Shein, low prices, new trending models every week
“They achieved something impossible: very low prices, trendy models in ultra-fast times. Zara dictates fashion and changes windows frequently, but Shein offers new products every day at the lowest prices on the market – says Sucharita Kodali, an analyst at Forrester – reaches young people, the fickle ones who buy without thinking. In social networks, photos and videos of their clothes are put and in their app, the discounts are random, which adds excitement to the experience, which creates a real obsession “. Shein, the Chinese start-up, is now more of a “star” than a “start” with its 250 million followers. She is valued at something like 100,000 million dollars. Despite the doubts about the quality of the products, despite the predictable criticisms for plagiarism and the many question marks on the conditions of the workers, the new reality attracts millions of young people every day, shaking the “fast fashion” to the base. Sector valued at over 1.4 billion euros and of which the Spanish Inditex is one of the undisputed leaders.
Shein, a formidable success in over 50 countries
With a business model based on that of Zara e algorithms similar to those of the e-commerce giant Alibaba or the TikTok application, the group is having tremendous success, particularly in the United States. Shein, with its clothes sold only online, is the most downloaded shopping app in 50 countries and, since the beginning of the month, has held the first place in the general ranking of the United States, ahead of TikTok, Instagram, Twitter and Amazon. According to Earnest Research, in the first three months of 2022 it made about a third of total clothing sales in the United States, surpassing the sum of H&M (17%) and Inditex (10%). It is also the third The most popular emerging company in the world, after the Chinese ByteDance, mother of TikTok, and SpaceX, of Elon Musk. Its recent valuation is higher than the sum of the market capitalizations of Inditex (64,000 million euros) and H&M (20,600 million euros).
Shein, success but little transparency
But the other side of the coin shows a somewhat too opaque reality, to the point that not even the US investment funds lenders (including Tiger Global and General Atlantic) give information. We only know that the company was created in Nanjing in 2008 under the name of SheInside. The business, which began with wedding dresses, really kicked off in 2015, two years after one of its three founders, Xu Yangtian, bought the domain on his own. After the change of name and location in Guangzhou in 2017, the company’s growth was unstoppable. Led by Xu, a search engine optimization (SEO) expert, it exploded into e-commerce especially during the pandemic. Shein does not publish results, but the consulting firm Sinolink Securities estimates sales in 2020 to increase by 250% on an annual basis, reaching about 9.5 billion euros, while in 2021 its revenues exceeded 14.8 billion euros, almost seven times more than before the health crisis.
Shein, automation and artificial intelligence
What is the secret of such success? For Mark Greeven, Professor of Innovation at IMB business school in Lausanne, the key is supply chain management and a commitment to automation and artificial intelligence. Shein is able to offer new fashion items every week and not every season with prices 50% lower on average than the competition. “Shein’s algorithm can predict trends in dozens of markets in real time. Every day, prototypes of thousands of garments appear on its platform and, based on whether users like it or not, it is able to predict the demand and the number of items that will actually be needed. Small orders to the many exclusive producers (over 300) paid quickly “. Public Eye, the Swiss human rights organization denounced the exploitation to which the workers of the entire group are subjected (up to 75 hours of work per week). All analysts agree that if Shein wants to continue growing, he will have to answer many questions and can only do so through the transparency that, at the moment, is lacking.
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