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Shein: The rise and rise of a fashion giant
Image source, Getty Images
Article information
- Author, Daniel Thomas, Lora Jones and Lucy Hooker
- Function, business reporters, BBC News
-
June 7, 2024
The biggest order Michaela, 17, says she has ever placed on Shein was £150, when she bought “over 16 items”.
Like millions of others, she’s a big fan of the ultra-fast fashion giant, mainly because it’s affordable.
She also likes the way YouTube influencers she watches offer Shein discount codes, which makes her “buy more.”
Over the past decade, Shein has gone from being a little-known brand among older shoppers to one of the largest fast fashion retailers in the world.
The China-founded company – which also sells a huge range of beauty and home products – doubled its profits to more than $2 billion (£1.6 billion) last year, earning more than the Swedish fashion group H&M and the British Primark and Next.
Today, it ships to customers in 150 countries around the world.
However, as the company explores a plan to list its shares on the London Stock Exchange, it continues to be dogged by controversy over its environmental impact and Work practices – Including allegations of forced labor in your supply chain.
Michaela is aware of the backlash and is particularly concerned about the amount of plastic Shein uses in its packaging.
But she feels most fashion brands face similar criticism and that “not everyone can afford high-quality clothes.”
“So deep down I feel really bad when I buy things, but at the same time it’s convenient,” she told the BBC.
Image source, Getty Images
Image caption Shein partners with influencers and reality TV stars like Natalia Zoppa to promote the brand
Shein, pronounced “she-in”, was founded in China in 2008 by entrepreneur Xu Yangtian and began selling wedding dresses online.
It has since become a global giant, best known for selling fashionable clothing primarily to a Gen Z customer base.
A big part of the appeal? The price.
The average cost of an item of clothing from the Shein brand is just £7.90, and at any given time it has up to 600,000 items for sale on its online platform, beating out rivals like Zara or Boohoo.
It has also taken on competitors such as Missguided, while Xu Yangtian, who rarely gives interviews, is now considered one of China’s richest men.
The real turning point for the brand came during the pandemic, when online shopping soared and Shein sales soared, says Louise Déglise-Favre of analyst GlobalData.
The company also made smart use of social media, recruiting popular influencers and college students to promote its clothing on TikTok and Instagram.
“The brand’s success coincided with a boom in the use of TikTok in Europe and the US,” says Déglise-Favre. “The Chinese social media platform was very involved in promoting Shein’s ultra-affordable proposition.”
It has attracted buyers by getting pop stars like Rita Ora and Katy Perry to perform at its virtual concerts, but it also attracts a lot of organic user-generated content.
You may well have scrolled past the so-called “haul” videos of young women emptying their newly arrived packages and giving their candid critiques of the site’s crop tops, dresses, or beauty blenders.
‘They keep coming back, shopping’
Shein’s business model is similar to Amazon’s in that it partners with thousands of third-party suppliers – many of them in China, Brazil and Turkey – to manufacture its clothes and then ship them from gigantic warehouses. and centralized.
It also accelerated the “test and repeat” model made famous by other fast fashion giants, including H&M and Zara owner Inditex.
This results in Shein suppliers producing items in small numbers, between 100 and 200 pieces, and then producing more of whatever style is a hit.
The brand can deliver a new item in just 25 days – something that would take other retailers months.
It also uses “gamification” strategies to increase customer engagement on its shopping app, used by millions of people around the world.
Users earn points and discounts for logging in daily, sharing purchases on social media and referring friends.
“This encourages users to repeat such behaviors to earn more rewards and, as a result, they keep coming back, interacting with the app and making purchases,” says Vilma Todri, associate professor at Goizueta Business School at Emory University in the US.
Image source, Getty Images
But the criticism Shein has faced over its operating practices has been difficult to shake.
And these concerns are back in the spotlight, as the Chinese company considers listing its shares in London in a public offering that could value it at around $50 billion.
There are concerns about the environmental impact of mass producing low-cost clothing and the waste it creates.
“We have zero tolerance for forced labor,” Shein told the BBC at the time.
The company has promised to investigate such issues and says it strictly enforces a code of conduct, which all its suppliers must adhere to.
It has also launched a resale platform for shoppers in the US and France to boost its green credentials, whilst claiming that producing clothes in smaller batches means very little material is wasted.
But some say it’s not enough.
Image caption Jess Gavin stopped buying clothes from Shein
Student Jess Gavin, 21, certainly used to shop at Shein, catching the bug during the pandemic when online fashion shopping was a fun way to pass the time.
She thought the site was good for tops and swimwear and liked the low prices. But ethical issues began to worry her and now she no longer shops there, opting instead for second-hand sites Vinted and Depop.
“I think you worry a little less about those things when you’re younger, for sure. But I think now we are more aware of the issues and feel more responsible,” she told the BBC.
According to reports, Shein initially wanted to list its shares in the US, but these plans were thwarted due to political tensions.
The UK now faces doubts, with some saying concerns over environmental, social and governance standards could put off investors.
Others say such a large listing in London could be very beneficial. It could bring more attention to the company’s operations and provide a boost to the UK economy, especially as the London Stock Exchange has struggled to attract fast-growing companies.
Michaela tentatively welcomes the idea of the fast fashion giant making Britain its financial home.
“I think it’s good, as long as they demonstrate that they are making an effort to improve their environmental and work practices.”