How Shein Became the World’s Largest Online Fashion Company

According to Coresight Research, it generated estimated revenue of $ 10 billion in 2020.

This represents a 250% increase in turnover in one year. Meanwhile, the revenues of online competitors Asos and Boohoo reached $ 4.4 billion and $ 2.4 billion respectively in 2020.

So why has he been so successful?

“It changed the way fashion is produced,” said Erin Schmidt, senior analyst at Coresight Research, in a recent phone conversation with Insider.

The company operates an on-demand business model.

This means that new products are created in small batches (around 100 items) and production is only ramped up according to their popularity.

There is less garment waste because the company does not create large quantities of products that customers do not want.

It uses algorithms and data science to identify new trends. According to Coresight, he adds an average of 2,800 new styles to his website every week.

For comparison, UK-based fast fashion rival Boohoo adds around 500 styles per week.

This rapid approach is possible due to its unique configuration of the supply chain.

Xu created a close relationship with his suppliers from the start, according to Schmidt, doing something that can sometimes seem drastic in this part of the world – paying them on time.

In return, factories are required to use Shein’s supply chain management software, which allows the company to closely monitor the manufacturing process and share real-time customer research data with suppliers to guide design and production.

According to Bloomberg, manufacturers should be no more than a five-hour drive from its supply center in Guangzhou.

Source: Bloomberg

They should also be able to complete the design and production process in as little as 10 days.

It’s significantly faster than its competition, especially traditional rivals like Zara which typically have a five week turnaround time.

Its price is also a big part of the appeal. It’s just “ridiculously low,” Schmidt said.

Prices start at under $ 1 for accessories and you can easily buy a dress or sweater for under $ 10.

This has helped create a subculture of internet shoppers, who are often teenagers, posting “transport” videos of Shein on TikTok and Instagram.

Such videos are shared widely on social media and illustrate how many items you can buy for $ 100, for example. This is free marketing for the brand and one of the main reasons for its success on social media.

He has 21.4 million followers on Instagram and 2.4 million on TikTok.

Its algorithm-based design process has also led to major incidents in the past.

This year, it sparked controversy over the sale of a necklace with a swastika, which she said was meant to represent a Buddhist symbol rather than a Nazi swastika.

He was also called upon to list Muslim prayer rugs on his site, which were advertised as “decorative rugs”. Shein apologized via a statement posted on Instagram. He also removed the prayer rug items from his site.