Shein – The mystery behind the largest ecommerce company in the world

“To put it simply, Shein is as mysterious in the Chinese world as it is in the English world.” – Jeffrey W, journalist

When you typically think of fast fashion, names like Pretty Little Thing, ASOS, Missguided spring to mind, but unless you are a social media influencer or a member of Gen Z, you probably won’t have heard about Shein (pronounced She-In).

However, the Chinese company is covertly the biggest fashion brand in the world and recently overtook Amazon to become the most downloaded shopping app in the US.

Its meteoric rise to fashion’s biggest player has been shrouded in mystery, with large numbers of shoppers never having even heard of it.

The Chinese fast-fashion app has been dubbed the “TikTok of ecommerce”, and is reportedly the fastest growing ecommerce company in the world, expanding over 100 per cent every year for the last eight years.

So how can this ecommerce colossus be one of the biggest and fastest growing companies on the planet yet remain relatively unknown to the public?

The brand tripled its valuation between 2019 to August 2020, seeing its value jump from $5 billion to $15 billion after raising an undisclosed amount from an undisclosed investor.

Despite the brand’s astronomical growth in little to no time, it has made a conscious effort to separate itself from its humble beginnings in China.

The company’s “About” page once said it began as “a small group of passionate fashion loving individuals in North Brunswick, New Jersey,” though this has now been changed.

Forbes reported that “the story really starts at the beginning of 2012, when notoriously hard-working founder and CEO Chris Xu, an American-born graduate of Washington University, gave up his wedding dress business to acquire the domain Sheinside.com.”

But a contradictory view was shared by journalist Jeffrey W, who claimed Xu was “born in 1984 in Shandong Province, China and graduated from Qingdao University of Science and Technology in 2007.” Thus adding to the enigma.

Not only does the brand make an effort to disguise its origins, but it also doesn’t market itself in its native consumer base and instead chooses to focus on other, international markets.

One of the reasons that people aren’t aware of the brand is the because of its ghostly PR presence. The mysterious ecommerce giant usually declines interviews, rebuffs queries and is almost completely unknown to Chinese consumers.

The company’s mysterious presence leads to questions like “Is Shein a legit company?” cropping up in Google’s most searched queries.

Despite the ambiguity of the brand, it’s massively popular with Gen Z, with hundreds of searches a day for ‘Shein Hauls” on video sharing social media platforms such as Youtube or TikTok and reams of fashion influencers producing Shein-focused content every day.

The company doesn’t publish its financial figures but its widely estimated that its revenues are around $10 billion annually, for context, Asos made $3.26 billion in 2020 (Statista).

What makes these numbers interesting is the different amounts both companies spend on their marketing campaigns.

According to Marketing Week, Asos spent $168m on marketing during its 2020 financial year to August. Shein on the other hand spent under $100 million according to figures from Media Radar.

As far as its products, Shein undercuts its rivals quite drastically in some of its categories, with Apptopia communications and content manager Madeline Lenahan saying: “Shein is so far ahead of its direct competitors that it’s difficult to even compare them.

The company has pioneered a new fashion retail model enabling it to do this, coined “Real-Time Fashion”.

This term refers to the amount of time it takes Shein to produce an item from its design process to getting put on a hanger.

Shein are able to do this as little as three days by removing the middle men in a consumer to manufacturer (C2M) model that was initially built by Chinese ecommerce brand Pinduoduo, then adapted to work internationally by Shein.

Pinduoduo started out selling fruit on Tencent’s WeChat platform with over 100 employees that were responsible for sourcing, inspecting, and purchasing fruit directly from local farms.

Pinduoduo’s business model worked around the fact that fruit’s shelf life is incredibly low, meaning that there was little need for a whole supply chain of middle men. The company removed wholesalers, logistics companies, and supermarkets from the picture, meaning farmers could charge higher prices while cutting the consumer price by up to 80 per cent.

Shein uses tech such as Google Trends to find out what’s trendy in fashion at the moment, designs the products and then combines in-app and user data to forecast what the demand for its items may be while pushing advertising campaigns through a paid acquisition and influencer programme.

This culminates in TikTok trends generating hype before the item has even been produced by Shein.

The company is able to produce the item in such little time that it is able to keep up with the trends while almost popularising them itself.

“As part of this programme, the brand pays fashionistas to wear its clothes and promote them on Instagram. In addition, Shein provides its ambassadors with affiliate promo codes,” HypeAuditor chief executive Alex Frolov told Charged.

“The key element of SHEIN’s influencer strategy is that it is built on an ambassador program named ‘#SHEINgals.’ This hashtag was used by over 20,000 of all influencers’ posts.

“Every time a purchase is made with these promo codes, influencers earn commission.”

The company cottoned onto the incoming social media boom before most others, becoming the first online clothing retailer to use social media influences as early as 2011. More recently the brand has developed a huge TikTok and YouTube presence.

The success of the brand can be mainly attributed to this C2M strategy. A strategy which differs slightly, but decisively from its rivals. SimilarWeb ranks Shein no.1 in the world for web traffic in the fashion and apparel category, putting them in front of major brands such as Nike, Adidas and Macy’s.

“One of the reasons explaining the success of Shein is its very successful influencer marketing strategy on social media,” Frolov added.

“We found that in the last three months, Shein was promoted by the largest number of Instagram creators compared to its competitors.”

Its social media marketing methods are incredibly effective, with the brand being mentioned by over 19,000 influencers which received almost 53,000 brand mentions (45,000 of those were sponsored) according to Forlov.

“This is 1.5 times more than the second-place brand, Fashion Nova, received.”

The brand seems to favour partnerships with nano-influencers, as most of its ambassadors have between 10,000 and 50,000 subscribers. On average, 500 posts are published every single day by Shein ambassadors. 

“In a nutshell, Shein knows its audience and can attract thousands of ambassadors using a revenue-sharing model. As a result, the brand effectively uses content created by ambassadors to promote itself,” Forlov added.

Not only this but the average site duration of Shein is estimated to be around 8 minutes and 36 seconds, this figure is higher than every major US fashion brand.

It’s difficult to argue with the statistics and while many are still unaware of the company, it is clear it vastly outperforms some of its rivals and manages to tap into ultra-fast fashion trends while having the manufacturing processes to keep up.

It is understood the fast-fashion company is expected to submit a prospectus for a $47 billion listing in the near future according to Forbes, which would make it the largest IPO in history.

It remains to be seen how its rivals will respond to the ultra-fast model that Shein adopts but there are no doubts that this fast fashion enigma is top of the pile for now.

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