Shein market strategy

Shein’s market strategy: how the Chinese fashion brand is conquering the West

Shein is now the largest cross-border fast fashion e-commerce company in China. The e-commerce clothing brand reaches consumers in the United States, France, Russia, Germany and over 200 other countries. In 2021, the Shein app had over 177 million downloads, with over 43.7 million users worldwide, exceeding 10 million monthly active users in the US alone. On TikTok, the hashtag #Shein has garnered over 32.3 billion views.

Insiders who know the business have anonymously stated Shein’s annual revenue in 2021 exceeded $16 billion USD (up from $10 billion in 2020).

For Westerners, the Shein obsession seems to be appeared out of nowhere. However, this type of explosive growth is increasingly common among new Chinese companies that prioritize revenue and growth before profits.

What is Shein?

Founded in 2008, Shein is a B2C Chinese online clothing and accessories retailer selling globally, but not in China. It features mostly women’s clothing for all occasions and in all sizes. There are also categories for men and children, as well as a new section with home life products.

Little is known about Shein’s founder, Chris Xu, a Chinese-American graduate of Washington University (or possibly Qingdao University as stated by other sources), as he mostly stays out of the spotlight.

With a global warehouse network, Shein ships to over 220 countries and regions worldwide making it one of the fastest-growing fast fashion brands.

Even though Shein has no permanent brick-and-mortar stores, the Nanjing-based fast fashion brand has lately opened pop-up stores in several cities, such as Madrid, Melbourne, Las Vegas, Milan and Barcelona. In line with Shein’s digital nature, its temporary stores all boast a social-friendly spot where customers can shoot their Instagram photos while doing shopping. The opening of Shein’s pop-up stores attracted hundreds of teenagers and young adults eager to get hold of their favorite pieces from the Chinese brand’s summer collection.

Total number of Shein users worldwide

Source: BusinessofApps, designed by Daxue Consulting, Total number of Shein users worldwide

What is the secret behind Shein’s business model?

Shein’s business model is all in their Chinese DNA. The “real-time fashion” retailer applies what works in the Chinese e-commerce world to its western gen-z consumer base, and it works. According to Google trends, US-based netizens search for “Shein” three times more than Western brands like Zara and H&M.

Shein’s true advantage is “real-time fashion”, a business model that takes the “fast-fashion” model to its extreme by identifying fashion trends quickly and minimizing manufacturing cycles. To shorten the time it takes to identify trends, design, manufacture and ship, Shein uses an in-house design team and comprehensive analysis of fashion trend data. With this, Shein can design, prototype, and ship products substantially faster than its fast fashion competitors, releasing 500-2000 new pieces every day.

What makes Shein’s market strategy different from western fast-fashion brands?

The speed and frequency of which the Chinese real-time fashion retailer launches products is unprecedented. In 2020, Shein launched 150,000 new items throughout the year, with an average of more than 10,000 new items per month. It has caught up with Zara’s annual new product volume in just one to two months, and the speed is still accelerating. In March 2021, Shein’s women’s clothing category alone had an average of 2,000 new products per day.

A small dress from other fast fashion brands may cost more than 30 US dollars, while a similar dress on Shein costs half that. The styles of Shein’s clothes are more diverse, and the colors and patterns are more varied. Additionally, the brand’s mission resides in reaching all kind of consumers and their ability to enjoy fashion regardless of their economic status.

Shein's marketing strategy: Official Instagram pages
Source: Shein Official Instagram pages, Sheinofficial and Sheincurve, featuring cheap summer styles for women of all shapes and sizes.

One of Shein’s strategies is micro-influencer marketing. These micro-influencers (with a couple hundred to a couple thousand followers) post on Instagram, YouTube, or TikTok and get free products delivered every month. Some of them can also get up to 10 to 20% commission from Shein’s referral sales.

This referral strategy is indeed effective, as it helps to spread awareness about the brand. According to Similar Web‘s traffic source statistics for the Shein.com site, in January 2022, 10% of the traffic can be directly traced to influencer recommendations (social and referrals), and 45% of the traffic comes from organic search. However, the proportion of direct access traffic exceeds 38%, which indicates a high proportion of returning customers. 

Shein's marketing strategy: traffic sources worldwide
Data Source: SimilarWeb, designed by daxue consulting, Shein traffic sources worldwide

Middle East is an important region for Shein

Shein entered the Middle East in 2016, and its sales in the area shortly reached 200 million RMB that year. Currently, Shein ranks among the top ten shopping apps in the two main markets in the Middle East: UAE and Saudi Arabia.

In November 2021, Shein released its fall/winter menswear collection in the Middle East offering casual clothing staples for men at an affordable price. In 2022, Shein launched their Middle East exclusive Eid collection – Shein X Beeba Eid 2022, in collaboration with popular Omani celebrity and actress Buthaina Al Raisi.

Why Western Gen Z consumers prefer Shein over Amazon

Amazon taught Western consumers to shop online and build their shopping habits through data collection from search optimization.

When expanding to the West, Shein utilized this strategy and competed with Amazon at its own game. Ultimately, Shein became the most popular online clothing store in the US, according to a survey of American teenagers. Now in 2022, Shein still surpasses Amazon in monthly downloads, indicating where Gen Z’s preference lies. Though competitors, Shein also lists its products on Amazon, mutually benefiting both platforms.

Shein's assortment of clothing
Source: Shein’s assortment of clothing and bikinis at a price point beating any fast-fashion brand

Shein’s collections are curated by Shein stylists. Some are created by designers specifically for the online store, but the site also lists designs from brand partners. The catalog has convenient navigation for shoppers, with products being categorized by gender, body type, promotions, fashion trends, seasonal collections, and styles.

Shein has an incredibly wide range of products and constant catalog updates, keeping customers engaged every time they visit. Young and price-oriented consumers who do not require a long-lasting professional wardrobe, Shein’s product selection is perfect.

1. Targeting Gen Z consumers

Shein’s target audience are price-driven customers who love online shopping from all over the world. The most common purchases on the website come from:

  • Gen Z consumers, mostly women
  • Parents of children from 1 to 15 years old

Since Gen Z is the most important target consumer group for Shein, it aims to be desirable, unique, and socially acceptable for young people. This demographic represents a significant market segment but requires new strategies.

For instance, 55% of Gen Z cite price as the most important factor when shopping for fashion emphasizing that they are extremely price sensitive. Shein provides an omnichannel experience with its website, app, and social media, as well as a wide network of fashion influencers. Compared to other generations, Generation Z relies more on social media and targeted mobile advertising to discover fashion brands. Across Shein’s social media presence, 27.6% of their followers are aged 18-24, and 29.2% are aged 25-34.

Aside from micro-influencers, Shein also collaborates with Western celebrities adored by young people, including but not limited to Katy Perry, Lil Nas X, Rita Ora, Nick Jonas, and Hailey Bieber who represented Shein in 2020. In 2021, Shein collaborated with fashion brand Sarah Kes for a new spring collection. Recently in 2022, Shein collaborated with Omani celebrity and actress Buthaina Al Raisi.

2. Ecommerce accelerated by COVID-19

During COVID-19, while most American fashion brands’ sales declined by 20% in 2022, the Chinese fashion brand’s sales soared to triple digits. The lockdown period also caused Shein’s target customers to spend more time browsing and shopping online. This was a perfect opportunity for consumers to become aware of new brands, which led to the dramatic rise of Shein.

Shein's business model wins over competitors
Data Source: Google Trends, designed by daxue consulting, U.S. comparison of google searches among Shein, Zara, and H&M during the two years following COVID-19’s outbreak

3. Shein’s presence on Tiktok

Shein is the #1 brand on TikTok. Shopping purchases are driven by a constant stream of coupons and discount codes. Shein has created armies of fashion bloggers supporting the brand with haul videos of their purchases under the hashtag “#shein”. Influencers get free merchandise every month for their posts on TikTok. Others earn commissions on sales directed to Shein.com, above the average affiliate rates that other small stores cannot compete with.

Many bloggers, influencers, and YouTubers alike enjoy working with Shein due to the flat rate per video profit made rather than a “brand exclusivity” contract. This creates an easy and convenient working experience for both parties.

Shein's marketing strategy: searches on Tiktok
Source: TikTok, Shein hashtag search results hits billions of views

4. Shein’s marketing strategy on YouTube

Shein has created an environment that allows shoppers to feel smart and savvy to find the perfect outfit in style. The sheer range of items sold through the store and the fact that not everything is always in stock create an almost gamified experience. Customers are happy to film themselves unpacking their clothes to try it on and show how they found these inexpensive goods. Sometimes, these products may not be the right size or look cheaper than they appear to be on the Internet, but this risk adds to the fun of a customer’s experience.

Shein haul videos by micro-influencers
Source: Youtube. Shein haul videos by micro-influencers

Shein’s influencer marketing strategy

Since Shein is a standalone brand and not a platform for sellers like Amazon, customers have the chance to be part of Shein’s affiliate program.

In affiliate programs, people earn commission on all recommended sales simply by referring customers to Shein.com. You can choose between Shein Official Affiliate and Partner Affiliate Platforms.

How influencers earn money from Shein:

  1. They promote Shein on social media
  2. A prospect clicks on the posts
  3. The client places an order
  4. The influencers receive commissions

Shein’s secret to success: Understanding the psychology of a new generation

The online apparel market is changing rapidly, and strategies must be constantly updated to beat competitors. Shein’s successful marketing strategy demonstrates a sincere understanding of the new generation.

Shein also beats its competitors with fast delivery and cheap prices. The company is becoming more and more vertically integrated with leading in-house developments. Average delivery time is 6-8 days. Processing usually takes 1-3 business days. It is also possible to choose premium delivery and receive the goods in 2-4 days.

Moreover, Shein actively supports an active community of like-minded shoppers through its channels. Their website and mobile stores include extensive expert reviews as well as a style gallery through which shoppers can share their clothes and tag products with their style sources.

What Chinese companies can learn from Shein’s success in the West

As a Chinese company that has become wildly popular around the world, it’s no surprise that Shein’s global strategy involves market strategies that have been successful in China. In a way, Shein helped test the waters for Chinese brands looking to expand abroad, to see what market strategies they can take abroad, and what won’t work. Here’s a look at what Shein market strategies worked in the West.

  • Micro-influencer marketing. Shein’s influencer marketing strategy is similar to KOC marketing in China. This mutually beneficial partnership allows the brand to expose itself to new audiences with its fashionably, trendy clothes while giving many small influencers a chance to receive free clothes in exchange for their opinions and social media exposure. By using smaller, less known influencers, Shein minimizes social media marketing costs as compared to larger, more popular influencers. Smaller influencers are also often more “down-to-earth”, which can give their opinions more credibility from their audiences’ perspectives.
  • Low prices. Shein’s pricing matches that of Taobao, which is lower than other fast fashion brand in the West, but not available outside of China. Because of the price, Shein was able to expand quickly, making a large amount of each item, which thereby allowed the brand to produce in bulk and even further lowering costs.
  • Frequent discounts. Similar to many Chinese brands in the domestic market, Shein frequently offers discounts. Discount for purchasing through an influencer, discount for downloading the app, and a portion of their website that offers rotating sales.
  • Social Media Presence. Shein has over 250 million followers on multiple social media platforms which contributes to its success allowing consumers to discover their brand and engage with audiences. Its digital social media presence is also highly connected to their influencer marketing strategy that targets younger shoppers and help builds its reputation through clothing hauls and reviews.

Controversies surrounding Shein

  • Imperfectly implemented body positivity. Shein indeed has dedicated sections for plus sized clothes, and the brand has taken a stance on body positivity. However, at a time when many Western apparel brands are pledging to stop photoshopping models, Shein is using overly photoshopped images to fit unrealistic beauty standards. Shein’s large consumer base consists of younger teens which counteracts the progressive movement towards loving one’s own body and sets an impractical goal to look up to.
Shein's business model has a dark side
Source: Screenshot posted by Reddit user, a Shein model with clearly photo shopped features.
  • Customer data collection. In exchange for more discounts and bonus points, Shein encourages shoppers to provide their personal data. Shein collects data from customers using their social media apps and sites to track their shopping behavior, as well as customize their preferred clothes at lower costs than competitors. In 2018, data breaches in Shein’s Australian site by hackers affected 6.2 million people which led many consumers to become wary and distrustful of Shein’s data collection practices.
  • Lack of cultural sensitivity. “Politically correct” means something else in the West than it does in China, and in the West, cultural appropriation belongs to the “politically incorrect” category. One major slip-up Shein made on this front was appropriating Muslim prayer mats to be ‘rugs’, which received angry backlash from consumers. On another instance, Shein was selling the Buddhist swastika sign on jewelry, however in Western cultures, the swastika is more closely related to anti-Semitism. Although the jewelry piece was made in the design of the Buddhist swastika, with the angle as the key difference, consumers can’t help but relate the symbol to the Nazi swastika.
  • Too many ads and notifications. A common complaint of Shein is that it sends to many notifications, and has too many ads within the app. This is a cultural difference between internet usage in the West vs. China – while Chinese prefer website that are busier and are less bothered by notifications, Westerners like clean-cut and simple websites like Google, and prefer less notifications and ads.

Key Takeaways from Shein’s marketing strategy

  • Shein exported Micro-influencer/KOC and online word-of-mouth marketing from the Chinese market to Western contexts.
  • Part of Shein’s success is selling products in the West at Chinese prices, making their products easily outcompete Western brands in price.
  • Gen Z consumers’ purchase decisions are highly influenced by online fashion trends, a trait that Shein uses effectively.
  • Shein has many criticisms of unsustainable practices and poor corporate social responsibility, yet remains popular as it’s target audience is driven by price.
  • Shein’s data-integrated supply chain is a key contributor to rapidly identifying popular trends and delivering minimum-viable-products.
  • SEO helped Shein become popular among consumers demanding cheap ecommerce fashion, however, this was only possible due to there being existing demand from consumers.
  • Shein’s success indicates that many Gen Z consumers prioritize price and value-for-money over quality and brand name.
  • With frequent discounts and new releases, the app taps into users dopamine reward system and is highly addicting.

This analysis of Shein’s market strategy in the west is a part of our 7 Continents initiative where we provide market research and consulting for Chinese brands in the west. Learn more about 7 Continents and find similar case studies here.


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