With amazingly low prices and an endless selection of trendy clothes, Shein has taken the world by storm – and has found himself in the crosshairs of French lawmakers looking to curb the excesses of fast fashion. Customers love the Chinese-founded firm’s vast inventory of ultra-affordable items, from $8 sundresses to 48-cent bracelets, at a time when inflation has sapped purchasing power around the world.
Like H&M and Zara, Shein has been accused by clothing manufacturers of using underpaid and overworked workers and causing widespread harm to the environment. Critics also accuse the company of promoting excessive consumerism and selling clothing with designs that are meant to be thrown away after a few wears – a charge also leveled against its competitors.
But analysts say what sets Shein apart is its highly efficient supply chain and product development process. “Theoretically, Bangladesh can probably sell apparel cheaper than Shein,” said Allison Malmsten, China market analyst at Beijing-based Daxue Consulting. There is no ecosystem.” Told AFP. “China has all these elements.”
According to analysts, Shein moved its headquarters to Singapore between 2021 and 2022 to avoid increasing global scrutiny of Chinese companies. Nevertheless, it benefits from the unique combination of China’s vast low-cost textile manufacturing industry with highly developed e-commerce technology and logistics networks. That ecosystem has also given rise to online shopping app Teemu – while it’s often compared to Shein, it acts as a marketplace like Amazon with discounts offering third-party home goods, appliances and gadgets.
‘Very agile’
According to research by fashion expert Sheng Lu of the University of Delaware, Shein offered a staggering 1.5 million different apparel items for sale last year—far more than leading Spanish fast-fashion brand Zara, which had 40,000. There was a wealth of styles.
While such a huge variety usually comes with huge risks and production costs, according to The Wall Street Journal, Sheen is projected to record revenues of $23 billion and net profits of $800 million in 2022. “The only reason China has been able to avoid this is because they are extremely agile and have very little waste in their warehouse,” Rui Ma, a China trade expert and founder of the Tech Buzz China newsletter, told AFP.
“By testing and producing new products in small initial batches of 100 to 200 items, we gather and evaluate customer feedback in real time, and re-release only those products,” Shein told AFP in a statement. We stock what our consumers really want.” “Disadvantages of Overproduction”.
This on-demand strategy relies primarily on a tightly engineered supply chain of more than 5,000 third-party manufacturers in China, where local media reports describe Shein as dominating entire districts of small workshops.
According to a 2021 Zhongtai Securities report, the company ranks suppliers based on their flexibility and ability to deliver immediate orders, and regularly eliminates the worst performers. Plus, it tracks users’ search data and social media trends to create designs that are almost guaranteed to sell—often looking like they’ve been copied from other brands.
The recent lawsuit filed by Japanese retail giant Uniqlo over alleged copycat bag designs is one of several intellectual property disputes involving Shein. “You can imagine their design team more as data people and less as design people,” Malmsten said. “They’re not sitting there with a sketchbook, they’re sitting there with a computer and data.”
‘Micro-influencers’
The world’s largest fast fashion brands, including Shein, have come under criticism in recent years for alleged labor exploitation and its contribution to environmental pollution and waste. The French Parliament last week approved measures to make low-cost fast fashion less attractive to customers, particularly over sustainability concerns.
Sheen says he conducts regular third-party audits to ensure fair wages, and says his on-demand model avoids overproduction and thus “dramatically reduces waste”. Even while fighting these accusations, it has developed an army of fans who praise it for making fashion accessible to people with lower budgets, especially in plus-size styles.
This inclusive image has been carefully crafted by Shein, who enlists younger video bloggers and social media users to represent the brand in exchange for free products and cash. According to Malmsten, unlike luxury brands that use celebrity ambassadors, Shein has sought out “micro-influencers” in the form of “everyday people”.
The company “uses tactics to bombard consumers, so wherever you look online, you’ll see Shein products,” he said. But this strategy has sometimes backfired, with a sponsored factory tour last year for a group of Western influencers leading to a strong backlash over alleged labor violations being covered up. Ma cautioned against giving too much credit to social media for Sheen’s success.
“It’s not like there weren’t a lot of companies trying to copy Sheen (on social media),” he told AFP. “The marketing aspect is the easiest to copy and also the most useless because it is not their fundamental competitive advantage.”