ANALYSIS
Why does Shein continue to escape scrutiny ?
The Chinese fast fashion giant may be one of the most downloaded fashion apps around the world , but it continues to maintain a low corporate profile . By Phil Wiggenraad
A sk any consumer to name a fast fashion retailer and they probably think of H & M , Zara or Gap . Chances are not many will point towards Chinese online brand Shein . Yet , Shein was the most downloaded fashion shopping app on Apple ’ s app store in Australia at the end of March 2021 . It also frequently ranks among the top 10 in countries as far afield as the US , France , Russia , Brazil and Singapore .
Shein is a somewhat secretive company that prefers to keep a low corporate profile . However , it recently lifted the lid on the scale of its business by disclosing that it notched up sales of RMB65.3 billion ( US $ 10 billion ) in 2020 . That comfortably makes it the world ’ s largest online fashion retailer of selfbranded products .
Ultimately , Shein aims to become the “ largest online wardrobe company around the world ”. But what are the secrets behind its success , and why is it so keen to stay out of the limelight ?
International focus from day one Shein was founded by American-born Chinese entrepreneur Chris Xu , who remains as CEO . Xu had been working in a trading company in Nanjing , but was keen to branch out on his own . In 2008 , he launched a fashion e-commerce site – She Inside – as a way to target consumers who were tired of waiting in lines in stores or unable to find their specific size .
Thanks to its fashionable designs and low prices , the site quickly gained traction . It achieved sales of US $ 50 million within four years and also became an early adopter of using influencers on social media to drive sales . In 2015 , the Nanjing-based company shortened its brand name to Shein and adopted the slogan “ She in , shine out ”.
What is really striking about Shein ’ s growth over the last decade is that it has been largely achieved by focusing on overseas customers . Shein is actually an unfamiliar name in China , where young shoppers prefer to buy low-priced fashion from Alibaba-owned Taobao or , more recently , social buying platform Pinduoduo .
Fast fashion , but slow deliveries Shein focuses on womenswear , but it also sells menswear , childrenswear and beauty products . The site has resonated particularly well with Gen Z consumers , born in the mid-90s or later , who value its frequent product updates , low prices and discount codes .
The retailer claims that 1,000 new styles are uploaded onto its app each day , with prices generally around half those of Zara . Sourcing costs are kept to a minimum by leveraging China ’ s manufacturing base .
Any consumer research pointing towards the importance of fulfilment in the online shopping experience should probably ignore the success of Shein and its completely underwhelming delivery service . Shipments to US shoppers typically take 10 to 15 days , as products are first shipped from China to a warehouse in Los Angeles , before being sent out via the regular post . Shipments to Australia take a minimum of two weeks , according to the site .
None of this makes a difference to Shein ’ s Gen Z target market , who are often dealing with budget constraints and willing to put up with slow deliveries in order to get their hands on the latest fashions . It is therefore not surprising to see that the site is reported to have an industry-leading customer return rate of over 30 per cent . ►
May 2021 www . insideretail . com . au | 31