Shein Valuation to Possibly Surpass $100 Billion
Featured Image: Shein
Shein is allegedly working with potential investors, including General Atlantic, for a funding round that would put it above H&M and Inditex (Zara, Pull&Bear, Massimo Dutti, Bershka, Stradivarius, Oysho, and Zara Home) combined — valuing it at $100 billion. As one of Gen Z’s favorite fashion brands, Shein has skyrocketed in the United States, specifically in comparison to its largest competitors, which have struggled through the pandemic.
“Without physical stores that added to overheads and could be shut down, and with its products largely manufactured and exported to the rest of the world from the Chinese manufacturing hub in the Pearl River Delta (which largely escaped the kind of serious outbreak of Covid-19 that caused factories and warehouses to close elsewhere), Shein was particularly well-placed to ride out the pandemic,” reported Casey Hall for Business of Fashion.
Founded by Chris Xu in 2008, Shein began as a wedding dress boutique named SheInside that would later diversify into womenswear. The company operated like a dropshipping business and sourced its products from the wholesale market in China. In 2014, that would change as Shein purchased Romwe, shortened its name to Shein, and acquired its own supply chain. It aimed to compete with Boohoo, Fashion Nova, and PrettyLittleThing. It uses influencers on Instagram and TikTok to promote hyperconsumption to a Gen Z market with discount codes and images of an idealized lifestyle.
Today, the brand works with various small factories which allows it to produce products quickly, churning out products as quickly as it becomes trendy, in order to maximize profit. Zara, which is credited as having the first fast-fashion business model, is noted to have a five-week turnaround from design to retail. Vox reports that online retailers such as Missguided, Fashion Nova, Boohoo, and the like are even faster. Inditex aims for about 3 weeks. Shein? Three days.
Reuters describes the company as “encroaching on the territory of more established rivals like Zara and H&M.” With as many as 4,000 new items added to the website per day, it’s clear that Shein has a good understanding of the short trend cycle. Notably, the company has more than quadrupled its revenue since 2019 with $15.7 billion in sales.
Coresight Research has reported Shein to be using a “real-time retail model, competitive pricing and aggressive social media strategies.” It has been successful as 12% of apparel shoppers are reporting they’ve purchased from Shein in the past 12 months. Among Gen Z it’s at 22%. Shein is outpacing the likes of well-known, established retailers such as Lululemon, Victoria’s Secret, and even Nordstrom. According to their estimates, Shein’s revenue rose 57% last year, reaching about $15.7 billion. It’s doing more than just keeping up with the competition — Shein is dominating.