Why is Shein so successful? A deep dive into a non-caring brand.
Let me make it clear that Shein is NOT a caring company.
They don’t care for people: for what is known of it, their workforce labor conditions are poor, read more about their supplier working over 75 hours per week here.
They don’t care for the planet: for what is known of it, their sustainability efforts are ridiculous. They are king in greenwashing, read more here if you want to dig into this.
So why did I decide to write about them as they are no examples at all of the Care Principles? Well because they are an amazing example of agility towards clients.
Hear me out. When you:
☑️ build a global company in less than 15 years
☑️ build up a valuation of $100 billion in just a couple of years
☑️ have captured the hearts of millions of clients worldwide
☑️ have 4,5 million followers on TikTok and over 25 million followers on Instagram
it means you are doing something right.
Dirt cheap products are obviously appealing to the masses, but it is not the only reason why they have success on a global scale. In my opinion, there are 3 main reasons for Shein’s success:
- Shein is a tech company and not a fashion company.
Traditional brands have a design process of looking at trends, fabrics, and colors followed by a production process that takes months. Fast fashion brands like Zara disrupted them, by basing their collections on the high-end fashion industry, copying them, and reducing production times to 3 weeks. This made that whenever you go to a store, there is always something new to spot.
Shein completely disrupted this way of working. They don’t look at trending colors, fabrics, or patterns like other fashion brands. Shein is not driven by fashion trends. They don’t invest in the pre-production of garments with the risk of remaining stocks. Instead, they’re analyzing people’s behavior and what they are looking at on social media. Every piece they produce is based on data-driven insights. They are a tech company that launches new products on a daily base, it just happens to be mostly in fashion. They produce new products on average in 5 to 7 days! They can do that because they have cultivated relationships with thousands of factories across China. Every day, they add anywhere from 5 to 5.000 different new items on their site, and then they wait to see how clients respond. They usually start with really small orders from a garment and only when they see consumers are into it, do they ramp up production. If the garment doesn’t sell, they’ll mark them down. With such tiny stocks, it is never a threat to their cash flow situation and they don’t have to do radical acts like burning their products to keep their market value high. Destroying unsold inventory has been done by fast-fashion brands like H&M and also luxury brands like Louis Vuitton. Each season about 30% of produced garments remain unsold, read more about this industry practice here if you are curious.
Data-driven input, daily new offers, ultra-fast production: the 3 key ingredients from a tech company that happens to deal in fashion.
2. They cater to the emotional needs of young girls all over the world.
The typical Shein consumer is female, 20-something, middle class, and lives all over the globe from the US to India to the Middle East or Europe. Shein is a truly global brand. Mainly young girls love the brand because they feel seen by Shein. Shein is seeing them first of all because they have one of the most extensive plus-size lines on the internet. This is a huge driver because how frustrating is it for a plus-size girl to see everyday clothes that don’t fit her? Secondly, Shein turns micro-influencers into valuable influencers. They give these girls not only self-esteem but also a way to make money. Two aspects that are important to Gen Z (a generation between 10 and 25 years old). More about their marketing approach towards Gen Z in the below chapter.
Thirdly, Shein makes itself valuable to these young girls because its algorithm – specifically in their app – is giving this target group a feeling of non-stop entertainment. While you and I might watch a movie or read a newspaper, this target group is scrolling for hours and hours through the app. Shein notices what they watch, how long they watch a certain garment, and what % of discount makes them buy and non-stop improves their artificial intelligence-fed app and sales techniques.
Whether you target Gen Z or not, what they wear and where they buy clothes are changing the market. Their consumer behavior is changing the internet, and it will have ripple effects on your business whether you are in fashion or not.
Whether people shop as a way to escape reality, to get a shot of dopamine, to feel in control, to reward themselves, or to simply feel good is not something unique to Gen Z, but the way they are getting addicted by algorithms and artificial intelligence-driven apps and website will create a completely new customer expectation. A new customer expectation that will influence your business model too.
3. A brand built through clever and agile digital marketing.
Of course, Shein is a brand built through clever, data-driven, and agile digital marketing. As mentioned before they encourage micro-influencers to contact them and which young girl doesn’t want to receive free clothes and make some money with them? Becoming a #shein-gal (over 1.3 million # on Instagram alone) is a dream come true for them. Free monthly products are offered to these micro-influencers. Some of them also get a 10% to 20% commission from Shein’s referral sales. Now there is 1 thing that Gen Z loves and that is money in their pockets. They are a very price-sensitive generation and love a good bargain. Shopping purchases are driven by a constant stream of coupons and discount codes, perfectly catering to their price-sensitive attitude.
Not only do unknown micro-influencers love the brand, but also famous celebrities such as Katy Perry, Rita Ora, and Hailey Bieber have been spotted promoting this Chinese e-commerce giant. Shein’s wide global network of celebrities and micro-influencers is extended with a clever mix of a daily changed website, a dynamic app, and very active social media accounts.
Shein is also the nr 1 brand for TikTok teens. TikTok, another Chinese giant rapidly taking over Western youngsters’ phones, with an expected 105 billion users by the end of 2022.
Finally, they are also organizing a pop-up tour amongst several cities. Antwerp was on the list this month. The tiny shop was actually just a showroom in which nothing could be bought nor tried on. On the first day, the lineup of youngsters was huge, most of them were disappointed when they understood they couldn’t buy anything, except scan the garment and order it online. When asked how they felt about the poor working conditions and sustainability efforts of the brand, most replied that other brands were not performing that much better.
True, the fashion industry is one of the most polluting industries worldwide. Despite beautiful stories on sustainability and CSR reports the BOF sustainability report 2022 shows a different reality.
Can we blame youngsters for not caring too much when the industry has been greenwashing and purpose-washing for years?
Let me conclude by warning you that both Chinese brands TikTok & Shein will influence the way we shop and the way we expect companies to cater to our wishes, whether we like it or not, whether we agree with it or not. So start by warning your teenage kids that their online behavior is highly monitored by a non-caring brand in an authoritarian Chinese regime, just to make them buy more stuff.
Shein’s business model is smart and based upon:
- data-driven input
- daily new offers
- ultra-fast production after consumers have ordered it
- tapping into deeper emotional insights
- smart, agile marketing techniques
- using people as tools to promote their garments
To end, 5 tips against any non-caring competitor:
✅ Communicate openly about your sustainability efforts and give transparency on your workforce, production & pricing policy.
✅ Invest in a long-term vision & communicate it clearly internally & externally.
✅ Collaborate with audit organizations to get an external appraisal and trust for your efforts.
✅ Look for deeper insights into your target groups and understand what their worries are.
✅ Don’t focus on selling but on solving your target group’s issues.
PS: Shein (pronounced ‘she – in’ and not ‘shine’ as many people think) describes itself as “an international B2C fast fashion e-commerce platform that focuses on women’s wear, but also offers men’s apparel, children’s clothes, accessories, shoes, bags, and other fashion items, launched in 2008. They have no shops yet and are currently doing a European pop-up tour that stopped in Antwerp on June 22. Their headquarters are in China. No surprise they are a completely opaque company, so all the above information is gathered through many different sources.