Fast Fashion
The term “Fast Fashion” was coined in the 1990’s when Zara opened its first store in New York. It’s about taking ideas from catwalks and/or celebrity culture to create clothing for the masses as fast as possible, to capitalise on the newest trends while they’re still popular.
You know the analogy of the 3-legged stool – fashion can be a combination of good quality, low cost and quick to arrive, but you can only choose two of these at any one time. Fast Fashion sacrifices quality in its desire to get clothing in the hands of consumers as cheaply and quickly as possible.
This combination also makes Fast Fashion an environmental and social scourge – read more about that here.
Living in a digital world
The speed of Zara’s product development and supply chain in the 1990’s was unheard of – But now we live in the age of Ultra-Fast Fashion – enter SHEIN.
Shein epitomises the way in which much of society seems to function these days – doomscrolling on Facebook, short attention-span tiktoks with Nightcore, and this Chinese influencer that made $18m in 7 days by … I can’t explain it, you’ll just have to watch the video.
Just like fast fashion of the 90’s, ultra-fast fashion does not care about the environment, or overproduction, or worker rights.
Shein uses subcontractor arrangements that are very similar to Uber Eats – requests for production are sent out to a network of small workshops and whoever can fulfil the order cheapest and fastest wins the job. For more information on the environmental and human impacts of this operating model read this article, or this one.
Those small production runs allow Shein to test approximately 700-1,000 new items EVERY DAY on its site before selecting the most likely winners to go through to mass production. Using AI to search and replicate popular trends every day means that a trend that goes viral today could be in test within a couple of days and begin mass production within 2 weeks. They add an average of 2,000 SKU’s daily.
source: Momentum Asia
Shein’s growth
Founded in 2008
$10 billion sales in 2020
$23 billion sales in 2022 & $800 million Net Profit
Ships to 150 countries
6,000 clothing factories in China
Creates the same amount of CO2 as 180 coal-fired power plants due to its use of virgin synthetic fibres (this is not to say they’re doing nothing about this – Shein aims to reduce supply chain emissions by 25% by 2030)
Shein’s IPO
In November 2023 news broke about Shein confidentially filing for a public offering in their largest market – USA. What’s attractive about it?
Stupendous growth
Geographic domination via online sales
Sideways expansion as a marketplace for third-party sellers – if that sounds familiar, you’ve heard of Amazon and Temu
Recently acquired stakes in business that would give it a channel to physical store sales
Partnership with a major Indian retailer
Relocated head office to Singapore in 2021
Diversified manufacturing locations to countries outside China – Turkey and Brazil
Shein last raised investor funding in May 2023, which valued the company at $100 billion - which would make it larger than H&M and Zara … combined.
Will it be successful? 2023 has not been kind to new listings – many companies have not been able to reach their target valuations, eg Birkenstock.
Even if it is less successful at IPO, Shein has already shaken up the world with its ultra-fast fashion, and looks set to continue with its forays into other channels and markets.
For more news and articles about IPOs, business valuations, and business strategy, check out our other blog articles.