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Shein, The Fastest Growing E-Commerce Company in the World

Source: Not Boring by Packy McCormick

The Fastest Growing E-commerce Company in the World

The latest trend in the fashion industry is the rise of a handful of fast fashion brands targeted at Gen Z. Amongst these fast fashion companies, the one that has catapulted to cult status among young women across the globe is the Chinese retailer Shein, with a valuation of over $15 billion. 

Shein is one of the fastest – and most secretive – growing e-commerce companies in the world. Raking in close to $10 billion in 2020 (CB Insights), Shein has reportedly enjoyed eight consecutive years of over 100% revenue growth. Estimated to be one of the fastest-growing e-commerce outfits in the world, Shein has revolutionized the way fashion is produced. Operating on an on demand business model. Shein’s popularity lies in the fact that its garments are astonishingly cheap and it quickly reflects the latest fashion trends.

How did Shein Fare During the Pandemic?

With enough background knowledge about Shein, many of you may be wondering whether Shein’s revenues have been impacted during Covid-19. At Measurable AI (‘MAI’), we specialise in providing consumer insights based on our unique dataset of transactional email receipts distributed across 22 countries. Let’s dig deeper into our consumer data and explore our findings.

Shein’s Global Distribution

The world map below illustrates Shein’s orders from our coverage of email transactional data across the 22 markets we cover. 

Shein Defies The Odds With Skyrocketing Sales During Covid-19

The pandemic has taken a harsh toll on several fashion brands and retailers. Neiman Marcus group, J.C. Penney, J. Crew, Brooks Brothers and more have filed for Chapter 11 bankruptcy protection, while others like Under Armour have seen significant decrease in revenues (read more here). 

Shein, however, as observed from Measurable AI’s transactional email receipt panel, actually saw its sales skyrocket from 2Q20 onwards, when Covid-19 became widespread and stay-at-home orders were enacted in mid-March. 

Average Order Value and User Index

As illustrated by our graph below, across our four sample countries United States, United Kingdom, Mexico and Saudi Arabia, Shein enjoyed an increase in revenues from pre-covid days and seems to have sustained its momentum up until now.

Average order value for consumers in the United States, United Kingdom, and Mexico seems to hover around the 60 USD mark (suspect this may be related to the free delivery minimum order value of 50 USD). Consumers in Saudi Arabia, however, seem to very much enjoy shopping at Shein with a greater number of items purchased in each order, and therefore, a higher order value hovering around the 100-150 USD mark.

It is no surprise that digital storefronts are the new normal with many fashion brands pivoting fast to digital sales to stand a chance in remaining profitable. A Mckinsey consumer-sentiment survey conducted in April demonstrated a significant drop in consumers intention to purchase. The survey revealed declines in purchase intent of 70 to 80 percent in offline and 30 to 40 percent in online channels in Europe and North America, even in countries that have not been under full lockdown.

Similarly, 74 percent of Chinese consumers said they have avoided shopping malls in the two weeks after stores reopened. It goes without saying that the days of picking clothes from the racks with your own hands are over and digital shopping is here to stay!

Which Country’s Users Purchase the Most Items Per Order?

As depicted in the map below, our e-receipt data panel revealed that consumers in emerging markets such as the Middle East, Africa and Latin America (which usually corresponds to lower income levels) tend to purchase more items per transaction from Shein.

Saudi Arabia, in particular, outshines Shein’s main market, the United States. As illustrated below, you can see how the number of products bought per customer order in Saudi Arabia dwarfs that of the United States.

Could the Shein online shopping spree from Saudi consumers be explained by the free shipping they receive from buying so much on each order? Our data seems to suggest so.

How Does Shein Stack Up Against ASOS?

For the past decade or two, British company ASOS had pretty much remained the gold standard for fast fashion amongst 20 something years olds. 

Given how fast Shein is growing, could it overtake ASOS as the world’s fastest growing fast fashion brand amongst teenagers? 

Comparing Shein to ASOS, the order value of ASOS is still higher by roughly 40 per cent. This could be explained partly by the higher cost for each item on ASOS and the lower delivery fee. 

How Ethical is Shein? 

Shein’s philosophy is a positive one: “Everyone can enjoy the beauty of fashion”. However, behind the public eye, just how ethical and sustainable is this e-commerce company touted to be the future of fast fashion? ’

Taking into account environmental impact, labor conditions and animal welfare, Shein doesn’t score highly on the ethics scale. 

From hazardous chemicals to carbon emissions to microplastics, Shein is making zero effort to rectify this. Furthermore, Shein’s mass production of cheap clothing based on its ‘on-demand’ algorithm is perpetuating a throwaway fashion culture amongst younger generations.

Nor is Shein making much effort in improving its laborers’ working situation. According to BBC News, Shein’s workers are clocking in excess of 75 hours a week. There is enormous pressure on staff to churn out items fast. These workers, mainly migrants, are paid per item of clothing which encourages them to work long hours. Rumor has it that it could be involved in unethical practises such as child labor. So far, there is no evidence that Sheing ensures payment of a living wage in its supply chain and its employee initiatives and support are reportedly absent. Read Shein’s responsibility pledge here.

Does Shein care for animals? Debatable. But it looks like Shein is working to clean up its image. For those who use TikTok, if you open the app you would probably have been greeted with the advert that says “Shein Cares”. Lot of people are using the hashtag #Sheincares on their videos alongside a new range of animal filters. For those unaware, Shein Cares is a recent campaign by Shein to show precisely that it cares for the animals. The company has agreed to donate US$300,000 to meaningful animal welfare organizations in a bid to keep the world’s animals protected. To shop your support, you can also shop at Shein’s Wild Heart collection. Just don’t forget to sign up to our consumer app reward.me to effortlessly earn shopping rewards in the form of reward dollars or cryptocurrency which can be redeemed for gift vouchers. 

What About Other Fast Fashion Companies?

As the focus of this article is on Shein, we will be continuing our analysis of our transactional data for ASOS and other fashion brands in another article. In the meantime, for deeper data insights on Shein or ASOS – or on any fast fashion company in particular – please don’t hesitate to contact us at [email protected].  

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