There’s excitement in the air as young people line up for the Shein’s Montreal pop-up.
“It’s cheaper,” said Diana Quentero, who stood in line to shop. “I can find anything…If I want something for a special occasion, I go to Shein.”
On Thursday, the queue numbered in the hundreds and snaked around the corner of an outdoor mall. Online fast fashion giant Shein, founded in 2008, has no physical stores except for a few in Asia. So, a pop-up is new for shoppers.
Shein, a Chinese company based in Singapore, has seen an explosion in popularity on social media for its $3 tops, $5 dresses and nearly endless style web pages. According Business InternShein has over 74.7 million active buyers, and in 2022 the business was worth US$100 billion.
Today, the company is growing from selling its own branded clothing to a global online marketplace to compete with some of the biggest online e-commerce brands. Its online marketplace will see third-party vendors sell everything from homewares to appliances direct to consumer, like Amazon.
It is one of many companies entering the market. This week, the Wall Street Journal reported that TikTok is also building an Amazon-like marketplace. And Temu, a Chinese-owned e-commerce platform launched in the United States in 2022 and in Canada in February.
People lined up Thursday for a retail pop-up hosted by Shein in Montreal. The company’s popularity exploded with young shoppers on social media for its $3 tops and $5 dresses.
But some say Shein needs to clean up his act first. The company has come under intense scrutiny of its environmental impact and his human rights recordand an expansion could make matters worse, experts say.
“The fashion industry is already complex enough. Shein already has enough problems to solve to improve,” said Sheng Lu, a global textile and apparel industry expert at the University of Delaware. .
In his May press release, Shein said it is expanding to meet consumer demand. Shein did not respond to CBC News’ request for an interview.
“Shein is committed to providing the best shopping experience for customers,” Sky Xu, CEO, said in the statement.
An Amazon competitor?
Shein has become the largest fast fashion retailer in the United States in 2021, according to Ernest Analytics. And now, with its expansion goals, some experts say it seems like just the beginning.
“I don’t think there’s a reason why any other company couldn’t compete with what Amazon does… It looks like Shein is trying to do that,” said New York-based author and journalist Elizabeth Cline. York which covers fast fashion and sustainability. .
It has already launched its online marketplace in Mexico, Brazil and the United States, and plans to roll it out in Europe later this year. It is not yet known when the market could roll out in Canada.
Shein’s ability to deliver at very low prices will make it a strong contender in the e-commerce arena, Cline said.
“Amazon is known for its speed and low prices, but you can always go lower,” she said.
Shein’s already established popularity could help propel its new market, said Dave Xie, an expert at China retail consultancy Oliver Wyman. Shein already has brand recognition, he said, and can charge merchants a commission.
“It’s kind of easy money for platforms to make, but only on the condition that as a platform you have a very large traffic base,” Xie said. “So basically I think that’s the strategy of many platforms, for example, Amazon.com.”
And he can rely on his ability to spot trends in the retail industry, which helps him understand what will sell well and what won’t, he added. He says the company has the ability to mine data from social media and other websites to spot new trends.
“A new design, a new color, a new theme, even new fabrics are available, and then Shein designers will combine these design elements…to produce the newest product.”
Supply chain pressure
Xie says Shein is able to meet demand using a “small order, quick response” model, which allows her to tightly control her supply chain, mass-producing only the best-selling items on her site. .
“They just order very small batches of clothes, and then if there’s a demand for the product, they’ll increase it,” Cline said.
But Cline says Shein’s business model creates pressure on its supply chain to make clothes at low prices, which ultimately causes factories to cut corners on environmental and human rights standards.
In 2021, Shein emitted about 6.3 million tonnes of carbon dioxide equivalent, according to The fashion business. And a recent US Congress Report feared the company had links to forced labor in its supply chain.
Last September, Shein pledged to reduce emissions from its supply chain by 25% by 2030. In comparison, Zara recently announced its plans to reduce emissions along its value chain by 50% in 2030 and reach net zero by 2040.
A group of influencers have come under fire after attending a brand trip with Shein, one of the world’s biggest fast fashion makers, which has been accused of labor rights violations and an outsize environmental footprint. Andrew Chang explains how this PR campaign went so wrong.
Cline wonders how Shein’s recently announced sustainability plan will play out in its new market and how far its sustainability initiatives in the supply chain will actually go.
“There are concerns about how Shein is creating this kind of culture that encourages consumers to keep buying cheap clothes and throwing them away,” Lu said.
Lu says that amid all the scrutiny, Shein should take the opportunity to review its business model.
Ultimately, Cline says Shein presents a lot of different strains.
“People kind of struggle with that,” Cline said. “What does it mean that we’re living in this time of enduring awareness and we’ve also nurtured and somehow created the biggest, fastest fast fashion company and the cheapest in the world.