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Shein, fast fashion business model taken to the extreme

Shein has rapidly become the unrivaled top company on the fast-fashion sector, and it has done so just by taking to the extreme the same business model that made Zara and H&M the huge disruptors of the fashion industry. Pandemic lockdowns turned people inevitably to ecommerce, allowing the Chinese newcomer to compete head-to-head with the largest fashion brands. Judging by the sales numbers, it looks like customers are willingly giving up some quality on the new trendy designs in exchange for cheaper prices, compared to the likes of better-known European brands. The fast fashion is also exploiting sizing issues that some customers face when trying to purchase trendy designs. Since large sizes usually sell out pretty quickly, the only way for some customers to purchase these designs is buying the Shein model.

Additionally, social media and Shein may as well be made for each other. Low prices and constant releases facilitate content production in social media, letting mid-level or aspiring influencers grow their followers and engagement figures without that much investment in fashion products. As with the rest of its business model, the Asian newcomer has gone for quantity over quality when choosing who to partner with to grow its brand, working with significantly more content creators although less relevant ones. Another proof of how the Chinese fast fashion retailer’s performance in sale orders have run in parallel with its social media success, is the prevalence of its hauls in several social media platforms are the best example of mostly free advertising for a fashion brand. As of now, it doesn’t look like any of the previously top players in the fast fashion sector have managed to come close to the splash that the Chinese fast fashion retailer has made in the last couple of years, especially among the gen Z population.

Furthermore, since going shopping, both in-store and online, is so ingrained in Western lifestyle, it seems unlikely that the current cost-of living crisis leads to a huge drop in retail sales. The current crisis will certainly help Shein attract a new group of customers that wouldn’t have look for cheaper versions of models made by well-known manufacturers if it wasn’t due to money constraints. Customers also have lower expectations when it comes to cheap products, so they are less likely to return orders and more easily satisfied with it so they would order again. Also, by rewarding customers for posting reviews and photos of the clothes, potential customers have a better idea of what they can expect from them before buying.

In terms of sustainability, Shein’s business model has raised many eyebrows. Recent developments in this industry from the pandemic outbreak has led to an increase in its carbon footprint, as a result of the customers’ definitive shift from in-store to online shopping. Another significant issue that comes from trying to mass produce at low prices is the human right abuses. These practices may start costing fast fashion companies in the wake of the ESG era, so may the rise of Shein serve as a wake-up call for the whole sector to clean up its act.