This article is for the Professionals
Sign up to Inside Retail Professional now for only $5+GST for your first three months.
That's an 85% discount plus you’ll get FREE access to all Masterclasses during Retail Week. 5 retail industry leaders like you’ve never seen them before.Already a professional? Log in
Founded in 2008, Shein (originally SheInside) started out as a wedding dress business. The company expanded into general womenswear and rebranded to Shein in 2015, a name it expected customers would more easily remember. And thanks to the data-driven business model, pushed by founder and CEO Chris Xu, previously a successful SEO consultant, Shein has continued to grow its overseas market presence.
Vincent Djen, a manufacturing and retail expert based in China, credits Shein’s success to its social media strategy, flexible supply chain and consumer demand for the latest fashion trends at affordable prices.
“From bricks-and-mortar fast fashion companies like Zara, to online brands like Boohoo and now Shein, we are seeing how fast fashion has evolved with technology,” Djen told Inside Retail.
“Whoever can successfully build a faster and more flexible supply chain at even more affordable prices and harness the power of next generation social media can very well be the next Shein.”
Djen said Shein needs to constantly invest into these areas to stay on top and fight off competitors.
Social media sensation
Undeniably, social media has played a major role in Shein’s success around the world, thanks to a global community of Gen Z shoppers eager to outdo each other with their latest clothing hauls.
Arnold Ma, China marketing expert and founder and CEO of digital creative agency Qumin, observed that as a Chinese brand, Shein understands the power of short-form video.
As a relative newcomer to TikTok, Shein has over 2 million followers, whilst the incumbents like Asos and Boohoo, which are lagging with 500,000-600,000 followers, have been around in the western market for much longer, Ma said.
“Shein knows the decline of second generation platforms like Instagram while Asos and Boohoo are still investing in those,” he told Inside Retail.
Unlike its competitors, Shein does not create “overly produced” social media content, keeping it real with its loyal fan base.
“Even on Instagram, Shein’s content is very ‘low-fi’, it’s crowd sourced and gives them an air of authenticity and accessibility that Asos and Boohoo lack; this is a great way to build fans, over just customers,” Ma said.
Tim Hill, co-founder and CEO of social media analytics company Social Status, points to Shein’s use of memes on its Australian Facebook and Instagram which helps drive engagement and organic reach.
“Subsequent product posts directly after highly engaged posts like these tend to get better visibility. There’s basically a halo effect of higher organic reach for the next post directly after a high-performing post,” Hill told Inside Retail.
“Retailers in particular use this tactic a lot. Showpo was an early adopter of using memes this way.”
Influencer marketing is another key tactic behind the brand’s social media success. In July 2021, Shein was the third-leading brand on Instagram based on mentions from English-speaking influencers, with an estimated 27,400 mentions, according to Statista.
Ma says Shein is very focused on the “everyday creator” strategy.
“While Asos and Boohoo are still using Instagram tactics on TikTok by wasting money on big expensive ‘influencers’, Shein is using the everyday creators, which is what TikTok is best at. This gives them the budget to create more content at volume – again a knowing strategy to gain traction on TikTok,” he said.
The price of fast fashion
Despite younger generations showing a strong interest in sustainability, fast fashion businesses like Shein continue to thrive.
“From what I see on a historical basis, we are spending less and less on clothing as a percentage of total expenditure but the amount of clothing we have is increasing,” Djen said, pointing to Eurostat data. “I would say that this is because people all want to buy affordable clothing and this trend is the same across many countries.”
However, Shein’s supply chain is under increasing scrutiny with many questioning how the retailer can churn out so much for so little. Undoubtedly, there is a cost to the environment, but what about the workers themselves?
Last month, Reuters reported that the retailer has not made public disclosures about working conditions in its supply chain which are required by law in Australia and the United Kingdom.
In Australia, companies with revenue over A$100 million per year must submit an annual modern slavery statement to the Australian Border Force (ABF). Reuters reported that as of August 4, neither Shein nor its subsidiary in Australia had submitted such a statement.
Djen believes Shein is starting to realise that it must be more open about its practices or risk losing trust with shoppers.
“From what I’m seeing, they are taking CSR more and more seriously so we will probably [learn] more about their supply chain,” he said.
The brand is also regularly at the centre of plagiarism allegations from budding designers on social media. Diet Prada, a fashion watchdog group on Instagram, recently posted side-by-side images of a design by Bailey Prado and a lookalike design from Shein.
“Prado alleges that more than 40 of her handmade items appear to have been copied by Shein, some selling for less than $10,” Diet Prada wrote. “The originals are created by hand, employing crochet’s sculptural properties to add unique details like unexpected cutouts, ruffles, and pearl and eyelash yarn trims. The fast fashion knockoffs translate these into the typical stretchy fare that Shein shoppers often review as good enough for Instagram pics, but not of any quality to be worn IRL – in essence, the definition of disposable fashion.”
Shein is trying to combat this bad PR with its very own English-language reality show, streaming on its app and on Youtube. Shein X 100K Challenges invites 30 designers to showcase their collections at Shein fashion week in Los Angeles and compete for a $100,000 cash prize to start their own label.
Shein already has over 1 billion video views on its Youtube channel so the reality show is likely to reach a wide audience.
“I think most marketers forget that YouTube reaches the same amount of monthly unique users in Australia (15M) as Facebook does (Instagram is *only* 10M in comparison). There’s so much potential for brands to reach audiences organically on YouTube since it’s one part social network, one part search engine,” Hill said.
While there is noticeable contempt for the brand from many online, it appears the need to look good for less will continue to weigh in the brand’s favour for some time.