Shein has taken the world by storm with jaw-droppingly low pricing and a seemingly limitless assortment of trendy garments, but it has also caught the attention of French politicians looking to curb the excesses of fast fashion.
Customers adore the Chinese-founded company’s huge library of ultra-cheap products, ranging from $8 sundresses to 48-cent necklaces, at a time when inflation has eroded purchasing power around the world.
Shein, like H&M and Zara, has been accused of employing low-wage and overworked garment workers in facilities that cause widespread environmental damage.
Critics also accuse the corporation of encouraging hyperconsumption and marketing garments that are meant to be thrown after a few wears – a complaint leveled at its competitors.
Analysts think Shein’s supply chain and product development process are particularly efficient.
“In theory, Bangladesh could probably sell garments for cheaper than Shein. However there’s no ecosystem there to market it, to brand it, to sell it overseas, to ship it,” Allison Malmsten, China market analyst at Beijing-based Daxue Consulting, told AFP.
“China has all of these elements.”
Analysts believe Shein may relocate its headquarters to Singapore between 2021 and 2022 to avoid increased global monitoring of Chinese corporations.
Nonetheless, it benefits from China’s unique combination of a vast low-cost textile manufacturing industry and advanced e-commerce technologies and shipping networks.
That ecosystem has also produced the online shopping app Temu, which, while sometimes compared to Shein, functions more as a cheap Amazon-like marketplace selling third-party home items, tools, and gadgets.
‘Extremely agile’
According to University of Delaware design specialist Sheng Lu, Shein sold 1.5 million different clothes products last year, significantly exceeding pioneering Spanish fast-fashion retailer Zara’s 40,000 styles.
According to The Wall Street Journal, Shein claimed $23 billion in revenue and $800 million in net profit in 2022, despite the high production costs and risks associated with such a diverse product line.
“The only reason Shein is able to get away with this is because they’re extremely agile and they have very little waste in their warehouse,” Rui Ma, China business 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 restock only the products that our consumers truly want,” Shein told AFP in a statement, adding that this avoided “the pitfalls of overproduction”.
Shein’s on-demand strategy relies significantly on a precisely organized supply chain of over 5,000 third-party manufacturers, primarily in China. Local media accounts show Shein dominating entire districts of small workshops.
According to a Zhongtai Securities study from 2021, the company rates suppliers based on their flexibility and ability to handle urgent requests, and the weakest performers are constantly eliminated.
Additionally, it analyzes user search data and social media trends to create designs that are very likely to sell, often resembling other companies.
A recent lawsuit brought by Japanese retail giant Uniqlo over an alleged imitation bag design is one of several intellectual property conflicts concerning Shein.
“You can imagine their design team more as data people, and less as design people,” Malmsten said. “They’re not sitting there with sketchbooks, they’re sitting there with computers and data.”
‘Micro-influencers’
In recent years, the world’s largest fast fashion firms, like Shein, have faced criticism for alleged labor exploitation, as well as their contribution to environmental degradation and waste.
The French parliament this week passed measures to make low-cost fast fashion less enticing to shoppers, notably because of sustainability concerns.
Shein claims to undertake frequent third-party audits to assure fair salaries, and that their on-demand strategy eliminates overproduction and so “dramatically reduces waste”.
Even as it disputes these claims, it has garnered a devoted following who applaud it for making fashion affordable to those on a tight budget, particularly in plus-size styles.
Shein has deliberately developed an inclusive image by enlisting small-time video bloggers and social media users to represent the brand in exchange for free products and cash.
According to Malmsten, Shein has opted for “micro-influencers” in the form of “everyday people” rather than famous ambassadors for premium companies.
The company used the strategy to “bombard consumers, so everywhere you look online, you’ll see Shein products,” she explained.
The technique has occasionally backfired, such as a sponsored factory tour for Western influencers last year that was criticized for ignoring suspected labor breaches.
Ma cautioned against giving social media too much credit for Shein’s accomplishments.
“It’s not like there weren’t plenty of companies trying to mimic Shein (on social media),” she told AFP.
“The marketing aspect is the easiest to copy and also the most useless as it’s not their foundational competitive advantage.”