Sort of strange reading all the praise here like Shein isn't literally Temu for clothes as well as a complete disaster for the environment, pumping out thousands of tonnes of what is essentially land-fill garbage every week like all the other fast fashion companies but on a much bigger scale.
Suppose the tech is good behind the scenes though, am I right guys?
Fun fact for the curious: their name is actually pronounced Shee-in, not Shine. I had been using the latter for the better part of a year before being corrected.
Shein May Open Up ‘Supply Chain As a Service’ to Brands and Designers
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The small-batch, on-demand manufacturing model has been the bread and butter for Shein’s rapid growth, with the e-commerce retailer reportedly making more than $30 billion in revenue in 2023.
Partnering with roughly 5,400 third-party contract manufacturers in China, Shein can churn out tens of thousands of new styles daily. The company places orders to suppliers to be delivered in days, shipping roughly 5,000 metric tons of goods via air freight per day, according to data from Cargo Facts Consulting.
The fashion firm also leverages real-time data to quickly analyze demand and replenishes orders as needed, while also allowing it to quickly boost production of popular items and drop products that do not sell as expected. Using this data, Shein can reduce storage costs and limit inventory waste—further allowing the company to maintain low prices in the form of $10 dresses and $5 shirts.
As someone with not too deep knowledge into the fashion industry, isn't Shein basically the same as H&M, which has sustained itself for more than 70 years? How are they different? Both seem to have a focus on fast fashion, although Shein seems to focus more on online sales compared to H&M.
SHEIN has experienced explosive growth through obscenely low prices, achieved by exploiting trade rules (de minimis value to offer free shipping), forced labor in manufacturing, ghost shifts, plagiarism, use of garbage materials (incl. cotton alleged to be created via slave labor), and "just in time" manufacturing habits that triple-down on items that sell.[1] Not to mention a gamified app pandering to a very addicted audience (average SHEIN shopper is 35 and spends 60% more than most folks per month on clothes)[2] and seems to have a "I shouldn't have to pay what things cost to manufacture, and whatever I want in my size shouldn't cost me more" attitude re: clothing.
H&M has positioned itself as more of an "eco friendly" and "fair wages" player but as a fast fashion retailer, has had accusations of similar practices in the past.
SHEIN seems a little different due to the nature, scale, and shameless lying infused in their approach. Their actions are orders of magnitude more intense even the grey zone manufacturing practices of Forever 21/Zara. Goes without saying no fast fashion is "ethical" by any stretch, but SHEIN is on another level.
Shein is basically a polyester company, as well as an even more egregious design thief. This makes them faster than the rest, as well as environmentally and socially undesirable.
The difference is in the way they do logistics and on-demand/just-in-time production. Shein is deeply integrated with its suppliers - H&M and similar are not.
Traditional retail - like H&M - has a markup of around factor 10 (meaning if something is 100 in the store, the factory/shipping company gets 10) - and supplier lead times of 3-6 months.
Shein has much lower markup and lead times of down to under a day.
SHEIN is more like Urban Outfitters with the TikTok trendy throttle turned up to 10. Everything is obscenely cheap and not intended to be worn more than 5-10 times and sold for more than a season.
In the same way that Amazon is a book company - Shein is a highly tech-driven fashion company - they use big data/AI/custom systems to manage everything from prediction fashion trends, managing the supply chain and customising the user experience.
> they use big data/AI/custom systems to manage everything from prediction fashion trends, managing the supply chain and customising the user experience.
Please elaborate, ideally with citations that provide sufficient technical detail.
Whereas, in my head:
“Big data” means “we tried to use Hadoop once” or “who needs a DBA? Just load everything into a Snowflake account”
“AI” means “we proxy ChatGPT and start all chats with “You are a helpful fast-fashion retailer…””
“Custom systems” is what every company has, and could be anything from giving the CEO a custom-built RGB-lit gaming rig as a desk PC, to a core company workflow using Excel macros, to what AWS is to Amazon; I can’t say I’ve heard of Shein launching SheinWebServices so that narrows it down somewhat.
No one has the details because they're secret (apart from some legal cases that open the lid slightly [1]). Just about every regular user of Shein will tell you it's the TikTok of fashion retail - the algorithm ruthlessly pumps them more items that they are likely to buy via the website and ads elsewhere. They've developed a process that can create and modify designs of what's popular (of their own products and from stealing designs that people like elsewhere) and start selling it in a few days for hundreds of products a day [2].
> “Custom systems” is what every company has, and could be anything from giving the CEO a custom-built RGB-lit gaming rig as a desk PC, to a core company workflow using Excel macros, to what AWS is to Amazon; I can’t say I’ve heard of Shein launching SheinWebServices so that narrows it down somewhat.
You seem to be dismissive of the words I've used, but the Shein "systems" have allowed them to out grow most of the competitors in a few years - you simply can't sell that much crap and produce and ship it without utilising the latest tech in everything from sales to warehouse management.
> they use big data/AI/custom systems to manage everything from prediction fashion trends, managing the supply chain and customising the user experience.
Innovation? You mean build a customer facing website, built a logistics platform to track inventory/receiving/shipping, built management tool for tracking vendors/suppliers? Excluding AWS, what tech innovation did Amazon do?
Still with a chinese risk, but I believe even for that they've been trying to get less tied to China. It's miles ahead in comparison to PDD, Alibaba and other Chinese firms.
They are the AWS of clothing. Before AWS hosting companies existed, but they sucked and were really limited on how they work, like taking time to boot up servers etc, then AWS came. Similarly, Shein have logistics operations that enable them to ship faster and sort of operate almost like a local brand doing DTC, but with much lower prices and operating costs.
Folks here that typically have no idea about business will likely complain that it's just yet another copycat selling fast fashion, without any knowledge about how it's hard to run the kind of operation that they do and how much logistics they are doing, nor don't understand D2C.
They are so successful that they completely changed the fast fashion landscape. There will be similar companies like it with a similar strategy and this will likely bankrupt the likes of H&M unless they adapt their business model as well.
Agreed - this company - besides having a solid internet retail business - has big potential in being a logistic backend for other fashion brands. None of the existing retailers have the tech chops to do what Shein does in terms of logistics and supplier integration.
That does not make sense per real world profit margins. Broad market retail businesses earn sub 5% profit margins (except Home Depot, which seems to be an exceptionally well run operation).
If you are spending 95%+ of every dollar you earn, then surely you HAVE to be cognizant of waste, logistics, and COGS in order to stay in business.
The big costs are staff and rent. I was referring to the markup from the factory cost to the sticker price - that is very high in clothing. It can still be money losing business if you are not selling enough.
It is only because the retailer cares about factory cost that the retailer can afford the staff and rent. Even paying the relatively low factory cost, the retailer can barely eke out a profit, so they must be discerning about the price to quality ratio of the clothing they are buying to retail to the public.
> Folks here that typically have no idea about business will likely complain that it's just yet another copycat selling fast fashion, without any knowledge about how it's hard to run the kind of operation that they do and how much logistics they are doing, nor don't understand D2C.
Unless there are network effects or high barriers to entry that allow Shein to extract high profit margins at scale, then they are not comparable to a “tech” company.
The article says they have 4.4% profit margin, which means they are in line with existing clothing retailers. They might take business away from their competitors with lower pricing, but their potential seems capped.
Even theoretically, I don’t see a high barrier to entry. Setting up a website and logistics operation seems doable such that there already exist many clothing retailers with similarly low profit margins.
And I don’t see what network effects there would be, any customer can trivially change the website they are buying from and similarly, any textile worker/producing company in the world can sell to another clothing retailer.
If Shein had some super advanced robots that could pump out clothes at competitive quality but at vastly lower prices, then that would be something with high barrier to entry, but then their profit margins would be higher because their COGS would be lower than their competitors.
Suppose the tech is good behind the scenes though, am I right guys?