Shein Is the Fastest-Growing E-commerce Company You’ve Maybe Never Heard Of

If you’re not a Gen Z woman with a penchant for online shopping, you may have never heard of the world’s fastest-growing e-commerce company, Shein. If you are in that demographic, the brand likely follows you around the internet like an overly attached chihuahua.

But, unlike a chi, the online fashion retailer has a big bark and a big bite:

• Estimated revenue in 2020 of nearly $10 billion
• Annual revenue growth of over 100% for eight years running
• A $15 billion valuation, as of last summer

Oh, and its app was downloaded more than Amazon on the US App Store in June…nbd.

Now that you’re listening, here’s the background

Shein is an online-only, fast-fashion retailer based in China, with a focus on women’s apparel. But calling it “fast” is like calling pickle juice delicious: It’s a vast understatement.

The first wave of fast-fashion retailers (Zara, H&M) became popular by creating new designs and getting them to the sales floor in five weeks or less. Fast fashion 2.0, known as “ultra-fast fashion” and popularized by brands like ASOS and Boohoo, got that process down to a week or two. Shein turns around a new design in as little as three days.

Fashion Nova made waves back in 2018 when its CEO bragged about launching 600 to 900 styles a week, per Vox. Shein added over 7,000 new styles to its site last Thursday alone (see for yourself here). The key to its speed is its well-oiled supply chain management.

Shein’s order flow is as frictionless as a Slip ’N Slide covered in soap

First, as laid out in Not Boring’s excellent deep dive, Shein analyzes trends and user data to decide which style to churn out next. An in-house design team then sends it to a Shein supplier located in China’s manufacturing hub, Guangzhou.

Here’s where the magic happens: Suppliers start by making a small batch of the product, but once it goes live on Shein.com, real-time shopping data is sent to the factory floor to inform whether to scale production up or down. If the item is being clicked on and added to carts furiously, Shein’s software (which all of its suppliers are required to use) tells the supplier to make more.

As factory production gears up, Shein.com’s algorithm recommends the product to more shoppers and its marketing team blasts it across social media.

But moving this fast has resulted in Shein breaking things. Its flywheel sometimes outpaces sound decision-making, meaning products like a “Metal Swastika Pendant Necklace” have ended up on the site.

Looking ahead…rumors have swirled in China that Shein would IPO sometime in 2021, but that was before Chinese authorities cracked down on the country’s biggest tech companies, especially when they tried to IPO on US-based exchanges. So we may have to wait a while to learn the juicy financial deets.

Source: Morning Brew