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Shein: The rise and rise of a fashion giant



Shein: The rise and rise of a fashion giant

By Daniel Thomas, Lora Jones & Lucy HookerBusiness reporters, BBC News

Getty Images A model walking on a runway at Shein fashion show wearing an orange topGetty Images

The biggest order 17-year-old Michaela says she ever made on Shein was for £150, when she bought “16 plus items”.

Like millions of others, she’s a huge fan of the ultra-fast fashion giant, mostly because of how affordable it is.

She also likes the way the influencers on YouTube she watches offer Shein discount codes, which makes her “buy more”.

Over the last decade, Shein has gone from a little-known brand among older shoppers to one of the biggest fast fashion retailers globally.

The Chinese-founded firm – which also sells a huge range of beauty and home products – doubled its profits to more than $2bn (£1.6bn) last year, making more than the Swedish fashion group H&M and the UK’s Primark and Next.

Today, it ships to customers in 150 countries across the world.

However, as the company explores a plan to list its shares on the London Stock Exchange, it remains dogged by controversy over its environmental impact and working practices – including allegations of forced labour in its supply chain.

Michaela is aware of the backlash and particularly concerned by the amount of plastic Shein uses in its packaging.

But she feels most fashion brands face similar criticism and that “not everyone can afford high-end clothing”.

“So at the back of my mind I feel quite bad when I purchase things, but at the same time it’s convenient,” she tells the BBC.

Getty Images Natalia Zoppa standing in front of a Shein signGetty Images

Shein partners with influencers and reality TV stars, like Natalia Zoppa, to promote the brand

Shein, pronounced “she-in”, was set up in China in 2008 by entrepreneur Xu Yangtian and started out selling wedding dresses online.

Since then it has grown into a global behemoth, best known for selling on-trend clothing, mostly to a Gen Z customer base.

A big part of the appeal? The price.

The average cost of a Shein-branded clothing item is just £7.90 and at any one time, it has as many as 600,000 items for sale on its online platform, dwarfing rivals like Zara or Boohoo.

It’s also snapped up competitors like Missguided, while Xu Yangtian, who rarely gives interviews, is now said to be one of China’s richest men.

The real turning point for the brand came during the pandemic, when online shopping took off and Shein’s sales soared, says Louise Déglise-Favre from analysts GlobalData.

The firm has also made smart use of social media, recruiting popular influencers and university students to promote its clothing on TikTok and Instagram.

“The brand’s success coincided with a boom in TikTok usage in Europe and the US,” says Ms Déglise-Favre. “The Chinese social media platform participated greatly in spreading awareness about the Shein’s ultra-affordable proposition.”

It has drawn in shoppers by getting pop stars like Rita Ora and Katy Perry to perform at its virtual concerts, but it also attracts a vast amount of organic user-generated content.

You might well have scrolled past so-called “haul” videos of young women emptying out their newly-arrived packages and giving their frank reviews of crop tops, dresses or beauty blenders from the site.

‘They keep coming back, making purchases’

Shein’s business model is similar to Amazon’s, in that it partners with thousands of third-party suppliers – many of them in China, Brazil and Turkey – to manufacture its clothes and then ships them from giant, centralised warehouses.

It has also sped up the “test and repeat” model made famous by other fast fashion giants including H&M and Zara owner Inditex.

This sees Shein suppliers produce items in small numbers, of between 100-200 pieces, and then produce more of any style that is a hit.

The brand can turn around a new item in just 25 days – something that would take other retailers months.

It also uses “gamification” strategies to boost customer engagement on its shopping app which is used by millions of people worldwide.

Users get points and discounts for logging in daily, sharing purchases on social media and referring friends.

“That encourages users to repeat such behaviours to earn more rewards and, as a result, they keep coming back, engaging with the app, and making purchases,” says Vilma Todri, an associate professor at Emory University’s Goizueta Business School in the US.

Getty Images A line of shoppers queuing outside a pop-up Shein storeGetty Images

But the criticism Shein has faced over its operating practices has been hard to shake off.

And those concerns are back in the spotlight as the Chinese firm explores listing its shares in London in a public offering that could value it at a reported $50bn.

There are worries about the environmental impact of mass producing low-cost clothes, and the waste it creates.

Last year, a group of US lawmakers also called for Shein to be investigated over claims that Uyghur forced labour in China is used to make some of the clothes it sells.

“We have zero tolerance for forced labour,” Shein told the BBC at the time.

The firm has promised to investigate such issues and says it strictly enforces a code of conduct, which all of its suppliers must sign up to.

It has also launched a resale platform for shoppers in the US and France to boost its green credentials, while it says producing clothes in smaller batches means very little material goes to waste.

But some say it is not enough.

Jess Gavin Jess GavinJess Gavin

Jess Gavin has stopped buying clothes from Shein

Student Jess Gavin, 21, certainly used to shop at Shein, getting the bug during the pandemic when online fashion shopping was a fun way to pass the time.

She found the site good for tops and swimwear and liked the low prices. But the ethical issues began to concern her and now she won’t shop there at all, opting instead for second-hand sites Vinted and Depop.

“I think you care a little less about these things when you’re younger, for sure. But I guess we’re now more aware of the issues and feel more responsible,” she tells the BBC.

According to reports, Shein initially wanted to list its shares in the US but these plans were derailed due to political tensions.

It’s now facing qualms in the UK, with some saying worries over environmental, social and governance standards could put off investors.

Others say that such a big listing in London could be very beneficial though. It may bring more attention to the company’s operations and provide a boost for the UK economy, particularly as the London Stock Exchange has been struggling to attract fast-growing companies.

Michaela tentatively welcomes the idea of the fast fashion giant making Britain its financial home.

“I think it’s good, as long as they show that they are making an effort to improve their environmental and work practices.”

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