Image source, Getty Images
- Author, Daniel Thomas, Lora Jones and Lucy Hooker
- Role, Business reporters, BBC News
The largest order 17-year-old Michaela ever made from Shein was £150, when she bought “16 plus items”.
Like millions of others, she’s a big fan of the ultra-fast fashion giant, especially because of its affordable price point.
She also likes how the YouTube influencers she watches offer Shein discount codes, which makes her “buy more.”
Over the past decade, Shein has grown from a little-known brand among older shoppers to one of the largest fast fashion retailers in the world.
The Chinese company – which also sells a huge range of beauty and home products – doubled its profits last year to more than $2 billion, more than Swedish fashion group H&M and Britain’s Primark and Next.
Today it ships to customers in 150 countries around the world.
However, as the company explores a plan to list its shares on the London Stock Exchange, it remains dogged by controversy over its environmental impact and working practices, including allegations of forced labor in its supply chain.
Michaela is aware of the reactions and is particularly concerned about the amount of plastic Shein uses in its packaging.
But she believes most fashion brands face similar criticism and that “not everyone can afford high-quality clothing”.
“So in the back of my mind I feel kind of bad when I buy things, but at the same time it’s convenient,” she told the BBC.
Image source, Getty Images
Shein, pronounced “she-in”, was founded in China in 2008 by entrepreneur Xu Yangtian and started selling wedding dresses online.
It has since grown into a global behemoth, best known for selling trendy clothing, especially to a Gen Z customer base.
A big part of the appeal? The price.
The average cost of a Shein-branded garment is just £7.90 and there are as many as 600,000 items for sale on the online platform at any one time, dwarfing rivals such as Zara or Boohoo.
It has also picked up rivals such as Missguided, while Xu Yangtian, who rarely gives interviews, is now said to be one of China’s richest men.
The real turning point for the brand came during the pandemic, when online shopping took off and Shein’s sales soared, says Louise Déglise-Favre of analysts GlobalData.
The company has also made smart use of social media, recruiting popular influencers and college students to promote its clothing on TikTok and Instagram.
“The brand’s success has coincided with a boom in TikTok use in Europe and the US,” says Ms Déglise-Favre. “The Chinese social media platform has greatly contributed to spreading awareness about Shein’s ultra-affordable proposition.”
It has attracted buyers by having pop stars like Rita Ora and Katy Perry perform at its virtual concerts, but it is also attracting a huge amount of organic, user-generated content.
You may have scrolled past so-called “haul” videos in which young women empty their newly arrived packages and give their candid reviews of crop tops, dresses or beauty blenders from the site.
‘They keep coming back and making purchases’
Shein’s business model is similar to Amazon’s, in that it partners with thousands of third-party suppliers – many in China, Brazil and Turkey – to manufacture its clothing and then ship it from massive, centralized warehouses.
It has also accelerated the “test and repeat” model made famous by other fast fashion giants, including H&M and Zara owner Inditex.
As a result, Shein suppliers produce items in small quantities, of between 100 and 200 pieces, and then produce more of each style that is a hit.
The brand can bring a new item to market in just 25 days, something that would take other retailers months.
It also uses ‘gamification’ strategies to increase customer engagement on its shopping app, which is used by millions of people around the world.
Users receive points and discounts for logging in daily, sharing purchases on social media and referring friends.
“That encourages users to repeat such behavior to earn more rewards and as a result they keep coming back, using the app and making purchases,” said Vilma Todri, associate professor at Emory University’s Goizueta Business School in the US.
Image source, Getty Images
But the criticism Shein received for his working methods was difficult to shake off.
And these concerns are back in the spotlight as the Chinese company explores whether it can list its shares in London in a public offering that could value them at a reported $50 billion.
There are concerns about the environmental impact of mass production of cheap clothing, and the waste it creates.
“We have a zero-tolerance policy towards forced labour,” Shein told the BBC at the time.
The company has pledged to investigate such issues and says it strictly enforces a code of conduct that all its suppliers must sign.
It has also launched a resale platform for shoppers in the US and France to boost its green credentials, while it says producing clothes in smaller batches means very little material goes to waste.
But some say it’s not enough.
Student Jess Gavin, 21, definitely shopped at Shein and got the bug during the pandemic when online fashion shopping was a fun way to pass the time.
She liked the site for tops and swimwear and liked the low prices. But the ethical issues started to worry her and now she no longer shops there at all, opting for second-hand sites Vinted and Depop.
“I definitely think you worry a little less about these things when you’re younger. But I think now we’re more aware of the issues and feel more responsible,” she told the BBC.
According to reports, Shein initially wanted to list its shares in the US, but investors were wary.
The country faces similar problems to Britain, with some saying concerns over environmental, social and governance standards could deter investors.
However, others say that such a large listing in London could be very useful. It could draw more attention to the company’s activities and provide a boost to the UK economy, especially as the London Stock Exchange struggles to attract fast-growing companies.
Michaela cautiously welcomes the idea of the fast fashion giant making Britain its financial home.
“I think it’s fine, as long as they show that they are making an effort to improve their environmental and labor practices.”