If you’re a regular online shopper — especially if you’re under the age of 30 or so — you’ve probably seen the name Shein, and might have 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 company is well-known on apps such as TikTok and Instagram, where generation Z shoppers will show off their #SheinHaul — a collection of clothes ordered from the online-only retailer at deeply discounted prices.
Women’s tops advertised on the Shein Canada website, for example, are often priced under $10 and sometimes as low as $5. A flurry of banners advertise steep sales and discounts on shipping — up to 90 per cent off for an extended May long weekend sale, for instance.
Shein’s direct-to-consumer model thrived during the COVID-19 pandemic, analysts say, as brands with physical storefronts were forced to shutter during lockdowns while e-commerce boomed.
While little is known for sure about the size of its business, a Financial Times report from February says the company pegged its internal sales figures at US$22.7 billion in a recent presentation, putting the company on par with — if not outpacing — fashion giants such as 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 started 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 year, citing multiple unnamed sources, as it sets even more ambitious growth goals.
However, a Shein spokesperson denied the company has any plans to go public in a statement to Global News on Tuesday.
But the reports have nonetheless renewed scrutiny on the company. Behind Shein’s explosive growth are accusations from artists that their designs have been knocked off, concerns that its rapid production cycles come with an enormous carbon footprint and allegations that its clothing is made through abusive labour practices.
Here’s what is known about the e-commerce juggernaut.
How does Shein do it?
Observers of the retail and fashion industries have started to pay closer attention to Shein in recent years.
“Shein has become a very, very, very big deal at the very low end of fashion today,” says retail analyst Bruce Winder.
Winder says Shein has been able to take a “major chunk” of the fashion industry by racing its designs to market. It’s not uncommon for clothing collections making their debut on the runways one day to be listed in Shein’s online stores just a week later, he tells Global News.
“Shein is really a new level of fast fashion. Fast-fast fashion is what we call it,” Winder says.
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The company has benefited from viral marketing that is especially popular with gen-Z on social media, Winder says. The popular #SheinHaul tag on TikTok and Instagram sees thousands of teens and young adults act as influencers for the brand as they share what came in their latest bulk order.
The sheer volume and speed at which Shein gets the latest 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 issues of intellectual property (IP) with artists when they arise. Shein suppliers are required to comply with company policy and verify their designs to not infringe on any third-party IP, a spokesperson said.
Justine Leconte, a designer and ambassador for ethical fashions in the industry, has sought to raise awareness of Shein’s business practices in campaigns on her YouTube channel.
She tells Global News that Shein’s legal firepower is too much for independent designers to realistically go up against.
“Shein has been known for years to copy, plagiarize the work of up-and-coming designers who don’t have big enough structures in place to legally act against that company so they steal freely,” she alleges.
Allegations of copyright infringement are not unique to Shein, however — other well-known clothing brands have faced their fair share of accusations that they’ve lifted designs from artists over the past decade as well, with some resulting in legal payouts.
Shein’s supply chain ‘dark sides’
Shein’s rise comes as shoppers adopt an increasingly disposable approach to fashion.
Leconte says that the idea of ordering clothes and wearing them for a single event before getting rid of them has become the “norm” for many today.
Shein’s low prices make this model accessible to even the youngest shoppers who have just a bit of pocket money to stretch, Leconte says.
“They’re unlocking the under-20 markets that have time on their hands and access to social media,” she explains.
A spokesperson for Shein reached out after publishing to note that, according to internal polling from February 2022, most customers surveyed reported wearing items they’ve purchased from the company more than once.
Shein keeps a minimal physical footprint, but has run pop-up stores in recent years including at a permanent 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 think that’s really what’s helped the company grow, really, through the stratosphere in the last three or four years,” he says.
However, Shein’s business model comes with “dark sides,” Winder says, which could hamper its reputation with consumers and prospects with regulators.
The speed at which Shein designs, produces and ships new 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 about the company’s labour practices have been enough to prompt American representatives to ask the U.S. Securities and Exchange Commission to verify Shein’s supply chain does not use forced Uyghur labour before considering reported plans for an IPO in the country, according to Reuters.
Global News reached out to the SEC to ask if any action 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 company has “zero tolerance” for forced labour and that suppliers are required to adhere to “a strict code of conduct that is aligned to the International Labour Organization’s core conventions.”
“As a global company, Shein takes visibility across our entire supply chain seriously,” the company told Global News.
Leconte says the nature of Shein’s business model means its clothing production cannot possibly be done entirely in-house, which means leaning on third-party factories to take on work, which can in turn outsource production to other contractors.
“In the end, we don’t know where the clothes are made, in 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 improve working conditions across its supply chain, including revamping housing facilities for workers. Leconte calls the campaign “greenwashing at its best.”
Fashion industry waking up to environmental impacts
The sheer volume of clothes produced by Shein’s rapid supply and demand cycles also fuels environmental concerns.
Even established players in 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 reduce carbon emissions across its entire supply chain by 25 per cent by 2030.
The company took that pledge to Toronto’s Eaton Centre in April, with an event that encouraged customers to bring in bags of used clothing for donation to a local non-profit providing clothes to vulnerable populations.
As for concerns about its own supply chain, Shein said in a statement to Global News that it’s able to reduce the amount of unsold inventory in its production by starting with a “small initial batch” of up to 200 items and then scaling production up to meet estimated customer demand.
“This allows us to consistently achieve average unsold inventory in the low single digits, which means less resource waste right from the beginning,” the spokesperson said.
“We constantly optimize the efficiency of the processes along our value 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 can meaningfully reduce its overall carbon footprint.
She agrees with Winder that consumers and companies 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 are becoming more aware, or demanding more transparency, (and) want more sustainability in the fashion items that they are shopping for,” Leconte says. “And at the same time, you see this monster of a corporation growing at a pace that has never been seen before.”
Winder says that Shein might have to push harder into corporate social responsibility to maintain its grasp on the fashion 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 best supply chain setup, but they also know that they only have so much money available to look good and feel good,” Winder says.
“They just may have to sort of follow their pocketbook instead of their conscience, because push comes to shove, there’s only so much money people have.”
— with files from Global News’ Anne Gaviola, Reuters
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