ANALYSIS
Shein hauls A large part of what keeps shoppers coming back is Shein ’ s product designs . What has helped in this area is a designer recruitment program that has been ongoing since 2013 . Essentially , this is a competition where designers can pitch their ideas . If their designs are chosen , they will receive a 30 per cent commission on sales revenue and a long-term collaboration contract .
In a way , the frequent changes to Shein ’ s product catalogue helps to gamify the shopping experience . The daily use of timed discount codes adds an element of FOMO ( fear of missing out ) to the experience . Something that you find on the app today , might not be there tomorrow .
This merchandising strategy has created the phenomenon of ‘ Shein hauls ’, whereby young shoppers use platforms such as Instagram and TikTok to show off their latest fashion buys . Sometimes items may not be as described or have the right fit , but this all adds to the thrill of buying through Shein . With the hashtag # Sheinhaul viewed over a billion times on TikTok , it is pretty clear that this is a very effective marketing tactic to drive traffic to its site and app .
Inclusive fashion Another aspect that cannot be overlooked is Shein ’ s strong position within plus-sized fashion . The online retailer was actually among the first fast fashion brands to really cater to this segment through its ‘ Curve ’ range . This collection consists of thousands of items across tops , bottoms , dresses , denim and swimwear .
Shein ’ s inclusive strategy makes a lot of sense . In the US , plus-sized fashion is said to account for 10 per cent of the overall fashion market — yet younger plus-sized consumers spend 20 per cent less on fashion then their straight size peers . There is therefore a huge opportunity to close that gap , which many traditional fashion brands have not fully grasped .
Shein under fire Not all of Shein ’ s designs have been without controversy though . Last year , the retailer came under fire for selling a swastika necklace . It stated that it had made a “ gigantic mistake ”, that the necklace was meant to represent the Buddhist swastika — a symbol of good fortune . However , it should really have known that such a symbol would not be well-received in markets not familiar with its background .
Around the same time , it was found that Shein had been selling Muslim prayer mats as “ decorative and floral tassel trim mats ”, as well as necklaces with the word ‘ Allah ’ in Arabic — of course very disrespectful to the Muslim community . Some improvement on cultural sensitivities is clearly in order .
The secret sauce The secret sauce behind Shein ’ s success has undoubtedly been its digital marketing capabilities . It has not followed the traditional mold of recruiting high profile and expensive influencers , but instead recruits # Sheingals to join its fashion blogger program and share their favourite looks on social media .
The program is open to fashion bloggers with more than 1,000 followers , who are then sent clothing worth US $ 50-US $ 250 each month . The huge number of smaller scale influencers involved in the program means that on any given day , social media will be overrun with glowing reviews of Shein ’ s fashion . Alongside retargeting tactics , this has proven to be a ruthlessly efficient method of directing a steady stream of Gen Z shoppers towards its site and app .
The darker side of ultra-cheap fast fashion What is striking about Shein ’ s rise is that it runs counter to a lot of narratives that have been told about Gen Z in recent years . According to numerous consumer research studies , Gen Z is a generation for which sustainability is a major concern . However , many online reviews on Shein complain about the poor quality of its clothing , which may only be able to be worn a few times . It should be pretty clear for most shoppers then that such disposable fashion is not exactly an eco-friendly option .
If anything , Shein is a brand that does not take a stand on anything . It deliberately keeps a low profile , no doubt as it does not want to draw attention to how it is able to sell fashion at such incredibly low prices . While the online retailer has a section devoted to corporate social responsibility on its website , it does not give much detail beyond its aim to provide a “ safe , clean , happy and productive environment ” for its workers .
Transparency is also lacking when it comes to the sourcing of its raw materials . China produces 22 per cent of the world ’ s cotton , but as much as 84 per cent of that comes from the Xinjiang region , where there have been allegations about the use of forced labour in the cotton industry . Just recently , H & M came under fire in China for stating that it deliberately does not source cotton from Xinjiang . It seems very unlikely that we will hear anything about this issue from Shein .
Will its relentless growth continue ? All of this has had little impact on Shein ’ s ability to attract external investment . It completed a series E financing round in 2020 , which values the business at US $ 15 billion . Over the years , it has succeeded in bringing on board respected investors and venture capitalists such as IDG Capital , Greenwoods Asset Management and Sequoia Capital .
With the online retailer fast reaching maturity , it seems inevitable that its sales growth rates of 100 per cent will start to tail off . Question marks also remain over whether its Gen Z target market will continue to ignore its lack of transparency about the sourcing and production of its products .
The secret sauce behind Shein ’ s success has undoubtedly been its digital marketing capabilities .
Anti-China sentiment has been on the rise in recent years , having been amplified by the coronavirus as well as political tensions between the US and China . Last year , Shein was one of 59 apps banned by the Indian government , following a border stand-off between India and China . While such action is unlikely to be taken in Western markets , Shein will need to carefully consider how it positions its brand in these sensitive times . �
Phil Wiggenraad is a retail expert who was previously head of research at Hong Kong-based Tofugear and Retail Week in London .
32 | www . insideretail . com . au May 2021