Shein: China’s mysterious $15 billion fast fashion retailer is ready for stores?

Are you over 30? You should continue reading. Shein might not be as well-known as the e-commerce giants Alibaba and Amazon, but it is a familiar name.
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Taobao or JD.com. However, as China’s newest retailer Decacorn, the mystery-shrouded low-profile is only matched by an unwavering ambition to be a global fast-fashion retailer.

Shein, located in Nanjing, was founded in 2008. It is targeted at Gen Z. They offer a range of discounts codes and Instagram influencers to lure young shoppers. Societe Generale reports that a dress costs half as much as a Zara equivalent.

Shein, who is ultra-publicity-shy, remains relatively unknown beyond her teen audience. The surprise bidder that the Pearl River-based company made for Arcadia, an ailing U.K fashion group, could change all of this anonymity. Although it failed, the message is clear: Shein will take on Main Street.

The story begins in 2012 when Chris Xu, a notoriously hardworking founder and CEO (also known as Yangtian Xu), an American-born graduate from Washington University, sold his wedding dress business to purchase the domain Sheinside.com. In 2015, he renamed the company Shein and started buying fashion rivals from overseas.

Shein’s largest market is the U.S., but it also ships to 220 other countries. There are websites for Australia, Europe, the Middle East and the U.S. A series of funding rounds have fueled Shein’s rapid growth, with the most recent being Series E financing in 2020. Shein now has a valuation of over $15 billion. While revenues are not publicly disclosed, they are estimated at more than $10 billion per year in the local area. Shein currently has a number international and Asian VCs as well as private equity houses as its backers.


Shein: Fast Fashion Made Ultra Fast

Do you remember the age/awareness divide. According to App Annie analytics, Shein was the most downloaded shopping app worldwide on iPhone in the week that began September 27. It was ranked among the top 10 in the U.S. and the U.K. as well as Australia, Brazil, Australia, Saudi Arabia, and Australia.

Products are shipped from Shein’s warehouse, Foshan, Guangdong, to a warehouse near Los Angeles. Fulfillment can take up to ten days glacial by Amazon Prime.
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next-day delivery standards. Its affordability has kept loyal customers coming back, attracted by the ever-changing assortment of accessories and clothing for women that is added on an average of 2,000 each day.

Shein is obsessed about identifying trends and hot searches in different countries. This allows her to predict colors, fabrics and styles that will be most popular with a much faster cycle than Inditex Zara owner. It promotes a lot with Instagram-and Weibo-friendly imagery to make it easy to find fashions on all its social media platforms.

Shein’s rise has not been without challenges. It was criticized for making a swastika pendant in July, an error it later sincerely regretted. Paid posts by celebrities and fashion bloggers have helped to improve the brand’s image while slowly discrediting its low-quality and low-cost reputation. Even Lil Nas X and Rita Ora were not allowed to attend the May 2020 #SHEINTogether global streaming event.

The Emergence of a Global Fashion Player

This is all for a company which didn’t have a supply chain prior to 2014 and preferred to purchase directly from Guangzhou Shisanhang Garment Wholesale Market. Xu was faced with a high demand and created an in-house design department. Within two years, he had an 800-strong team dedicated to prototyping and designing ultra-fast production. It was also known for its prompt payment, which is rare in China. In 2015, Shein moved its supply chain operations from Guangzhou, to Panyu, and almost all the factories it worked with were relocated.

Shein also entered the Middle East in the same year. Sales soared and revenues reached $617 million in 2016, and $1.5 billion by 2017.

Shein and the hundreds factories that work with the company have merged to create a production cluster similar to A Coruna, north-east Spain. Inditex’s headquarters can be found within easy reach of its upstream and downstream suppliers. There are four R&D centers in Nanjing and Shenzhen, Guangzhou and Hangzhou as well as six logistics centers in Foshan and Nansha, Belgium and India. It employs over 10,000 people and has seven customer service centres, which are based in Los Angeles, Liege and Manila.

Future plans include the creation of new businesses in mobile payment, supply chain finance and advertising. Brick-and-mortar store openings are also possible. It’s likely that it will happen super-fast, no matter what.

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