Shein Case Study

    About the Company

    Shein is a China-based online swift fashion retail merchant. Shein, initially known as ZZKKO, came into existence in 2008 in Nanjing, China. Chris Xu is the originator of the company.

    Shein is mostly famous for its low-priced clothes. In the nascent phase of the company, it was believed to be more of a drop shipping enterprise than a retail merchant.




    During the first few years, the firm was not engaged in apparel design and fabrication and rather procured its merchandise from the wholesale apparel marketplace in Guangzhou.

    It did not materialize till 2012 that the company started taking over its indigenous supply chain setup, switching itself into a completely incorporated retail merchant.

    The organization has founded its supply chain in Guangzhou with a strong network comprising over 3,000 dealers. Located in China and delivering throughout 150+ nations, Shein ranks as the leading style retail merchant in the world as of 2022.

    The firm’s worth was estimated at U.S. $100 billion following a financing round in April 2022.

    Over the past few years, the firm has embroiled itself in various disputes, which include the following:

    • Tax dodging
    • Brand name controversies
    • Security and health issues
    • Human rights infringements

    As cited by Bloomberg Businessweek and other periodicals, the company’s commercial prototype has gained from the Sino–U.S. economic conflict.

    When Was Shein Established?

    The company came into existence in 2008, fifteen years back.

    Who is the Originator of the Company?

    The originator of Shein is Chris Xu.

    What Type of Organization is Shein? 

    Shein is a retailer.

    Where is the Headquarters of the Company Based?

    The company has its central office in Singapore.

    What is the Name of the Parent Company of Shein?

    Shein’s parent company is Roadget Business Pte Ltd.

    Shein Management

    Quist Huang presently serves as the Director of the Employee Experience Platform of Shein.

    What is the Name of the Subsidiary of Shein? 

    The name of its subsidiary is ROMWE.

    How Many Employees Work for Shein?

    Presently, the company has 10,000+ workers.

    Company History

    Shein, initially known as ZZKKO, was set up in 2008 in China by Chris Xu, a search engine optimization promotion professional and tycoon. SheInside.com, the company’s official site, got listed in March 2011 and promoted itself as “a global top wedding clothing firm,” though it marketed universal women’s garments as well. The firm procured its stuff from the wholesale garments marketplace in Guangzhou, which functioned as the key center for several apparel makers and marketplaces in China. Shein did not participate in the blueprint or manufacturing of the clothes. Rather, it acted as a drop shipping company correspondingly, which markets products from 3rd-party traders straightaway to overseas clients.

    At the beginning of the 2010s, Shein had their stuff available in the following nations:

    • France
    • Spain
    • Italy
    • Russia
    • Germany

    Besides, the company promotes footwear, make-up items, ornaments, and handbags, over and above ladies’ apparel. In 2012, Shein launched the present site and commenced utilizing social media promotions by joining hands with style bloggers for free promotional gifts and promoting stuff on Pinterest, Instagram, and Facebook.

    2014- Acquisition of Romwe

    In 2014, the company took over Romwe, a retail e-commerce merchant based in China, turning it into a “comprehensively structured retail merchant.”

    2016

    By 2016, Shein had one hundred workers and had already set up its central office in Guangzhou, China. In 2015, the company’s name altered from “Sheinside” to “Shein” once more, asserting that a name was essential that was easier to keep in mind and simple to search online.

    By the same year, Chris Xu assembled a group of eight hundred fashion designers and model manufacturers that created Shein-labeled apparel. The firm started improving its supply chain, keeping out vendors offering inferior products or images.

    2019

    By 2019, the company’s products were highlighted on daytime T.V. programs in the U.S. with other online enterprises like Zaful and Fashion Nova. In the interim, style influencers exhibited Shein merchandise in attention-grabbing videos together with other renowned retail merchants as well.

    Despite being a web-based retail outlet, the company also pioneered pop-up stores for customers who do not desire to buy online. Furthermore, the prompt utilization of TikTok by the retail merchant and the capacity to promote viral stuff enhanced the firm’s fame.

    In 2019, Singapore-listed Roadget Business Pte incorporated Chris Xu and other individuals in the form of spokespersons.

    2021

    By 2021, business filing in China demonstrated that the company had de-listed Nanjing Top Plus Information Technology Co Ltd, its principal enterprise. Filings done in Singapore indicate Roadget as the legitimate entity running Shein’s worldwide site and possessing the company’s brand marks.

    By November 2021, the company expanded from a firm worth U.S. $15 billion to one worth U.S. $30 billion. Throughout the coronavirus pandemic period of 2020, it earned U.S. $10 billion in revenue, turning it into the 7th direct year of over 100% marketing development for the firm. As of October 2020, Shein became the top online-exclusive style company in the world. As of May 2022, it ranks as the leading fast fashion company.

    2022

    In April, the company collected U.S. $1 billion to U.S. $2 billion through private financing and captured 28% of the fast fashion marketplace in the United States. At the beginning of 2022, a study of 7,000 US-based youngsters rated Shein as their 2nd best e-business site.

    In an editorial published in the Fortune magazine in the May 2022 edition, the firm got portrayed as overprotecting Gen Z while utilizing big data and speedy Chinese fabrication to promptly blueprint garments at a diminished price level. The firm was worth U.S. $100 billion at that point.

    The same year, the company set up a supply hub in Whitestown and intended to launch additional supply hubs in the northeastern U.S. and southern California.

    In November, the company unveiled a new business bureau and delivery hub in Markham, Ontario. This will act as the principal delivery center of the company in Canada.

    In October, The Wall Street Journal described that Shein earned U.S. $24 billion in 2022 as revenue, turning it nearly as big as H&M and Zara.



    Promotion

    As stated by CNN, the key role of TikTok has been instrumental in pulling clients to the firm’s official site because of a TikTok drift of bulk purchasing garments from Shein and showcasing Shein apparel to the viewer like a model haul video. On 17th May 2021, Shein’s count of application downloads outdid the ones for Amazon.

    Shein maintains to use of the psyche of the new age band and executes marketing plans consequently to attain expansion.

    In 2020, the company became the most discussed product on YouTube and TikTok, and Instagram’s 4th most discussed product. The affordable rates draw adolescent online buyers with modest budgets to share their purchases on various social media platforms.

    For client expansion, Shein offers comparatively affordable rates to encourage demand. With higher expenditures, clients get paid back with additional rebates, which are recommended to be utilized for their subsequent shopping tours.

    The organization not only utilizes its algorithm-oriented reference arrangement but also draws buyers to go to the platform often for performing undertakings, such as including stuff into their virtual shopping cart, viewing live streams, and participating in its competition program, to facilitate winning points which can be subject to redemption subsequently.

    Fabrication

    Initially, the company did not blueprint its apparel and primarily procured its garments from the wholesale apparel marketplace of China in Guangzhou. Nonetheless, Shein became a comprehensively incorporated retail merchant in 2014 once it introduced its indigenous supply chain setup. Currently, the organization uses a network of fabrication collaborators and providers to facilitate the manufacturing and supply of its items.

    The company creates forecasts on styles and manufactures products as promptly as three days following the recognition of a style. Besides, Shein restricts its bids to tiny bunches of around 100 products for measuring customer attention. Simultaneously, its other contenders, such as Zara, place orders of bigger amounts (around 500), heightening their probability of suffering losses if customers don’t buy orders entirely. As stated by Bloomberg News, the tiny-bunch plan of the company is viewed as the cornerstone of its success. Providers functioning with Shein witnessed their enterprise burgeoning as the level improved.

    Tax handling

    Shein could evade payment of export and import taxes, which is conducive to higher profits. Section 321 of the U.S. legislative bill under the Trade Facilitation and Trade Enforcement Act of 2015 (also known as “de minimis”) mentions that any import with a maximum amount of U.S. $800 per Individual is tax-exempt. This bill has permitted the company to supply to the U.S. with no tax requisites, facilitating Shein to have an economic benefit over inland firms in the U.S.

    Disputes

    Intellectual property theft

    Levi Strauss & Co. initiated legal proceedings against Shein in 2018 for plagiarism of a branded denim sewing. The suit was subject to an out-of-court settlement.

    Similar allegations were leveled by AirWair International Limited, famous for Dr. Martens Boots, Ralph Lauren, and Mariama Diallo, in 2021.

    In 2022, the Secretariat of Culture in Mexico confronted the application of Shein’s utilization of conventional Mayan layouts, instructing Shein to take them out from its site.

    Data violation

    There were allegations of data violation against Shein in 2018 that involved a compromise of encrypted passwords and email ids of around 6.42 million subscribers.

    App Embargo in India

    In June 2020, India prohibited the Shein application because of privacy issues. The Indian Ministry of Electronics and Information Technology pigeonholed the Shein application and fifty-nine other China-based applications under Section 69A of The Information Technology Act, 2000.

    Health and Security Hazards 

    Miriam Diamond, a professor supervising a Marketplace probe at the University of Toronto, mentioned Shein for marketing kids’ jackets that carried nearly twenty times the quantity of lead allowed by the security rules set by Health Canada. Besides, the firm marketed a red handbag with five times the permissible quantity of lead. The company informed Marketplace that it would cease the sales of the two products till the concern was solved.

    Human Rights Infringements 

    In August 2021, Shein asserted on its official site that its manufacturing plants were licensed by the ISO (International Organization for Standardization) and SA8000. It was a controversial matter and deemed a violation of the 2015 Modern Slavery Act in the United Kingdom. As cited by Reuters, the company was involved in violation of a likewise anti-slavery regulation in Australia. There were probes by Public Eye, a Switzerland-based Support Team which substantiated an infringement of labor regulations in China.

    In November 2022, there were revelations from Bloomberg News that Shein’s clothing was manufactured with cotton procured from the Xinjiang province.

    Tax Avoidance

    There are allegations of tax evasion against Shein in the United Kingdom concerning VAT registration, and there are hints that Shein was a defaulter for a minimum of nine months. The company’s official site does not show the U.K. business registration no or enumerate VAT, as is necessary for the U.K. regulations.

    Environmental Effect

    According to reports published by D.W. (Deutsche Welle), a German TV channel, Shein has been creating a detrimental impact on ecological well-being. Because of the cheapness of Shein items, most garments do not belong to the premium category and can drive people to toss them out, aggravating the fabric waste quandary.



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