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Shein
TikTok-fuelled realtime fashion
Shein (She-in) is a global fashion brand and online retailer from China, reaching out to the world with a realtime business model built on AI, on demand production and Tok-Tok fuelled social marketing. It's on-demand manufacturing technology connects suppliers to its agile supply chain, reducing inventory waste and enabling us to deliver a variety of affordable products to customers around the world. The brand targets customers in more than 150 countries, and is now registered in Singapore.
Shein, originally named ZZKKO, was founded in China in 2008 by entrepreneur and search engine optimization marketing specialist Chris Xu.
The website SheInside.com was registered in 2011 and advertised itself as “a worldwide leading wedding dress company”, although it sold general womenswear too. The company acquired its items from Guangzhou’s wholesale clothing market, which is a central hub to many of China’s garment manufacturers and markets. Shein initially had no involvement in the design or production of the garments; it functioned similarly to a drop shipping firm, which sells items from third-party wholesalers directly to international customers.
Shein made their products available in Spain, France, Russia, Italy, and Germany in the early 2010s; as well as selling cosmetics, shoes, purses, and jewellery, in addition to women’s clothing. In 2012, it started using social media marketing by collaborating with fashion bloggers for giveaways and advertising items on social media.
In 2014, Shein acquired Romwe, a Chinese e-commerce retailer, making it a “fully integrated retailer.” By 2016 the company had 100 employees, and had already established their headquarters in Guangzhou, China. The firm’s name changed again in 2015 from “Sheinside” to “Shein,” claiming that it needed a name that was simpler to remember and easy to find online. By 2016, Xu gathered a team of 800 designers and prototype makers that manufactured Shein-branded clothing. The company began improving its supply chain, excluding vendors that provided low-quality items or photos.
By 2019, its merchandise were featured on daytime television shows in the United States with other internet businesses such as Fashion Nova and Zaful. Meanwhile, fashion influencers also displayed Shein products in haul videos alongside other well-known retailers. Despite being an online retail store, Shein also opened up pop-up shops for people who do not wish to purchase online. Moreover, the retailer’s early usage of TikTok and ability to advertise viral items boosted Shein’s popularity.
In 2019, Singapore-registered Roadget Business Pte listed Chris Xu and others as representatives. Singapore filings reportedly shows Roadget as the legal entity operating Shein’s global website and owns Shein’s trademarks.
By November 2021, Shein grew from a company valued at $15 billion to one valued at $30 billion. During the pandemic of 2020, it reportedly made $10 billion in revenue, making it the seventh straight year of more than 100% sales growth for the company. As of October 2020, Shein was the world’s largest online-only fashion firm. As of May 2022, it is the largest fast fashion firm.
In April 2022, Shein raised $1 billion to $2 billion in private funding and had claimed 28% of the US fast fashion market. Earlier that year, a survey of 7000 American teenagers ranked Shein as their second favorite ecommerce website.
In a May 2022, article in Fortune, the company was described as catering to Gen Z while using big data and rapid Chinese manufacturing to quickly design clothing at a lower price point. The company was valued at $100 billion.
In 2022, Shein established a distribution center in Whitestown USA and plans to open more distribution facilities in southern California and northeast USA. It also opened a new corporate office and distribution centre in Markham, Ontario, which will function as Shein’s main distribution hub in the Canada. The Wall Street Journal reported that Shein generated US$24 billion revenue in 2022, making it almost as large as Zara and H&M.
TikTok plays a large role in driving customers to the company website due to a TikTok trend of bulk buying clothes from Shein and presenting Shein clothes to their audience like a standard haul video. In 2021, the number of Shein’s app downloads surpassed those of Amazon.
Shein claims to utilize the psychology of the new generation and implements marketing strategies accordingly to achieve growth. In 2020, Shein was the most talked about brand on TikTok and YouTube, and the 4th most talked about brand on Instagram. Its low prices attract teenage internet shoppers with small budgets to post what they bought on social media.
For user growth, the company offers relatively low prices to stimulate demand. With more spending, customers can be rewarded with more discounts, which are encouraged to be applied to their next shopping trip. Shein not only makes use of its algorithm-driven recommendation system but also attracts customers to visit the platform frequently to do tasks, like adding items into their cart, watching live streams and joining its contest show, in order to win points which can be redeemed later.
In recent years, the company has found itself in the middle of a number of significant controversies including trademark disputes, tax evasion, human rights violations, and health and safety concerns. These are detailed elsewhere, but are important to weigh against its commercial success and innovative business model.