Retail Shein has filed to go public and is reportedly seeking up to $90 billion valuation.Here’s how the fast-fashion brand chartered a meteoric rise.Jennifer Ortakales Dawkins and Grace Mayer Updated 2023-12-18T18:07:53Z Share icon An curved arrow pointing right.Share Facebook Icon The letter F.Facebook Email icon An envelope.It indicates the ability to send an email.Email Twitter icon A stylized bird with an open mouth, tweeting.
Twitter LinkedIn icon The word “in”.
LinkedIn Link icon An image of a chain link.It symobilizes a website link url.Copy Link Save Article Icon A bookmark Save Read in app Angle down icon An icon in the shape of an angle pointing down.TV personality Sofia Suescun attends a Shein event in Ibiza, Spain.
Influencers have helped boost the fast-fashion brand’s popularity.Xavi Torrent/Getty Shein is a fast-fashion retailer that produces thousands of garments and accessories at a rapid pace.In 2022, the company was worth $100 billion — more than fast-fashion predecessors H&M and Zara combined.Shein has faced backlash over labor practices and fast fashion’s role in pollution.
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Shein took less than a decade to emerge from relative obscurity to become the dominant player in fast fashion and a favorite online shopping destination for Gen Z.But the company is as famous for its controversies as for the trendy, super-cheap clothing that it churns out to the delight of TikTokers everywhere.
Now the company has filed confidentially to go public, the Wall Street Journal reported.
Earlier this month, insiders told Bloomberg that Shein is eyeing a $90 billion valuation.
At the same time, Shein is pushing ahead with its goal of becoming more like Amazon Marketplace by letting third party retailers sell products on its site.The company has forged a partnership with Forever 21 to sell the retailer’s clothing.Shein is also hosting pop ups in Forever 21 stores.
For those unfamiliar with the brand, here’s how Shein chartered a meteoric rise.
Advertisement Shein sold wedding dresses before it became a fast-fashion retailer Before it became Shein, the e-commerce website was known as SheInside and sold wedding dresses.Crystal Cox/Insider Billionaire founder and CEO Sky Xu started the business in 2008 as an e-commerce site selling wedding dresses that were made in China, later adopting the name SheInside.
In 2015, Xu shifted the business to focus on fast-fashion apparel and rebranded as Shein, pronounced “she-in.” But the company’s rise didn’t come until 2020, when quarantined shoppers gave a boon to e-commerce .
Xu’s background in SEO and marketing has benefitted the company’s digital-first approach.
Not much is known about Xu , who is even more private than the company he built.
Advertisement Fast fashion took off in the 1990s Pedestrians walk past Spanish fast-fashion retailer Zara in Shanghai in 2019.Alex Tai/SOPA Images/LightRocket via Getty Images People first began embracing cheaply made clothing in the 60s and 70s as fashion trends began to change more frequently and companies turned to offshore textile manufacturing to cut costs, Fashionista reported.
But it wasn’t until the late 90s and early 2000s that H&M, Zara, and Forever 21 popularized the fast-fashion model as we know it today.
Advertisement Shein’s AI technology creates new clothing at a record pace Shein uses AI technology to identify fashion trends and churn out thousands of garments in record time.Kristy Sparow/Getty In the last few years, Shein has quickly become the world’s biggest player in fast fashion .The company sells clothing that is cheaply and rapidly produced, then sold at incredibly low prices — many items are under $10.
Shein gave fast fashion a whole new meaning by using AI technology to identify trends and an online-only model to churn out thousands of garments in record time.
Analysts have dubbed Shein’s business model “real-time retail” because new designs can take as little as three days to produce, Vox reported .Because of this, there are as many as 600,000 items listed on the site at any given time, according to BBC .
Advertisement Customer hauls on TikTok made Shein a huge success Shein has gained popularity in large part due to shoppers on TikTok creating hauls to show off what they purchased from the online retailer.TikTok/Alexis Biltz/ashlyn_gv Customers and influencers on TikTok have driven much of Shein’s international appeal.
Creating a #Sheinhaul is a rite of passage for many teens and 20-somethings.Shoppers dump piles of Shein-branded packages from large cardboard boxes onto the floors of their bedrooms, where you’ll also probably see garlands of fake ivy and string lights hanging from the walls.One woman filmed a box truck delivering a giant box to her driveway after she said she bought $2,000 worth of Shein products.
Shein is the second most-downloaded shopping app in the US, according to UBS Evidence Lab data.Shein has more followers on TikTok than any other apparel retail brand and is the most Google-searched apparel retailer in the US, according to UBS data.
Advertisement The average Shein shopper spends $100 a month on clothing The average Shein shopper is nearly 35 years old.Xavi Torrent/Getty Shein’s average customer is a 34.7-year-old woman who earns $65,300 in annual income and reports spending $100 per month on women’s clothing.
That’s 60% higher than the average US woman, UBS reported.
Advertisement In 2022, Shein was worth more than H&M and Zara combined As of this writing, H&M’s market cap was about $20.5 billion and Zara’s parent company, Inditex, was valued at about $114 billion.
Ann Matica/Insider In 2022, Shein raised $1 billion in a funding round that valued the company at $100 billion, more than H&M and Zara combined, the Wall Street Journal reported .Shein was the world’s third most valuable startup that year, Bloomberg reported .
In another fundraising round earlier this year, Shein’s valuation dipped to $66 billion, the Wall Street Journal reported .The company generated $23 billion in revenue last year, the Journal said.
As of this writing, H&M’s market cap was about $20.5 billion and Zara’s parent company, Inditex, had a market cap of about $114 billion.
Advertisement Shein has faced a lot of backlash for its role in climate pollution Women search for unused clothes in the Atacama Desert in Chile.The heap is so large that satellites can easily spot it.Fast fashion contributes between 2% and 8% of the world’s carbon emissions, the United Nations found in 2018.MARTIN BERNETTI/AFP via Getty Image Along with Shein’s colossal success, comes mounting criticism.
The company is known for its secrecy and lack of supply chain transparency .It’s come under fire for producing extremely high volumes of garments, which reports say contribute to overcrowded landfills and 6.3 million tons of carbon dioxide emissions per year.
According to its 2021 Sustainability and Social Impact Report , Shein uses The United Nations Sustainable Development Goals (SDGs) as a framework for its sustainability efforts and social impact.On its website , Shein says that its digital supply chain limits excess inventory and reduces waste.It also says it uses digital printing methods that use less water and attempts to sell unsold inventory before donating it.
But some critics say these efforts pale in comparison to the company’s output of an estimated 314,877 new styles per year, according to a Business of Fashion article, which used data from retail analytics firm Edited.H&M produces a meager 4,414 new styles in comparison.
Advertisement Yet, Shein shoppers say they’re more environmentally conscious than the average consumer.Shein shoppers say the environment is important to them.
Jennifer Ortakales Dawkins/Insider Shein shoppers say they’re more environmentally conscious than the average consumer, according to a report by The New Consumer and Coefficient Capital, which surveyed more than 3,000 US consumers.
Fifty-two percent of Shein shoppers said they considered caring for the environment to be a big part of their personal identity, compared to 47% of overall respondents.
And 67% of Shein shoppers said they were willing to pay more for environmentally sustainable goods, compared to 53% overall.
Shein’s own reporting found that its customers are increasingly interested in secondhand.In December, the company released findings from its 2023 Circularity Study , which surveyed 3,515 Shein customers ages 18 to 29 and 30 to 45 in the US, Mexico, Brazil, the UK, France, and Germany.
The survey found that Shein customers buy or resell secondhand clothing online one to four times a year on average.Despite reports that Shein’s clothing is disposable , 62% of respondents reported wearing Shein items 10 or more times and 33% said they get 30 or more wears out of Shein clothes.
Advertisement Critics question Shein’s manufacturing and supply chain practices Workers manufacture blue jeans in a textile factory.
Shein has told the media it does not use manufacturers in the Xinjiang region of China.Lucas Schifres/Getty Shein has headquarters in Singapore and in the manufacturing hub of Guangzhou, China.It works with over 6,000 suppliers throughout China.The company has been accused of using manufacturers that have violated labor rights .
A 2021 investigation by the Chinese digital publication Sixth Tone uncovered a pattern of “loose oversight and poor working conditions” at some of Shein’s manufacturers.
It discovered that Shein’s suppliers often subcontract orders to small workshops inside rundown buildings to cut costs.Because these businesses don’t deal directly with Shein, the company cannot verify their working conditions.
Advertisement Last year, Shein’s sales took a tumble In 2022, Shein’s sales declined, according to online spending data from Earnest Analytics.Jade Gao/AFP Shortly after the company’s $100 billion valuation in 2022, Shein’s sales took a downturn.Business of Fashion reported that the company’s sales declined for five months before slightly increasing in December, based on online spending data from Earnest Analytics.
In May 2023, the company raised $2 billion in funding and some sources say the company is eyeing an initial public offering as early as 2024, Bloomberg reported.
Advertisement The company’s IPO plans could be delayed Sources told Reuters that Shein is eyeing an IPO.(Photo by Spencer Platt/Getty Images) US lawmakers have lobbied to delay Shein’s public offering until they can verify that the company does not benefit from forced labor.
An interim report by the House Select Committee on the Chinese Communist Party found that Shein and online retailer Temu are responsible for more than 30% of all packages shipped to the US every day without payment of import duties.Companies are exempt from paying US tariffs on products with a retail value less than $800 if they are shipped directly to individual customers.
This loophole, lawmakers concluded , makes it difficult to obtain data on Shein’s suppliers to verify whether they are violating the Certa Uyghur Forced Labor Prevention Act (UFLPA), which prohibits international imports manufactured by forced labor, particularly in the Xinjiang region of China.
Shein has repeatedly told the media it does not use manufacturers in Xinjiang.
Analysts say Shein could continue to grab market share UBS analysts say part of Shein’s success comes from its in-person marketing events.David M.Benett Despite the bad press, UBS analysts suggest that Shein could continue to take major market share from US apparel companies.
In a June report , they attributed much of the company’s success to its marketing prowess.Shein’s loyal customers are not only driven by its low prices, but by a strong community bolstered by in-person events.
Advertisement An influencer trip to China in June proved to be a public relations catastrophe for Shein.
Influencer Dani Carbonari posted on TikTok and Instagram about her trip to Shein’s innovation center in China.Instagram/DaniDmC In June, Shein invited influencers to visit its innovation center in China.After posting glowing reviews of their trips, the influencers faced a lot of backlash for ignoring mounting allegations of questionable labor ethics and concerns about Shein’s role in climate pollution.
“In hindsight, it didn’t go to the place we intended, which is that we’re committed to more transparency,” executive vice chairman Donald Tang said in an interview with Time.”The influencers got very unfair treatment, which I very much regret.”
Advertisement Shein battled rival Temu in dual lawsuits and designers sued the fast-fashion company, alleging that it stole their artwork.
In May, US spending on Temu was 20% higher than on Shein, Bloomberg reported.STEFANI REYNOLDS/AFP via Getty Images Shein has had a fair share of court drama.
In December, Shein’s parent company sued its e-commerce rival, Temu , alleging that Temu created fake accounts on Twitter under Shein’s name and trademark.Shein recently sued Twitter to release data about the accounts in question.
Temu fought back with its own lawsuit against Shein.It alleges that Shein violated antitrust laws by intimidating manufacturers not to work with the Boston-based company, Reuters reported .Temu is a subsidiary of a Chinese commerce company.
In July, a group of designers filed a federal lawsuit against Shein that alleges copyright infringement and racketeering.They say that the company stole their designs and sold them as products on its site.The court filing alleges that copyright infringement is central to Shein’s business model and that the company passes the blame onto third-party vendors.
Shein vowed to defend itself, telling CNN in a statement: “Shein takes all claims of infringement seriously, and we take swift action when complaints are raised by valid IP rights holders.
We will vigorously defend ourselves against this lawsuit and any claims that are without merit.”
Advertisement Shein clothing is popping up in Forever 21 stores Sparc Group Holdings, which operates Forever 21, announced a partnership with Shein on August 24.Michael Brochstein/SOPA Images/LightRocket via Getty Images Shein is partnering with fellow fast-fashion retailer Forever 21 , furthering the retailer’s efforts to expand its product offering beyond Shein-produced items.
Forever 21 items will be sold on Shein’s site and Shein is hosting pop-ups in Forever 21 stores.
Advertisement Shein purchased rights to a UK fast fashion brand Shein gained the rights to the Missguided brand.Justin Tallis/Getty In October, Shein purchased the IP and trademarks of Missguided, a UK-based fast fashion brand owned by Frasers Group.The parent company, which owns the department store chain House of Fraser, will maintain ownership of Missguided’s staff and real estate, Reuters reported.
The Times reported that Shein is considering buying Topshop, another fast-fashion retailer based in the US.Topshop is currently owned by online fashion site ASOS, which purchased the brand in 2021 for $364 million .
Advertisement Shein has filed to go public, aiming for a $90 billion valuation Insiders say Shein has ambitions for a major IPO.
Christophe Archambault/Getty After the company publicly denied reports of a rumored IPO, it confidentially filed to go public on Monday, the Wall Street Journal reported.Sources said the offering could happen in 2024.Insiders told Bloomberg that Shein is targeting a $80 billion to $90 billion valuation.
According to the Wall Street Journal, Shein told investors it generated $23 billion in revenue and $800 million in net profit in 2022.
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