Shein

This post discusses the remarkable success of the Chinese online shopping company, Shein. It draws from this recent FT article - (https://www.ft.com/content/ed0c9a35-7616-4b02-ac59-aac0ac154324)

In today's budding pre-covid society-online shopping has reached unimaginable new heights. With few things to occupy their time, most people are bored... really bored. Apps like Instagram and Tiktok provide a brief escape, but the truth is that the pandemic and lockdowns, masks, and vaccines are all still very real. Also, people who have more money (than they would without the pandemic) have no idea where to spend it. Online Shopping provides the perfect outlet.

 

 Consumers gain access to a large host of brands that they couldn't physically visit pre-pandemic, equating to more choices, better deals, no need to leave their homes. Companies also benefit, as money used to fund store rents, electricity, and office spaces could be saved as excess profit or improve the product. 

 

 One industry that has massively benefited through the completely “virtual" revolution is clothing, specifically the fast fashion industry. A notable example is Shein. The Chinese retail organization's rapid ascent to the top, overtaking giants such as Zara and H&M in sales (2021), is nothing short of stunning. 

 

 But what makes Shein so appealing to shoppers? 

 

 Could it be its prices? Or how often it stocks new inventory? Or how "trendy" its clothes are? Or it's dominance on social media platforms (especially TikTok)? Or is it just pure luck?

 

 The truth is that all of this has acted as building blocks that aided the companies growth. The brand model functions similarly to Zara and other fast-fashion retailers: large amounts of market research and data are collected to understand changes in consumer tastes; new designs then churned out rapidly; and clothes produced in small batches to reduce unsold inventory, at the end of the season. Resulting in two main expenditure areas: production and shipping.

This is where Shein differentiates from its competitors. Its business model takes advantage of China's lower taxes and large subsidies (available to native companies) to reduce production costs. It also benefits from the low import taxes imposed on Chinese companies ( reducing shipping costs). Moreover, the completely online model of the brand means it does not have to worry about operating costs for stores. 

Shein's luck has created a situation where it pays a fraction of its competitors. Using all these, it has managed to undercut its European and American competition by providing cheap clothes for even cheaper prices along with greater variety. For comparison, Shein adds 1000 clothes each day, Zara adds 500 a week. It's FAST fashion.

 Shein’s success, though, comes at a significant cost. There is growing scrutiny on Shein's ethical practices in both production and crediting designers it has taken inspiration from. Remember the short attention spans I mentioned earlier? That extends to clothes. Trend cycles have shortened to mere weeks. One week something is 'in' the next it isn't. This coupled with low prices, means that consumers don't feel any reluctance in disposing of these clothes to purchase newer ones. This creates several environmental problems.

 A question we must ask ourselves now is; how long we as consumers can continue to make the trade-off with the environment for our cheap prices before the costs become too high. More and more industries face pressure to better their environmental standards and work towards a more sustainable future. The fashion industry has remained relatively unscathed, while still being a large contributor to our environmental woes- accounting for 5% of the world's carbon emissions. 

The following article talks more about the issues with fast fashion if you would like to learn more:

(https://www.nytimes.com/2019/09/03/books/review/how-fast-fashion-is-destroying-the-planet.html)