<article>Shein&#8217;s unconventional approach has propelled the Chinese fast-fashion app to a market value far surpassing that of its closest competitors Uniqlo and Zara.
The startup has taken the world by storm by rolling out thousands of new products every day that can be bought for affordable prices. Shirts and bags can go for as little as $5.</article>

Shein&#8217;s unconventional approach has propelled the Chinese fast-fashion app to a market value far surpassing that of its closest competitors Uniqlo and Zara.
The startup has taken the world by storm by rolling out thousands of new products every day that can be bought for affordable prices. Shirts and bags can go for as little as $5.
&#8220;I end up buying a lot because they&#8217;re so cheap and well-designed,&#8221; said a woman living in Tokyo.
Founded by billionaire Chris Xu in 2008, Shein launched its online fashion vending business in 2012, and is now operated by Singapore-based Roadget Business.
The company does not disclose sales figures, but media reports say that it generated around 100 billion yuan ($14.3 billion) in revenue last year, which would be up sixfold from the 16 billion yuan in 2019.
Driving this juggernaut are Shein&#8217;s superior supply chain and deft marketing.
An early September visit to Shein&#8217;s supply chain headquarters in Panyu, a district in the city of Guangzhou, revealed a cluster of people and vehicles &#8212; presumably from suppliers &#8212; by the entrances that weekday afternoon.
&#8220;We&#8217;ve been doing business with Shein for years now,&#8221; said a person identified only as Li, who works at a Guangzhou factory that employs around 200 people. &#8220;Today I&#8217;ve brought about eight samples of clothing.&#8221;
Surrounding Shein&#8217;s supply chain headquarters is a collection of apparel businesses known as &#8220;Shein Village,&#8221; containing over 400 suppliers that work with the company, according to brokerage China Industrial Securities.
Shein &#8220;provides management guidance at every stage, including orders, inventories, production progress and accounting,&#8221; said the brokerage.
Apart from Guangzhou, Shein also fields networks of small workshops to midsize garment factories in Zhejiang and Jiangxi provinces. Products are mass produced in three weeks from designs.
&#8220;The first samples must be delivered a week after receiving the order, and there are cases when the turnaround times are shorter still,&#8221; said Li.
Shein first produces a minimum of 100 to 200 units of a product, then ramps up output if the product sells well. This contrasts with larger rivals, which typically make thousands to tens of thousands units of a particular product, according to Shein.
The company is able to accommodate small-lot orders that are passed over by large plants, allowing it to quickly cycle in clothes matching the latest fashion trends, regardless of the cultural tastes of the target market.
Shein has attained a valuation of $100 billion, according to CB Insights. Big-name venture capital firms such as Sequoia Capital China and Tiger Global Management have backed the startup.
By comparison, Inditex, the Spanish operator of Zara, has a market capitalization of about 67 billion euros ($66.5 billion), while Uniqlo&#8217;s Japanese parent Fast Retailing has a market value of around 8.6 trillion yen ($60.7 billion).
The second prong of Shein&#8217;s successful business model is its marketing strategy. The company operates in over 150 markets, including the U.S., the U.K., Mexico, Thailand and Japan. In most of those markets, its is seen as an American brand.
An army of over 20,000 online influencers boost brand awareness. To release thousands of new products, Shein hires hundreds of designers in China, the U.S. and Singapore and also collaborates with outside independent designers.
Although Shein was founded in China, it does not sell its wares inside its home country, where the app is not accessible. Instead of confronting a mainland market already saturated with online vendors selling inexpensive clothes, the company targeted overseas customers from the beginning.
&#8220;We turned our focus on Western markets where online shopping was not as common,&#8221; said a Shein representative.
Downloads of Shein&#8217;s app in the U.S. surpassed those of Amazon.com for the first time ever in the second quarter, according to U.S. analytics firm Sensor Tower.
And Shein is looking to expand further, with plans to spend 15 billion yuan on a headquarters in Guangzhou, disclosures by city officials in February show.
As Shein has expanded its footprint, it has drawn critics who vocally question its sense of social responsibility. Not only is the startup facing multiple claims of copyright infringement, but fast fashion itself is <a href="https://asia.nikkei.com/Business/Business-Spotlight/From-China-to-India-Asia-braces-for-EU-plan-to-kill-fast-fashion">increasingly under pressure</a> in light of the industry&#8217;s impact on social and environmental sustainability.
&#8220;Suppliers are progressively being asked to increase product quality, but the prices of the orders haven&#8217;t changed much,&#8221; said Li. &#8220;Our profits are diminishing.&#8221;
The article was first published on <a href="https://asia.nikkei.com/Business/Startups/How-China-s-fast-fashion-app-Shein-beat-Uniqlo-s-market-value">Nikkei Asia</a>.

How Chinese fast-fashion app Shein beat Uniqlo and Zara in market value

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