Shein is a fast fashion business that sells cheap apparel to the Gen Z audience globally…
… Well almost globally, although Shein is Chinese, ironically it doesn’t sell in China.
Shein is also a fantastic example of how to scale a business internationally, fast!
The company has reportedly filed to IPO next year in the U.S. and was last valued at $66b.
Unlike many startups, especially in the tech space, Shein’s founder CEO is a media recluse. There are very few photos of Sky Xu. He’s also given no interviews.
The stock market thrives on news and rumours. Everyone likes a story; story telling is part of most sales pitches. One of the factors driving tech stock popularity has been charismatic founders like Steve Jobs, Mark Zuckerberg or even Bill Gates.
(Even in the food industry, my staple, there was a persona around Pepsi’s Indra Nooyi or Oatly’s Toni Petersson, both of whom are now grazing in pastures new.)
Where and how will Shein grow post IPO? I think many investors expect to hear direct from the CEO on such matters. Present in over 180 markets already and I imagine fairly high penetration, it’s not instantly obvious to me how to unlock more growth.
So far there have been several factors which have propelled Shein up to the top of fashion charts.
For those of us in other consumer industries there are a few good learning points here!
Very high rate of innovation
Shein’s gab is very affordable, even if its quality is less durable. The company teams up with wanabee designers to provide ideas. They also reap the rewards – 30% commissions from sales.
Shein is all D2C
It doesn’t have the costs of finding and renting physical locations in pricey high streets. It’s all online and controls its entire value chain.
Social media endorsers not celebrities
Shein relies upon social media influencers like Dani Carbonari to engage and extol merchandise. Though it must be said as the company has grown it has taken pot shots.
Airfreight small packages
As a D2C operation, Shein ships small packages straight from China to customers globally. Not only does this give the business direct consumer engagement, and loyalty, it’s also a way to circumvent some tariff rules according to the WSJ.
This year air freight charges on trans Pacific routes are comfortably above 2022 levels, according to the FT
What will Shein do post-IPO? Will Shein seek to buy complimentary businesses? Make up, beauty and toiletries seem a ripe target. It could easily cross leverage its EC prowess and the consumer target is identical.
Savvy investors might also ask who else is on the management team. Even, is there an heir apparent to Sky Xu? Alibaba’s Jack Ma disappeared off the radar screens during the pandemic for reasons that remain murky.
Maybe that’s why Shein has relocated its global HQ to Singapore?