Published in · 3 min read · Jun 7, 2022
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Overtook Amazon, Shein is now the most downloaded shopping app in the U.S. since May 2021. Valued at $47 billion for an expected IPO in 2022, its brand story is one you can’t miss. Delving into Shein’s business model and the phenomenon it creates, we can get a glimpse of not only the future of E-commerce, but also consumer behavior at large.
Cheap and trendy, you can not miss
Whenever you search for keywords like hoodies, dresses, t-shirts, Shein is always somewhere in the top search. You look around, comparing styles and prices, and you find yourself going back to Shein’s website. Shein’s story is simple: cheap and trendy. When Shein first came into consumers’ attention, it seemed too good to be true. No one else is selling clothes so trendy at this price. Since then, major social media platforms like Youtube, TikTok, and Instagram are swamped with Shein Haul videos: ridiculous amounts of clothing, most current style, at unbelievably low price.
These haul and outfit videos are highly shareable content, which leads to valuable earned marketing exposure for Shein. With influencers becoming more like celebrities, consumers feel less relatable to their lifestyles. As people’s need for self expression through fashion increases, their budget does not follow. However, Shein is the perfect solution. With its on-demand manufacturing model producing small batches of products, Shein is able to closely follow micro trends while minimizing cost. Using Shein, consumers can actually afford the styles of popular influencers and celebrities. So as consumers’ needs for new purchases arise, Shein is able to quickly fulfill them.
On Demand Business Model: fashion brand or tech company?
Shein’s unique competitive advantage relies on its industry leading digital marketing strategy as well as a highly efficient supply chain system. From need detection and product testing to integrated warehousing and distribution, Shein has a highly digitized operating system. With its independent closed-loop system of marketing, designing, and manufacturing, Shein is able to produce on average 6,000 new styles per day.
As Shein’s founder Chris Xu started his career in SEO, it also serves as a key factor in the brand’s popularity. Emphasizing on search and direct channels, Shein pushes exactly what customers want right in front of their faces. The brand also uses micro influencers, people like you and me, to build a sense of trust and accessibility.
The Paradox: Gen Z’s love hate relationship with fast fashion
Controversies follow Shein’s rise in popularity. As Gen Zs rave about environmentalism and abolition of fast fashion, it does not hinder their obsession with expanding their wardrobe with more and more outfits purchased from Shein. #Sheinhual is among some of the most viewed tags across platforms, and a majority of its content creators are Gen Zs. Ironically, they are also one of the biggest supporting demographics of environmental sustainability.
The core of fast fashion is increased consumption of clothing through short-cycled micro trends. Being the most socially conscious generation as of yet, Gen Zs are very vocal about sustainability. Interestingly, they are also the generation that is most vocal with their self expression and self identity. They wish to express themselves through fashion and that usually means owning more pieces of clothing.
Personal remarks: the opportunity
This paradox may seem hard to solve, but Shein may be able to utilize its business capabilities and social influences to mitigate the problem. The brand can optimize its sustainability potential with automated supply chain and targeted consumer data. With such an efficient supply chain system, Shein knows how to reduce waste with warehousing and transportation. And through its highly popular app, they can utilize their consumer data to help consumers find their most suitable pieces of products instead of creating waste in the trial and deciding process.
