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How the Chinese Fast Fashion Brand Shein is Conquering the US Market

12/13/2021
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A story of success

Shein (pronounced as “she-in”), the Chinese online fast fashion retailer, is one of the most striking fashion companies to emerge in the last three years, especially during the COVID-19 pandemic. This company has become one of Generation Z’s favourite brands in the US, as it provides up-to-date fashion products at affordable prices. Shein has indeed enjoyed a meteoric rise since it launched in the US around 2017, to reach an estimated USD3.1 billion in retail sales in the US market in 2021.

Figure 1: Shein’s Key Milestones

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Source: Euromonitor International insights based on trade press, Shein’s company website, and social media data.

Fast growth amidst the pandemic

When most American fashion companies were caught off guard by the impact of COVID-19 and the overall US apparel and footwear market declined by over 20% in 2020, the Chinese ultra-fast fashion giant Shein’s sales continued to grow dramatically, up by 150% versus 2019, and continued to post triple-digit growth in 2021.

Even though in actual terms, Shein’s sales in 2020 reached less than half of Zara’s figures, its tremendous and seemingly unstoppable growth has turned the brand into a real threat for other fast fashion brands (Figure 2).

image94v9.pngSource: Euromonitor International, Apparel and Footwear Edition 2022

According to Google Trends data (Figure 3), US users’ search interest in Shein surpassed their interest in H&M and Zara during the pandemic.

image7gfl9.pngFigure 3. Search interest in Shein, H&M, and Zara from 2017 to 2021 in the US (Retrieved from
Google Trends on 3 December 2021)

Affordability, fashionable styles, and targeting the right segment are behind Shein’s success

Shein appeals to many Generation Z consumers in the US with its competitive advantages at providing affordable prices, predicting and testing fashionable styles, and attracting consumers via social media marketing.

  • Affordable Prices. Shein aims to offer up-to-date and relevant styles at competitive prices. If consumers like a dress from Zara, they can find a similar style from Shein at approximately 70% of Zara’s price. Its ability to provide such low prices is attributed to its supply chain, business model, and trade policies. The fashion supply chain, especially from design to production (within about 10 days for Shein), is time-consuming, as it is typically a multi-operational and international activity. However, Shein has integrated its supply chain system and has all operations centred in Guangzhou, China. This system not only reduces the shipping cost, which is a big concern for most fashion companies, but also saves time.

Additionally, Shein’s DTC (direct to customer) business model has benefited from the trade policies of China and the US back in 2018, when China began to waive export taxes for DTC companies after the US imposed additional tariffs on Chinese companies. On the other hand, the Trade Facilitation and Trade Enforcement Act of 2015 in the US states that any import up to USD800 per person is duty-free. This means that Shein has been exempt from export and import taxes since 2018.

  • Fashionable Styles. Big data is one of the most popular topics in modern business and Shein is a pioneer in utilising big data analysis in its product design and production processes. Chris Xu, the founder of Shein, worked as an SEO (search engine optimisation) engineer for three years before he established Shein. The brand has developed a big data system to collect and analyse app data. The results could help guide new product design, determine production volumes, and select suppliers. Moreover, Shein has cooperated with Google which offers a customised tool for Shein to capture local fashion attributes through Google Trends Finder.

After designing the new styles based on big data analysis, Shein will launch the new styles into the market to test consumers’ feedback and determine future production sizes. Normally, companies such as Zara must produce at least 300-500 units for a style, as this is the minimum order quantity. However, Shein only needs 100 units for a style as it has managed to create strong relationships with local factories over several years. In this way, Shein’s ability to add approximately 3,000 styles per day is far ahead of other fast fashion companies.

  • Social Media Marketing. Generation Z has grown up in a digital world, saturated by technology and social media. Euromonitor International’s Voice of the Consumer: Lifestyle Survey fielded in April 2021 shows that over 33% of Generation Z in the US actively follow companies’ social media posts and feeds, while according to Google Trends (Figure 4), two of the top 10 topics related to this generation over the past year related to fashion (slim-fit pants, fashion) and the 10th is social media. Therefore, it is unsurprising that Shein has benefited from its social media marketing.

imageogf9.png

Figure 4. Top 10 ten rising topics related to Generation Z in the US from 2020-2021 (Retrieved
from Google Trends on 3 December 2021)

Shein has honed its strong social media marketing strategy for approximately nine years, even before it adopted its current name. In the initial stages, Shein collaborated with influencers on Facebook, Instagram, and Pinterest to introduce the brand and products to consumers. Shein is also an early adopter of TikTok that has played a large role in driving younger consumers to the company’s website. Additionally, to attract consumers back to the website, Shein provides them with some opportunities to earn extra discounts or incentives. For example, consumers who complete tasks such as watching live streams and adding items to carts will receive points that can be redeemed later.

Controversies around Shein’s addiction

The pronunciation of Shein in Chinese is “Shang-yin” which means “addiction”, and posts regarding consumers’ addiction to Shein have proliferated on social media in the US, much faster than any of the posts about the various controversies the brand has been embroiled in. Nonetheless, the brand is taking note and has made some efforts to address negative press regarding trademark disputes, environmental and social sustainability issues, and compliance with national regulations.

For example, Shein published its supply chain transparency statement on its website in September 2021 as a response to external suspicions over its use of forced and child labour. In addition, Shein has implemented an incentivising recycling programme that encourages consumers to bring in unwanted clothes to pop-up and campus events in exchange for Shein gift cards as a response to criticism of its textile waste. Additionally, Shein uses solar-powered vehicles to transport products and is beginning to use recycled fibres in its products, both of which will reduce its environmental impact.

Even if Shein does not have specific metrics to effectively report its efforts towards sustainability at the moment, Euromonitor International predicts that its share of the apparel and footwear market in the US will continue to grow in 2022 and beyond. First of all, the demand for its fashionable affordable clothing is still going strong among young Americans, and secondly, the Chinese company appears to be taking steps to improve its brand image which will be necessary to earn long-term growth, and appeal to a wider range of consumers.

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