Shein: The reasons for the success of the Chinese fashion brand that rocked the pandemic

BBC News Brazil

It’s a common scene on YouTube, TikTok and Instagram: A teenage girl dumps a bunch of Shein clothes on her bed and tries on each piece to show it off to her followers.

The Chinese fast fashion brand’s popularity exploded during the pandemic. But if you’re over 30, you’ve probably never heard of it.

With an eye on buyers concerned about trends (and costs), the giant operates exclusively online and adds a staggering 6,000 new items to its catalog daily.

But it is also the target of criticism about its environmental impact, lack of transparency and accusations that it copies small designers, which Shein denies.

Below, we explain the reasons behind the company’s huge success.

1 – IT’S A CHEAP BRAND: R$ 58 IS THE AVERAGE PRICE OF ITS PRODUCTS

Sheinside’s little-known founders started their partnership in 2008, led by entrepreneur Chris Xu, who worked in digital marketing and sold wedding dresses online.

With an abbreviated name, Shein (pronounced She-in), the company took on its current form five years later.

Although headquartered in China, the company mainly targets customers in the US, Europe and Australia with its tops, bikinis and dresses at low prices — R$58 on average.

Today, it is one of the biggest names in fast fashion, shipping products to 220 countries. The Covid-19 crisis gave the company a boost in sales, says Richard Lim, president of independent consultancy Retail Economics.

“Os lockdowns it meant that many consumers spent more time surfing online, and that helped to expand their presence and reach a wider audience faster.”

Although the company does not release financial information, data provider CB Insights estimates that Shein’s sales reached 63.5 billion yuan ($54.4 billion) in 2020.

But the prices of Shein’s products have also raised questions about its environmental footprint, as have many of its rivals.

It’s a big challenge, with the fashion industry accounting for up to 8% of global carbon emissions, according to a study by the United Nations.

Roberta Lee, a sustainable fashion designer, points out that Shein and other fast fashion brands they often use polyester fabrics, which depend on “oil and coal extraction” to be manufactured and do not biodegrade like natural materials.

The Chinese brand insists its method of producing clothes in small batches is more efficient. A spokesman said its business model “balances the wants and needs of consumers and the inventory process.”

The company also says it wants to use more recycled fabrics and that it employs a printing technology for graphics and prints that is less polluting than traditional.

2 – A LOT VARIETY: 600 THOUSAND PRODUCTS FOR SALE

At any given time, Shein has up to 600,000 products for sale. It has thousands of third-party suppliers, as well as around 200 contract manufacturers, close to its Guangzhou headquarters.

In what Chinese technology expert and author Matthew Brennan defined as “real-time retailing,” smaller companies along their supply chain are fed information on trends or the performance of certain products.

Based on this data, they produce a batch of 50 to 100 items of a style. If it goes well? Shein asks for more. If not, it is discontinued.

Shein can create a new item in about 25 days. For many retailers, it can take months. The company accelerated the “test and repeat” model, made famous by companies like H&M and Zara owner Inditex.

Only 6% of Shein’s stock catalog remains for sale for more than 90 days, the BBC learned.

The company ships orders to its customers directly, primarily from a 1.5 million m² warehouse on the outskirts of Guangzhou.

But their deliveries typically take at least a week to arrive in markets like the US and UK, compared to competitors that offer next-day delivery.

3 – IT IS VERY POPULAR ON SOCIAL NETWORKS: 250 MILLION FOLLOWERS

Using an army of influencers, from student “ambassadors” to reality TV stars, Shein has amassed more than 250 million followers on its social media channels.

Shein’s online presence has driven her success “as she grows brand awareness and engagement” with consumers, says Emily Salter, retail analyst at GlobalData.

Targeting advertising and sponsoring influencers on Instagram and TikTok helped make it relevant among younger shoppers. The company also performs live shows on its platforms to promote its products.

“This is less used by Western brands, but it has huge potential to boost sales, as evidenced in China,” says Salter. However, the use of customer data has raised concerns in the UK.

Shein was recently accused in the UK of encouraging customers to provide personal data in exchange for discounts and other rewards.

British Foreign Affairs Committee chairman Tom Tugendhat said: “Millions of people are giving up their personal details in exchange for cheap clothes. When the price is really good, you have to ask yourself who is really paying and how.”

4 – A HUGE CREATION TEAM: 200 DESIGNERS

Creating a colossal range of products and styles quickly requires Shein to employ 200 designers out of more than 7,000 employees.

But the brand has been accused of copyright infringement and faces lawsuits from companies like the maker of Dr. Martens boots, although it denies any wrongdoing.

A senior executive at Shein told the BBC that it also has a team that reviews new designs from its suppliers before they arrive on the site, to try to filter out any rights-infringement issues, and said the company takes this matter seriously.

Although the brand has paid more than $1 million (£5.5 million) to independent designers so far, it is still the target of plagiarism charges from smaller companies.

Some claim that Shein allegedly copied their creations and sold similar items at a lower cost.

Shein recently held a competition for young designers with a $100,000 (BRL 550,000) prize in an attempt to improve its image.

In addition, a recent BBC News investigation revealed that job advertisements for workers in Shein’s factories and warehouses on Chinese recruitment websites said that people of certain ethnic origins, including Uighurs, should not apply.

Shein said it does not fund or approve the ads and is committed to “maintaining high standards of work”.

A spokesperson for Shein told the BBC that she has “a zero tolerance policy for forced and child labor and discrimination”.