How fashion giant Shein rose in just few years?

Over the past decade, Shein has transformed from an obscure brand among older shoppers to one of the leading global fast fashion retailers. The Chinese-founded company, which also sells a wide array of beauty and home products, doubled its profits to over $2 billion (£1.6 billion) last year, surpassing Swedish fashion group H&M and the UK’s Primark and Next. It now ships to customers in 150 countries worldwide.

Seventeen-year-old Michaela recalls her largest purchase from Shein, totaling £150 for over 16 items. Like millions, she loves the ultra-fast fashion retailer primarily for its affordability. She also enjoys the discount codes offered by YouTube influencers, which encourages her to buy more.

Despite its success, Shein faces controversy over its environmental impact and labor practices, including allegations of forced labor in its supply chain. Michaela is aware of the backlash, particularly concerned about the amount of plastic used in Shein’s packaging. However, she believes most fashion brands face similar criticism and notes that “not everyone can afford high-end clothing.” She admits feeling guilty about her purchases but finds Shein’s convenience hard to resist.

Shein, pronounced “she-in,” was established in China in 2008 by entrepreneur Xu Yangtian, initially selling wedding dresses online. It has since grown into a global giant, renowned for trendy clothing aimed primarily at a Gen Z audience. A significant part of its appeal is its pricing, with the average Shein-branded clothing item costing just £7.90. At any given time, the platform offers as many as 600,000 items for sale, far outstripping rivals like Zara and Boohoo. Shein has also acquired competitors like Missguided, and Xu Yangtian, who rarely gives interviews, is now among China’s wealthiest individuals.

The pandemic marked a turning point for Shein, as online shopping surged and its sales skyrocketed, explains Louise Déglise-Favre from GlobalData. The brand effectively utilized social media, partnering with popular influencers and university students to promote its clothing on TikTok and Instagram. “The brand’s success coincided with a boom in TikTok usage in Europe and the US,” says Déglise-Favre. “The Chinese social media platform greatly helped spread awareness of Shein’s ultra-affordable offerings.”

Shein has attracted customers by featuring pop stars like Rita Ora and Katy Perry at virtual concerts and through a vast amount of organic user-generated content. Many users have likely seen “haul” videos of young women reviewing their recent Shein purchases. Shein’s business model is similar to Amazon’s, partnering with thousands of third-party suppliers, mainly in China, Brazil, and Turkey, to manufacture its clothes and ship them from large, centralized warehouses. It has accelerated the “test and repeat” model popularized by other fast fashion giants, producing items in small batches and increasing production of successful styles. Shein can introduce a new item in just 25 days, a process that takes other retailers months.

Shein also employs “gamification” strategies to boost customer engagement on its app, offering points and discounts for daily logins, social media shares, and referrals. “That encourages users to repeat these behaviors to earn more rewards, keeping them engaged and making purchases,” says Vilma Todri, an associate professor at Emory University’s Goizueta Business School.

However, the criticism surrounding Shein’s practices persists, especially as the company considers listing its shares on the London Stock Exchange, potentially valuing it at $50 billion. Concerns about the environmental impact of mass-producing low-cost clothes and the waste generated are prominent. Last year, US lawmakers called for an investigation into claims that Uyghur forced labor is used in Shein’s supply chain. “We have zero tolerance for forced labor,” Shein told the media, promising to investigate and enforce a strict code of conduct among suppliers. The company has also launched a resale platform in the US and France to enhance its green credentials and argues that producing clothes in smaller batches minimizes waste.

Despite these efforts, some critics remain unconvinced. Student Jess Gavin, 21, who used to shop at Shein, now opts for second-hand sites like Vinted and Depop due to ethical concerns. “You care less about these things when you’re younger, but as awareness grows, so does a sense of responsibility,” she tells the media.

Initially aiming to list in the US, Shein shifted focus to the UK due to political tensions. In the UK, concerns over environmental, social, and governance standards might deter investors. However, others believe that a major listing in London could benefit the UK economy and bring more scrutiny to Shein’s operations. Michaela cautiously supports the idea of Shein making Britain its financial base, as long as the company commits to improving its environmental and labor practices.

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