Shein, the Barely Know App that Rivals Amazon and H&M

06/07/2020

With almost $3 bln revenue last year, Shein ranks 14th on a list of the 50 top Chinese global brands. But is unknown in China

It is one of the most popular e-commerce apps in Western countries, but it’s barely known in China. Is it that possible? Yes it is. We are talking about Shein, a hot fast fashion app, widely used several countries around the world. Now Shein has climbed the download charts from Europe to The States.

Why does it matter? Shein doesn’t target its home country, China, as well it doesn’t sell there. Instead, the fast fashion online retailer primarily targets overseas markets, helping it pull in billions of dollars in sales last year. Launched in 2008 in Nanjing, Jiangsu capital’s province, the start-up made around $3billion in revenue last year.

As suggested by its name, Shein (she-in) specializes in trendy women’s clothes that are mostly priced below $20, with some products even selling for less than $5. Nowadays, the shopping app also offers cheap household products, men’s wear, and electronics gadgets like earbuds and smartphone accessories.

Despite is totally unknown in China, the app has already become the top shopping app on the iOS App Store in a handful of Western countries, including France, Spain and the UK, according to media. And it’s taken the top spot in some Middle Eastern countries, too, including Saudi Arabia. In the US, it ranks behind only Amazon, media said. The company’s brand recognition is also growing. The start-up ranks 14th on a list of the 50 top Chinese global brands compiled by BrandZ and Google last year.

According to experts, Shein’s success comes partly from effectively leveraging influencers in social media marketing campaigns. For example, Shein’s main Instagram account has pulled in more than 11 million followers by running targeted ads with influencers endorsing its products. In May, Shein held a four-hour online event for Covid-19 relief called “Shein Together” that featured artists Katy Perry and Rita Ora. But in China, though, the app doesn’t have such a big presence online. On the microblogging platform Weibo or on WeChat, Shein has more than a dozen accounts, but  but nearly all of them also exist to serve suppliers and logistics partners.

Shein’s aggressive marketing efforts aren’t limited to online. Last year, the app launched a pop-up store in Paris, where it invited fashion journalists and bloggers to attend. The move generated an interesting buzz online. In more detail, we could assume that Shein is following the same strategy taken by other Chinese tech upstarts like Xiaomi. En fact, the company  doesn’t operate any physical stores and it is a huge advantage in terms of costs.

With only the occasional pop-up store, Shein is able to keep costs down and more aggressively compete against rivals with large retail chains like H&M, helping them grow early on before later expanding into physical retail. Shein’s popularity in the West is centered around Gen Z consumers, who are willing to put up with the long fulfillment times of typically two to three weeks in order to benefit from the brand’s low prices.

But the company is facing challenges and one of the main one is company’s Chinese origin. The rising of anti-China behaviours, amplified by Beijing-Washington tensions and the pandemic outbreak, is likely to strain the company’s further expansion in the global market.

Moreover, diplomatic tension between India and China, have caused problems for the company. Last Monday, it was one of 59 Chinese apps banned by the Indian government on national security grounds. So, what’s next? An outright ban might be impossible in Western markets, but Shein will need to carefully consider how it positions its brand in these sensitive times.

 

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