Shein, valued at $100B in April 2022, China’s fast-fashion platform has disrupted the online fashion industry and enjoyed meteoric growth over the past few years.

Shein, China’s fast-fashion platform, has disrupted the online fashion industry and enjoyed meteoric growth over the past few years. Since its launch in the US in 2015, it has conquered the market with its ultra-low prices and trending designs.

But how did this relatively unknown company dominate the fast fashion industry and reach a $100B enterprise value in just a few short years?

Here’s a breakdown from WSJ on Shein’s business model, key milestones, and the factors behind its rapid growth.

Shein Business Model (Source FourWeekMBA)

Business model

Flywheel by Shein (Source: notboring.co)

Shein has pioneered a new retail model called “production on demand.” Unlike traditional retailers who place orders months in advance, Shein uses data and technology to produce small batches of each product. Shein designers create 2,000 designs a day, then monitor customer interactions. If a product attracts interest, Shein will produce a small batch of just 100-200 units to test demand. This allows the company to react to trends quickly and avoid being stuck with inventory.

Shein also leverages a network of thousands of third-party suppliers and manufacturers, primarily in China. By producing in small batches and working with multiple factories, Shein can fulfill orders efficiently while keeping costs extremely low. A lean, responsive supply chain is key to Shein’s business model.

Milestones

• Founded in China as SheInside in 2008
• Launched Shein.com in 2015 and entered the US market
• Sales skyrocketed during the pandemic, from $4B in 2019 to $10B in 2020
• Overtook Zara and H&M to become the largest fast-fashion retailer in the US in 2021
• Valued at $100B in April 2022 after $15.7B in 2021 sales
• US women’s fashion market share increased from 6% to 28% from 2020 to 2022
• Most recently, Shein has also partnered with Forever 21 to open Expand brand awareness offline, expand footfall to penetrate deep into the US retail market

Reasons for Rapid Growth

Shein’s Business Canvas (Source: Apptunix.com

Some Factors That Have Driven Shein’s Rapid Growth

• Ultra-Low Prices – Shein’s prices are lower than other fast fashion brands thanks to on-demand manufacturing, cheap overseas labor, and tax loopholes
• Constantly New Designs – Shein Adds Over 2,000 New Products Every Day to Stay on Trend
• Marketing Through TikTok & influencers – Shein has been aggressively promoting itself through TikTok and influencers
• E-commerce boom during the pandemic – Online fashion sales have surged during the pandemic, benefiting Shein
• Speed ​​– Shein’s supply chain allows them to go from design to delivery in just a few days
• Fast fashion addiction – Shein’s low prices and constant product updates encourage shopping addiction

While Shein’s business model and growth are impressive, the company has faced criticism over sustainability and labor issues. However, Shein shows no signs of slowing down as they continue to disrupt the fashion industry. The Shein phenomenon shows how data analytics and technology help a nimble company dominate fashion e-commerce.