Shein: A New Fashion Giant From China

Friday January 21st, 2022

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[dropcap]S[/dropcap]hein became the biggest fast fashion brand on the USA market in 2021 by being cheaper and faster than its rivals. So, what is going on in the western fashion world?

Shein’s founder Chris Xu started his brand SHEIN in 2008 after quitting his job in marketing. Still, after all these years there is little information about the company or its founder. He set up his company She Inside in 2008, and after 7 years he changed its name to Shein.

Today Shein has over a quarter of the USA fast-fashion market, and it doesn’t have any intention to stop its rapid growth. The brand has become a real threat for big, global fashion players like Inditex and H&M.

The basic idea behind Shein is: Take a rival model, use automation, artificial intelligence, and supply-chain to become cheaper and faster than everybody else. Also, the brand is very dominant on social media and apps. For example, in the first quarter of 2021 Shein’s app downloads were second to Amazon, and engagement levels on TikTok were sky-high.

Now Shein is one of the few Chinese-founded companies overseas which has ever made such a market impact in the USA.

Some rivals criticize Shein’s strategy and tactics, but we have to remind them that the strategy to copy runway fashion and create clothes available in stores to ordinary consumers wasn’t presented by Shein.

Indeed, Shein took everything one step further, so instead of a couple of weeks (this is exactly how long it takes to test and repeat a model for rivals), Shein can copy styles in just one week. Rather crazy, isn’t it?

Each day this brand adds 6.000 new items online, far more than any other brand competitor. And yes, to do so, Shein uses analytics software, which trawls through shopping and social media websites. While other brands rely greatly on Instagram, Shein is dominant on TikTok, which has become popular among young fashionistas who regularly post short clips of “Shein hauls”.

Another big plus is that Shein makes a large proportion of its sales via mobile apps, borrowing ideas from the gaming world (countdowns and discount prizes) and further boosting engagement. Before check out, shoppers are encouraged to continue shopping with a lure of gifts and discounts after they reach a certain amount.

Shein has turned shopping into real entertainment.

Shein is also very cheap. The average price per unit is around 7.9 $. Having that in mind, analysts found that only Primark in Europe and Forever 21 in the USA can match these low prices, but only in some categories (Jeans, T-shirts, and Dresses).

How does Shein do it?

1. No export taxes from China;
2. Shipping individual parcels from Guangdong – no import/sale taxes;
3. Shein uses suppliers who design their products and makes contracts with manufacturers who exclusively work for Shein (small-batch production);
4. Selling quickly means that very little cash is tied up in inventory;
5. Self logistics and lack of physical stores = Shein’s growth has not required much capital.

After being accused of copying designs from big companies like Dr Martens and Levi’s, Shein started to support independent fashion designers, who now produce special lines for Shein.