How China's Shein pioneered fast-fashion 2.0
STORY: Low prices, super-fast production cycles, and a strong social media presence have all helped shape Shein into a market leader in the fast-fashion industry.
In 2022, the China-founded online retailer generated about $23 billion in global revenue, according to research firm Coresight.
That same year, Shein accounted for nearly one-fifth of the global fast-fashion market, outpacing H&M and Zara, which are often credited with spearheading the concept of replicating runway looks and selling them for less, also known as "fast fashion."
Let's take a closer look at how Shein has managed to outgrow its competitors.
Analysts and investors say Shein’s key strategy is to tap a vast network of largely China-based suppliers.
It uses an on-demand manufacturing system that allows it to quickly boost production of popular items and drop products that flop.
U.S. Specialty Retail Correspondent Kate Masters explains:
"What Shein essentially does or is able to do is take a design, send it to a network of, you know, hundreds of smaller factories located in China and place small orders for those products. They're able to bring clothes to market in between 5 to 7 days. If it sells well, they can very quickly ramp up production, but if it doesn't sell well, it's no real loss for Shein because they've only put in a small order.”
That process helps improve production speed and inventory management.
The ultra-flexible supply chain also allows Shein to create a fundamentally different business model from established players like Zara and H&M which largely rely on predicting what styles shoppers will buy.
Having churned out thousands of new designs a day, Shein then sends the products directly to consumers via air freight.
Shipping can still take up to two weeks, but the model gives Shein an advantage over brick-and-mortar retailers, which must distribute apparel across a global network of stores.
Shein targets its millions of social-media followers and makes heavy use of influencers and discount codes.
The company says it has more than 250 million followers on social media.
“One thing that Shein did as well is really leverage the idea of influencers. They're known for sending clothing for free to a large group of these people, you can search on Tik Tok for Shein haul videos, Shein unboxing videos and that just grabs more eyeballs and helps them reach more shoppers without having to pay for traditional advertising”
To be sure, Shein has some features in common with Zara and H&M.
All three retailers have faced criticism for allegedly stealing designs from other brands, but some critics say that Shein's super-fast production cycle makes it an especially egregious offender.
