When you’re a daily online shopper — especially should you’re under the age of 30 or so — you’ve probably seen the name Shein, and might need bought an outfit or two from the retailer.
Founded in China in 2008 by entrepreneur Chris Xu and now based in Singapore, Shein has taken the fashion world by storm.
The corporate is well-known on apps corresponding to TikTok and Instagram, where generation Z shoppers will showcase their #SheinHaul — a set of garments ordered from the online-only retailer at deeply discounted prices.
Women’s tops advertised on the Shein Canada website, for instance, are sometimes priced under $10 and sometimes as little as $5. A flurry of banners advertise steep sales and discounts on shipping — as much as 90 per cent off for an prolonged May long weekend sale, as an example.
Shein’s direct-to-consumer model thrived throughout the COVID-19 pandemic, analysts say, as brands with physical storefronts were forced to shutter during lockdowns while e-commerce boomed.
While little is understood obviously concerning the size of its business, a Financial Times report from February says the corporate pegged its internal sales figures at US$22.7 billion in a recent presentation, putting the corporate on par with — if not outpacing — fashion giants corresponding to Zara and H&M.
Shein planted roots in Canada last November, opening up a 170,000-square-foot warehouse with corporate offices in Markham, Ont.
Long heralded as a disruptor for its online-only model, Shein has also began toying with pop-up storefronts, potentially bringing its brand to a wider, in-person audience.
Reuters reported in March that Shein is gearing up for a public offering this 12 months, citing multiple unnamed sources, because it sets much more ambitious growth goals.
Nonetheless, a Shein spokesperson denied the corporate has any plans to go public in an announcement to Global News on Tuesday.
However the reports have nonetheless renewed scrutiny on the corporate. Behind Shein’s explosive growth are accusations from artists that their designs have been knocked off, concerns that its rapid production cycles include an unlimited carbon footprint and allegations that its clothing is made through abusive labour practices.
Here’s what is understood concerning the e-commerce juggernaut.
Observers of the retail and fashion industries have began to pay closer attention to Shein in recent times.
“Shein has change into a really, very, very big deal on the very low end of fashion today,” says retail analyst Bruce Winder.
Winder says Shein has been in a position to take a “major chunk” of the style industry by racing its designs to market. It’s not unusual for clothing collections making their debut on the runways sooner or later to be listed in Shein’s online stores just per week later, he tells Global News.
“Shein is basically a recent level of fast fashion. Fast-fast fashion is what we call it,” Winder says.
The corporate has benefited from viral marketing that is particularly popular with gen-Z on social media, Winder says. The favored #SheinHaul tag on TikTok and Instagram sees 1000’s of teens and young adults act as influencers for the brand as they share what got here of their latest bulk order.
The sheer volume and speed at which Shein gets the most recent fashions into consumers’ hands spurs concerns that not all of Shein’s clothing is original. Designers have told outlets including the Wall Street Journal, the BBC and the Guardian that Shein has allegedly ripped off their work.
Shein told Global News that it takes “all claims of infringement seriously” and addresses problems with mental property (IP) with artists once they arise. Shein suppliers are required to comply with company policy and confirm their designs to not infringe on any third-party IP, a spokesperson said.
Justine Leconte, a designer and ambassador for ethical fashions within the industry, has sought to boost awareness of Shein’s business practices in campaigns on her YouTube channel.
She tells Global News that Shein’s legal firepower is just too much for independent designers to realistically go up against.
“Shein has been known for years to repeat, plagiarize the work of up-and-coming designers who don’t have sufficiently big structures in place to legally act against that company so that they steal freely,” she alleges.
Allegations of copyright infringement should not unique to Shein, nonetheless — other well-known clothing brands have faced their fair proportion of accusations that they’ve lifted designs from artists over the past decade as well, with some leading to legal payouts.
Shein’s rise comes as shoppers adopt an increasingly disposable approach to fashion.
Leconte says that the thought of ordering clothes and wearing them for a single event before eliminating them has change into the “norm” for a lot of today.
Shein’s low prices make this model accessible to even the youngest shoppers who’ve only a little bit of pocket money to stretch, Leconte says.
“They’re unlocking the under-20 markets which have time on their hands and access to social media,” she explains.
A spokesperson for Shein reached out after publishing to notice that, in keeping with internal polling from February 2022, most customers surveyed reported wearing items they’ve purchased from the corporate greater than once.
Shein keeps a minimal physical footprint, but has run pop-up stores in recent times including at a everlasting bricks-and-mortar location in Tokyo. The low overhead from its digital operations makes it hard for other fashion giants to go toe-to-toe with the brand, Winder says.
“I believe that’s really what’s helped the corporate grow, really, through the stratosphere within the last three or 4 years,” he says.
Nonetheless, Shein’s business model comes with “dark sides,” Winder says, which could hamper its popularity with consumers and prospects with regulators.
The speed at which Shein designs, produces and ships recent pieces puts immense pressure on its supply chain.
A 2022 Bloomberg report found that Shein’s garments contained cotton linked to China’s Xinjiang region. Rights groups and governments have accused China of forced labour and internment of Uyghurs, a mainly Muslim ethnic minority, in Xinjiang. Beijing denies any human rights abuses.
Concerns concerning the company’s labour practices have been enough to prompt American representatives to ask the U.S. Securities and Exchange Commission to confirm Shein’s supply chain doesn’t use forced Uyghur labour before considering reported plans for an IPO within the country, in keeping with Reuters.
Global News reached out to the SEC to ask if any motion has been taken in response to the letter from U.S. lawmakers, but a spokesperson for the regulator declined to comment.
A spokesperson for Shein said the corporate has “zero tolerance” for forced labour and that suppliers are required to stick to “a strict code of conduct that’s aligned to the International Labour Organization’s core conventions.”
“As a world company, Shein takes visibility across our entire supply chain seriously,” the corporate told Global News.
Leconte says the character of Shein’s business model means its clothing production cannot possibly be done entirely in-house, which implies leaning on third-party factories to tackle work, which might in turn outsource production to other contractors.
“Ultimately, we don’t know where the garments are made, through which working conditions and by whom,” she says. “And Shein doesn’t know that either.”
Shein announced in late April that it’s spending US$70 million over five years to enhance working conditions across its supply chain, including revamping housing facilities for employees. Leconte calls the campaign “greenwashing at its best.”
The sheer volume of garments produced by Shein’s rapid supply and demand cycles also fuels environmental concerns.
Even established players within the fast-fashion industry have been paying closer attention to their carbon footprints, Winder says, as consumers grapple with the environmental impact of rapidly cycling through clothes.
Shein, too, has made pledges to cut back carbon emissions across its entire supply chain by 25 per cent by 2030.
The corporate took that pledge to Toronto’s Eaton Centre in April, with an event that encouraged customers to herald bags of used clothing for donation to an area non-profit providing clothes to vulnerable populations.
As for concerns about its own supply chain, Shein said in an announcement to Global News that it’s able to cut back the quantity of unsold inventory in its production by starting with a “small initial batch” of as much as 200 items after which scaling production up to satisfy estimated customer demand.
“This enables us to consistently achieve average unsold inventory within the low single digits, which implies less resource waste right from the start,” the spokesperson said.
“We continually optimize the efficiency of the processes along our worth chain to conserve resources – water, energy and raw materials – while minimizing consumption and waste.”
Leconte is doubtful here, too, that Shein has enough visibility into its own production cycles to make claims about where it will possibly meaningfully reduce its overall carbon footprint.
She agrees with Winder that customers and firms alike are being more cognizant of the lasting environmental impacts that come from fast fashion cycles. But she says she finds the growing awareness hard to square with the parallel rise of Shein.
“On one hand, customers have gotten more aware, or demanding more transparency, (and) want more sustainability in the style items that they’re looking for,” Leconte says. “And at the identical time, you see this monster of a company growing at a pace that has never been seen before.”
Winder says that Shein might need to push harder into corporate social responsibility to take care of its grasp on the style industry as consumers and regulators grow critical of the brand.
But he notes that rumblings of a recession on the horizon mean consumers are caught between turning away from Shein’s “dark sides” and staying on budget.
“They know that it’s probably not the most effective supply chain setup, but additionally they know that they only have a lot money available to look good and feel good,” Winder says.
“They only can have to kind of follow their pocketbook as an alternative of their conscience, because push involves shove, there’s only a lot money people have.”
— with files from Global News’ Anne Gaviola, Reuters