Shein: The secretive Chinese upstart ‘making fast fashion look slow’

“It kind of becomes a habit,”The student at Hong Kong University, aged 20, said that he was happy. “Before sleeping, I’m just like, ‘Okay, check in.'”

The platform Sachan is using belongs to a Chinese brand called Shein — pronounced “She In” — which has rapidly attracted a global army of teen fans on TikTok.

“They’re making fast fashion look slow,”Erin Schmidt is a senior analyst at Coresight Research. Coresight Research is a global advisory firm and research firm that specializes on technology and retail. “They’ve changed the model.”

Sachan uses the Shein app every day to earn points. The more points you have, the more you save on purchases. Shein gives them to customers who open the app, watch live streams, and enter. outfit design contests.

“It is pretty addictive,”Sachan described the experience like playing a mobile game.

Shein’s ability lure users to its platform, along with its fast production process, bargain pricing, and data-driven product offerings, is one of its main ingredients to success.

“I just stopped buying from H&M when I started using Shein,”Sachan, who frequents the site to find new accessories, once scored a necklace at 9 Hong Kong dollars ($1.20).

“Because I was getting the same things that I saw at H&M, but like, for cheaper.”

A rising star

Shein was born under a different name — ZZKKO — in China, where it was started in 2008 by Chris Xu. Coresight Research claims that his experience as a marketing and SEO consultant was instrumental in the creation of the site’s powerful algorithms.

Schmidt stated that initially, the company sold only wedding dresses. Later, it expanded to womenswear and adopted the name. “Sheinside.”The company was founded in 2015 rebrandedIt stated again that it needed a name that was easy to remember and easier to search for online.
Guests attending a Shein pop-up event in May 2019 in London.

The pandemic has now effected Shein’s growth tremendously and helped it win international acclaim. It was the world’s largest online-only retailer as of October 2013. fashionEuromonitor International measures the company’s sales of goods under its own brand. The research firm declined further information, stating that the finding was part a proprietary project.

Shein competes with Zara and H&M for customers who want the latest trends for less, and all three companies sell their own branded goods. However, the two have been in business together for many years. Brick-and mortar stores are also owned and operated by heavyweights who cater to a wider client base and sell at slightly higher pricing.

Shein’s direct competition comes from British fast food fashionBoohoo and ASOS are online retailers that target young female shoppers. They also tend to have more affordable products.

Shein’s application was downloaded more than 8 million times worldwide in the first half. It overtook Amazon as America’s most-installed shopping app across Google Play and App Store in May, according to App Annie and Sensor Tower.

Shein’s app keeps users coming back by rewarding them for almost everything. From logging in every day to watching live-streams to entering, to logging in each night. outfit design contests. Credit: SHEIN

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Amazon has regained its crown. “daily installs between the two apps since then have largely remained close,”Craig Chapple, a strategist in mobile insights for Europe, Africa, and the Middle East for Sensor Tower, said:

In recent months, Shein “has really exploded onto the scene,”Schmidt. “Everybody wants [to know] everything that they possibly can about Shein.”

They might be disappointed. Despite its success, Shein is notoriously secretive. It is one of China’s most important privately-held businesses and little is known about its inner workings. According to PitchBook Shein’s valuation was $15 billion in August 2013. That had doubled to $30 billion by the end of last summer, with an annual revenue of $10 billion. BloombergReports were made in June, citing unidentified sources.
Steve Aoki performing onstage at a Shein event in Los Angeles earlier this year.

The firm’s backers include prominent investors like Sequoia Capital China or Tiger Global. Shein declined to be interviewed and did not respond when asked for specific details. Sequoia declined to interview Tiger Global.

A tight spot

Shein presents itself as a global business with a strong emphasis on distribution. It ships to more that 220 countries and territories. Its website does not mention its history or where it is based. statingIt is only what it is “an international”firm. Some have suggested that the retailer intentionally minimizes its Chinese roots in light of rising political controversy and biases.

“Given the current climate of geopolitical tensions, it can … make sense for Chinese entities to lay low,”Matthew Brennan, who writes about Chinese technology and is the founder China Channel, said that he believes in the importance of China Channel. “They just want to do business. This is something that they don’t want to have to deal with. And so I don’t think we can blame Shein for taking that option.”

A selection of Shein apparel and accessories displayed on its app in Hong Kong.

However, the murkiness can be distracting. Some customers, such as Sachan, have expressed concerns over the firm’s lack of transparency around how it produces its goods — and sells them at a low cost — as well as where it sources its materials.

Experts say it is difficult to verify the company’s impressive numbers. However they point out that other metrics like app downloads can be a solid indicator of a brand’s reach, if any, sales.

Lightning-fast fashion

Shein has made a name by appealing to young women with affordable and fashionable clothing, including $6 crop tops for girls and $9 minidresses for them. Similar to ASOS or Boohoo. Shein heavily relies on influencer marketing. This includes partnering up with internet celebrities and stars like Katy PerryAnd Nick JonasTo expand its reach.

This brand is particularly popular among Gen Z shoppers on TikTok where it has become a fashion for users to post $1,000 Shein. “hauls,”Large purchases. This buzz is a result of Shein’s affiliate programs, which reward influencers for spreading the word about its products.

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It is also very adept at keeping users on its platform. It hosted a virtual conference in September. fashionApp Annie’s Lexi Sydow, head marketing insights, said that it was able to show only on its app, which may have helped it attract more users. Ellie Goulding, Grammy-nominated, was among the performers.

“They’re just so far ahead in terms of user experience,” said Brennan. “They mix together media and entertainment into the experience, and user-generated content and reviews.”

A multibillion-dollar shopping obsession goes mainstream in China

Analysts call it the “Key Differentiator”. “real-time retail.”

They say that Shein has come up with an in-house algorithm that trawls the web — including its own massive customer database — to find out what fashionWhat items are most popular in search and what people respond to on other websites?

Experts claim that this data is used by the design team to create new items. Even in the fast-paced world of today, it is possible to remain focused. fashionShein is prolific: dropsAs many as 500 fashionBoohoo has many products, and releases them all daily over a week.
Katy Perry speaking at a Shein event in May 2020.
Shein has also been able to take advantage China’s manufacturing prowess to reduce its lead times. According to researchers, its production schedule is only three to seven days compared to the average of seven days. three weeksZara is one of the players who disclosed it.

Experts believe that Shein’s suppliers use the back-end software of the company, which allows them to immediately get information about user clicks and orders.

“They’ve integrated their systems with their factory,”Schmidt. “Based off of what is trending, like, what clicks, what sells, what starts to trend … the algorithm goes to the factory and says: ‘Start ordering material, start producing.’ So they’ve essentially cut out all of the middlemen.”

Other Chinese companies have also heavily invested in smart manufacturing. For example, last year Alibaba(*(( )BABAAn AI-powered processing system that helps small businesses streamline their apparel production processes rolled outShein is also careful to hedge its bets and only makes small batches of each item until there is demand.

Coresight Research

“If a design sells out quickly, Shein places a large order of the product,”. reportThere are sustainability issues. Like other fast foods, sustainability concerns are also present. “If it does not sell out quickly, Shein sells the remaining pieces and abandons the design.”

Some customers avoid Shein, which is a problem for retailersfashionSome are concerned about the environmental impact of the production process, while others feel the prices are too high to resist. Sachan, on the other hand, mentioned concerns about waste and overconsumption as reasons she now tries not to shop on the app as much as she feels compelled each day to log in. Change the game

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Shein does not have a significant presence in mainland China, which is a huge market.

The company has a hard time marketing itself in its country. This is due to a variety of reasons, including the fact that it must compete with Alibaba, a long-standing industry leader.

Schmidt.

“It’s not lucrative for them to sell in China,”Shein instead focuses on exports. “[And] these products that would seem cheap to us are not as cheap to [consumers] in their home country.”

Australia, the United States, Europe and the Middle East are key markets. Shein does not disclose its top markets.namingApp Annie recently reported that the app has also gained momentum in Latin America. App downloads in Brazil have risen by 988% in the past 12 months, compared with the previous year.
Tinashe attending a Shein festival in Los Angeles in May.

The brand remains a fan favorite even though it was kicked out of India last summer in a crackdown against dozens of apps. Last month,

Amazon Prime Day Shopping Festival, causing excitement among customersit returned to IndiaBrennan, the author of the book, suggested that Shein’s rise could be compared with TikTok in some ways.
Amazon is helping a Chinese upstart make a comeback in India after its app was banned

He spoke out, reflecting on how the video app was viewed before it became a worldwide sensation.”Attention Factory: The Story of TikTok and China’s ByteDance.”

“I see so many similarities,”— Anagha Subhash Nair contributed to this report.

“It was viewed as something that was just for Gen Z. It was sort of viewed as frivolous entertainment … I think the competitors were looking at it similarly, and not taking it as seriously as they should have. And I’m sure that platforms like YouTube and Instagram much regret that now.”

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