Founded by billionaire ChrisXu in 2008, Shein launched its online fashion vending business in 2012. Xu is among China’s richest men, but is far less well known than figures like Alibaba’s Jack Ma, or Tencent’s Pony Ma. Big-name venture capital firms such as Sequoia Capital China and Tiger Global Management have backed the start-up.
Shein’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 start-up has taken the world by storm by rolling out thousands of new products every day that can be bought for affordable prices. Its shirts and bags can go for as little as $5. Shein has attained a valuation of $100 billion, according to CB Insights. By comparison, Inditex, the Spanish operator of Zara, has a market capitalization of about 67 billion euros (.
5 billion), while Uniqlo’s Japanese parent Fast Retailing has a market value of around 8.6 trillion yen ($60.7 billion).
The company does not disclose sales figures, but media reports say that it generated around 100 billion yuan (.
3 billion) in revenue last year, which would be up sixfold from the 16 billion yuan in 2019. 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 of units of a particular product, according to Shein.
The company can 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.
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. The first samples must be delivered a week or less after receiving the order. 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 collaborates with outside independent designers.
