image source, Getty Images
- Author, Daniel Thomas, Lora Jones and Lucy Hooker
- Role, Business reporters, BBC News
The biggest order 17-year-old Michaela ever made on Shein was for £150 when she bought “16 plus items”.
Like millions of others, he’s a big fan of the ultra-fast fashion giant, mainly because of how affordable it is.
She also likes how the YouTube influencers she follows offer Shein discount codes, which makes her “shop more.”
Over the past decade, Shein has gone from a little-known brand among older shoppers to one of the biggest fast fashion retailers in the world.
The Chinese firm – which also sells a huge range of beauty and home products – doubled its profits to more than $2bn (£1.6bn) last year, earning more than Swedish fashion group H&M and Britain’s Primark and Next.
Today, it delivers to customers in 150 countries around the world.
But as the company examines a plan to list its shares on the London Stock Exchange, it remains beset by controversy over its environmental impact and labor practices – including allegations of forced labor in its supply chain.
Michaela is aware of the backlash and is particularly concerned about the amount of plastic Shein uses in its packaging.
But he feels that most fashion brands face similar criticism and that “not everyone can afford high-end clothes”.
“So in the back of my mind I feel quite bad about buying 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 to a mostly Gen Z customer base.
A big part of the appeal? Price.
The average price of a Shein-branded garment is just £7.90 and it has up to 600,000 items for sale on its online platform at any one time, dwarfing rivals such as Zara or Boohoo.
It is also underlined by competitors such as Missguided, while Xu Yangtian, who rarely gives interviews, is now considered 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 GlobalData analysts.
The firm also made smart use of social media, recruiting popular influencers and university students to promote its clothing on TikTok and Instagram.
“The success of the brand coincided with the boom in TikTok usage in Europe and the US,” says Ms Déglise-Favre. “The Chinese social media platform has been instrumental in spreading awareness of Shein’s extremely affordable design.”
It has attracted customers by featuring pop stars like Rita Ora and Katy Perry at its virtual concerts, but it also attracts a huge amount of organic user-generated content.
You may have come across so-called “haul” videos of young women unpacking their newly arrived packages and giving their honest reviews of tops, dresses or beauty blenders from the web.
“They keep coming back and buying”
Shein’s business model is similar to Amazon’s in that it works with thousands of third-party suppliers — many of them in China, Brazil and Turkey — to make its clothes and then ships them from giant, centralized warehouses.
It also accelerated the “test and repeat” model made famous by other fast fashion giants including H&M and Zara owner Inditex.
This means that Shein’s suppliers make items in small numbers, between 100-200 pieces, and then make more of whatever style is a hit.
The brand can turn around a new item in just 25 days – which would take other retailers months.
It also uses “gamification” strategies to increase customer engagement with its shopping app, which is used by millions of people around the world.
Users earn points and discounts for logging in daily, sharing purchases on social media and referring friends.
“This encourages users to repeat the behavior to get more rewards, and as a result they keep coming back, engaging with the app and making purchases,” says Vilma Todri, an associate professor at Emory University’s Goizueta Business School in the US.
image source, Getty Images
But the criticism Shein faced over his operating practices was hard to shake.
And those concerns are back in the spotlight as the Chinese firm explores listing its shares in London in a public offering that could value it 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 zero tolerance for forced labour,” Shein told the BBC at the time.
The firm has promised 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 eco-cred, and claims that producing clothes in smaller batches means very little material is wasted.
But some say that’s not enough.
Student Jess Gavin, 21, must have shopped at Shein and got the bug during the pandemic when shopping for fashion online was a fun way to pass the time.
She found the site to be good for tops and swimwear and liked the low prices. But the ethical issues started to worry her and now she won’t shop there at all, opting instead for bazaar sites Vinted and Depop.
“I think you care a little bit less about these things when you’re younger, for sure. But I think now we’re more aware of the issues and feel more responsible,” she told the BBC.
According to reports, Shein originally wanted to list his shares in the US, but investors were wary.
It faces similar difficulties in the UK, where some say concerns over environmental, social and governance standards could deter investors.
Others say that such a large list in London could be very beneficial. It can bring more attention to the company’s operations and provide a boost to the UK economy, especially as the London Stock Exchange tries to attract fast-growing companies.
Michaela tentatively welcomes the idea of a fast fashion giant making Britain its financial home.
“I think it’s good if they show they’re trying to improve their environmental and labor practices.”