a way that I think makes it way more attractive in this context. Keep an eye on that.

00:16:26 Chris:
I’m on it. One last thing regarding China: there was a study about the “consumer mandate.” 74% of consumers state they are willing to pay a premium for fully traceable, sustainability-verified fashion.

00:16:55 Chris:
49% of shoppers explicitly have a high intent to buy if a product’s original materials can be independently verified via a digital product passport. The market wants authenticity.

00:17:28 Mike:
I’ll tell you one thing: I know a lot of shoppers who say that, but the moment they make a decision, they don’t give a flying… well, you know. I wouldn’t be too bullish about that. People follow price points. With AI search features, that could become even more the case.

00:18:04 Mike:
People understand Temu is from China, but I think we aren’t there yet where people make decisions based on the origin of the product versus the price. However, we are getting there.

00:18:30 Chris:
We have to see how people’s wallets and values play out if the economy gets tighter. There is contradicting research showing people are satisfied with the customer experience on those platforms and are likely to recommend them. The products seem to be okay for the price.

00:18:58 Chris:
No comment! To summarize the playbook to benefit from this open auction landscape: try incremental growth, new exploration bidding functionality, and demand-led growth.

00:19:21 Chris:
And don’t forget to be more aggressive with your ROAS settings. The ROAS is not just the goal; it’s a major signal and prompt to Google.

00:19:43 Mike:
Good news, overall. It’s a positive signal. Shout out to the EU for using those teeth. Off-topic, but I also love that the EU is working on interchangeable batteries for smartphones. It might make them ugly, but it makes the world better.

00:20:27 Mike:
Next topic: a hidden feature of Google Marketing Live. This was not in the keynote, but it’s huge. I was at a breakout session where they presented this. It’s called AI Performance Insights.

00:20:53 Mike:
Google has done good work recently on increasing transparency, specifically with PMax. But AI overviews currently have no breakout, and that volume is growing every quarter. It’s a new black box growing inside of everything.

00:21:39 Mike:
This affects your organic visibility and your free listings in Merchant Center. What they’ve built here is a first-of-its-kind view at visibility for your products inside of AI surfaces.

00:22:11 Mike:
They have introduced a metric called “Share of Voice.” There has been a whole industry spun out on AI visibility, and now Google is giving us official data.

00:22:46 Chris:
So, as an online retailer, I would understand my Share of Voice—my visibility—for both my organic and paid presence? I can look at my organic presence as a dedicated KPI?

00:23:11 Mike:
Yes, it’s very impressive. This lives in Google Merchant Center. You can look at a country and category combination and set a custom time range. You can split visibility by free organic listings, paid listings, or both.

00:23:37 Mike:
The structure is great because you can drill down into a specific category in a specific country. They also added funnel dimensions: discovery, consideration, and purchase.

00:24:05 Mike:
They are using Gemini to look at the context of the chat. While you won’t get the exact chat data, they let you know if the chat was upper, mid, or lower funnel. You can see your Share of Voice relative to peers in those stages.

00:24:38 Chris:
Wow, super granular. Based on my conversations with clients, this was a big concern. They knew there was a shift to AI surfaces but didn’t know how they were performing there. Google is listening.

00:25:23 Mike:
Within each funnel stage, you’ll see activities like price comparison or looking at specs. There is also a “popularity score” showing how often that activity occurs. This covers AI Overviews, AI Mode, and the Gemini app.

00:26:16 Mike:
You can even see which feed attributes are being activated in these chats. If a specific brand or attribute is popular but you have low completeness in your feed, you know what to prioritize. That will be key.

00:27:02 Mike:
Right now, this is “coming soon,” so I can’t click through it yet, but the videos they put out are very cool.

00:27:25 Chris:
That report would be the major guiding factor for the “last mile” of feed optimization. We should talk to our CTO about that! Where are the complaints, Mike? I’m impressed.

00:28:09 Mike:
The complaint is that while this is helpful at the feed level, the campaigns remain a black box. Advertisers won’t be satisfied just knowing Share of Voice; they need to know the volume of impressions and what they can do about it beyond the feed.

00:28:56 Mike:
What can I do on the paid part? How can I optimize that to apply pressure? Google still has work to do there, but I don’t want to be nitpicking—this is awesome stuff. It’s very detailed and actionable for the data feed.

00:29:39 Chris:
We both believe the data feed is at the center of everything.

00:30:00 Mike:
It definitely is. More and more people believe us now! We need to tell them what’s coming next. I loved this episode. I think we’re at time.

00:30:19 Mike:
It’s Friday, so let’s sail off to the weekend. To our listeners, I hope you enjoyed the episode. We will be back.

00:30:39 Mike:
Thank you, Chris. To learn more, visit us at Smarter Ecommerce. Please leave us a review, a shout-out on social media, or a comment on YouTube. We really appreciate it. See you next time!