How Shein beat Amazon at its own game – and reinvented fast fashion
The long read: By connecting China ’s garment factories with western gen-Z customers, Shein ushered in a new era of ‘ultra-fast’ shopping
hundreds of Chinese merchants for allegedly using fake product reviews. Many of the sellers weren’t entirely happy with Amazon either, which required them to abide by an ever-shifting set of policies, and to pay hefty fees for services such as warehousing and order fulfilment.
“This cost is very high,” said Du Tianchi, the founder of an apparel company in China’s Jiangsu province that sells on Amazon and AliExpress. “Once your Amazon storage is out of stock [in the US], you have to replenish it from China, which is time-consuming.”
Rising frustration with Amazon among Chinese sellers opened a window for Shein, which recruited many of them to supply its own platform. But Shein didn’t just try to compete with Amazon: it joined it. The company offers thousands of its own products on headtopics.com
, including some that have become bestsellers.“Amazon whet the palate for online shopping, taught[Americans] how to shop online, and created the habit,” said Allison Malmsten, a China market analyst at Daxue Consulting in Hong Kong. “Shein realised that and decided to optimise it.”
Rather than mimicking Amazon directly, Shein grew by bringing traits of China’s gamified e-commerce market to the rest of the world. Online shopping in the country has evolved into a form of entertainment, featuringlivestreamers, flash sales and enticing pop-ups that compel consumers to scroll through the newest products. Taobao, a domestic Chinese e-commerce platform owned by Alibaba, helped pioneer interactive features such as custom product recommendations, and even built a miniature social network into its app. Shein has used similar components on its platform, including a
points systemthat rewards shoppers for making purchases, leaving reviews and playing minigames.Malmsten said that Shein has learned a lot from the strategies of Chinese e-commerce companies. “Shein brought that style[of shopping] to the west, and it really works with Gen Z,” she said.
After watching the company’s rapid rise, major Chinese tech giants and newer startups are now racing to imitate it. The competition includes ByteDance and Alibaba, which are both working on e-commerce platforms targeting the same international demographic as Shein. Then there are brands like Cider, a Hong Kong-based e-commerce clothing brand backed by the Silicon Valley venture capital firm Andreessen Horowitz. In a headtopics.com
announcing its investment, the firm described Cider as a “marketplace of global factories that makes it possible for users to have more selection than Zara, at the price point of Forever 21, on-demand”.Lin Zhen is a Chinese clothing manufacturer and the head of the largest organisation of Amazon sellers in Fujian, one of China’s main garment-producing provinces. He has sold clothing to consumers in Europe and North America directly since 2011, long before they learned to buy everything from mattresses to toothpaste on Instagram. Today, Lin’s clothing company, Xiamen Ouchengsheng, known as OCS, earns nearly $100m in annual overseas sales, he told Rest of World
.website, and the rest came through AliExpress or selling to other businesses, including Shein.Lin said Shein originally approached OCS because it was one of the top sellers of dresses on AliExpress, Alibaba’s e-commerce platform for markets outside China. Lin said that the company mandated that he produce a certain number of different styles every month, and deliver some in as little as 10 days. “The requirements are kind of high,” he said.
Because of the variety of styles that Shein demands, suppliers that already have a range of production capabilities and function “more like factories” have an easier time working with the company, Lin explained.Lin said he feels positive about what Shein has done for Chinese apparel sellers. The company’s ability to persevere through a number of challenges – worsening tensions between the US and China, global supply chain slowdowns, and an ongoing pandemic – is a result of a “long-term vision” that has included “meticulous supply chain management”, he said.
The secret is Shein’s internal software, which connects its entire business, from design to delivery. “Everything is optimised with big data,” Lin said. Each of Shein’s suppliers gets their own account on the platform. “You can see the current sales, and then it will tell you to stock up more if you sell well, and what you need to do if you don’t sell well. It’s all there.” headtopics.com
The software contains simple design specifications that help manufacturers execute new orders quickly. “A big brand might need a very high-end designer, or a designer with top technology, and even then may only be able to produce 20 or 30 styles a month,” said Lin. “But Shein does not have high design requirements. It is possible that a typical university student could get started designing quickly, and the output could be high.”
Discarded clothes in the Atacama desert, Chile.Photograph: Martin Bernetti/AFP/Getty ImagesA spokesperson for Shein declined to say much about the software, but said the company invests “heavily in training, technology and IT support to help our suppliers become more efficient and profitable”.
For years, European brands such as Zara and H&M have embodiedfast fashion, shortening the route from catwalk to shop window from months to weeks. But Shein isn’t chasing catwalk trends – rather, it often knocks off items seen on TikTok and Instagram, where hype cycles move significantly faster. Whereas Zara typically asks manufacturers to turn around minimum orders of 2,000 items in 30 days, Shein asks for as few as 100 products in as little as 10 days. “They want factories to be much more nimble,” said Lu.
That pressure to produce clothes more rapidly ends up falling on Chinese garment workers, who sew products for Shein during long shifts in poorly regulated workshops, according to reporting by the Chinese media siteSixth Tone. A knitting machine operator at a factory in the city of Zhejiang told Rest of World that, in China’s garment sector, working overtime is “a certainty”.
“Like all the manufacturing industries in China, the number of employees working overtime is basically already saturated,” said the worker, who asked to remain anonymous because they weren’t authorised to speak about their job publicly. “It’s impossible to go to work from nine to five.” (The factory where they work doesn’t supply for Shein, but does manufacture clothes for other foreign brands and for sale on AliExpress.)
In emailed comments, Shein said the company takes “all supply chain matters seriously and is fully committed to upholding high labour standards”. It added that it takes “immediate action” if it identifies that a supplier isn’t adhering to its code of conduct.
Shein’s software-driven model allows it to remain at arm’s length from the labour force actually making the products on its platform. It can also avoid directly managing inventory for almost any of the products it sells, minimising the amount of goods sitting unbought in warehouses.
To convince suppliers to join its system, Shein had to meet only a very basic bar: paying them on time. Receiving timely payments is a huge problem for factories in China, said Malmsten, the market analyst. “They’ve built a lot of loyalty from their suppliers, so they can have more urgency on their orders,” she said. The result is that more than 70% of products on Shein’s website were listed less than three months ago, Malmsten found, compared with 53% at Zara and 40% at H&M. “Shein just kind of blew Zara out of the water,” she said.
There is a downside to Shein working with so many different factories at the same time: similar products are popping up all over the internet. Because some suppliers such as Lin sell through multiple channels, consumers have complained on social media about seeing the same clothes appear on Shein, AliExpress, Amazon and stand-alone e-commerce sites, all at different prices. The duplicated products are often brandless basics such as T-shirts, or knockoffs of items from independent labels and major fashion houses. Since they don’t seem exclusive or unique, consumers are wary about getting duped into paying more than they should.Read more: The Guardian »
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