Fast fashion may not have the same buzz it had a decade ago, but that doesn’t mean investors have lost interest. Shein, Gen Z’s favorite online clothing retailer, is now worth as much as General Electric and more than Zara and H&M combined.
Shein recently raised a financing round at a private market valuation of $100 billion, Bloomberg and The Wall Street Journal reported on April 4, a figure unheard of among fashion companies. Shein’s listed rivals, Zara and H&M, are much less valued. Zara’s parent company, Spain’s Inditex Group, has a market capitalization of around $66 billion, while Sweden’s H&M is worth just $20 billion.
Based in Guangzhou, China, Shein has raised between $1 billion and $2 billion from new investors, including private equity firm General Atlantic, and its existing shareholders, Sequoia and Tiger Global Management, through The Wall Street Journal. The fundraiser officially made Shein the third most valuable private company in the world, after TikTok parent company ByteDance and SpaceX, according to CB Insights, a private market research company. (SpaceX was the last valued at $100 billion in October 2021.)
“No other fashion or pure-play start-up has a valuation in this range,” said Sucharita Kodali, retail industry analyst at Forrester, a market research firm. “The valuation suggests some investors believe it will be one of the biggest fashion brands in the world for a long time into the future.
Shein takes the fast fashion model to the next level
Shein was founded in 2008 by Chinese entrepreneur Chris Xu, initially as a distributor that sources products from wholesale apparel factories in China and sells them worldwide through its website. The company itself was not involved in the design or manufacture at first. Over time, he gradually built up a team of more than 1,000 creators and established supply relationships with approximately 3,000 factories in China. It has also developed big data-based forecasting tools that can quickly determine the production quantity based on the best-selling new styles.
Shein follows the tried and tested fast fashion rule of churning out endless styles off the runway at rock bottom prices, but takes it to the next level. According to its website, Shein launches 1,000 new products every day. (Zara releases 500 new designs every week). Most of them are price between $8 and $30. This is 30 to 50% less than comparable pieces sold by Zara and H&M.
Thanks to its all-digital retail model, Shein has seen its popularity skyrocket during the pandemic as more people turn to online shopping. In 2020, Shein’s global sales doubled to $10 billion, about half of Inditex Group’s. In May 2021, Shein overtook Amazon as the most downloaded shopping app in the US Analysts believe Shein’s revenue is on track to surpass Inditex’s this year.
Shein did not respond to a press request confirming his latest valuation figure. In May 2021, the company told reporters it was last valued at “several billion dollars” and had no intention of going public.