Research on the Business Strategy and Deficiency of
the Fast Fashion Industry to Enhance Development - a
Case Study of Shein
Jiaye Liu
King’s Business School
King’s College London
*Corresponding author. Email:
[email protected]ABSTRACT
Apparel is one of the largest categories of retail business in which the fast fashion industry originated in the 1990s and
has played a significant role over the past decade. However, it still faces a variety of unique challenges. This research
aims to suggest appropriate improvements in certain aspects of the fast fashion business using the case of Shein, which
is an e-commerce company with one of the fastest growth rates in the world. By analysing the business strategies of the
company using the SWOT analysis and the Marketing Mix, this study identifies three potential deficiencies in the field
which hinder its further development, including the lack of sensitivity in design, insufficient corporate social
responsibility, and damage to the environment in the manufacturing process.
Keywords: Fast fashion, Shein, E-commerce, C2M
1. INTRODUCTION business strategies applied by Shein as a fast-growing
startup and to analyse the areas that require improvement
Fast fashion is a business model followed by the to enhance development for the fast fashion industry as a
clothing industry in which recent catwalk trends and whole.
high-fashion designs are copied, mass-produced at a low
cost, and shipped quickly to retail stores. During the late 2. THE HISTORY OF SHEIN
20th century, fast fashion grew as clothing
manufacturing became less expensive - thanks to new The company was established in Nanjing, China, by
fabrics like polyester and nylon, more efficient supply Chris Xu in 2008 and is known for its reasonably priced
chains and rapid response manufacturing techniques, and clothing. Shein started more as a drop shipping business
reliance on low-cost labour in the apparel industries of rather than a retailer in the early days. Instead of
Asia. With an estimated market value of $30 billion, designing and manufacturing clothes, the company
Shein is now the largest cross-border e-commerce site for bought its merchandise in Guangzhou wholesale
fast fashion in China [1]. Over the past eight years, its markets. Shein acquired Romwe, a Chinese retailer, in
revenue has grown by over 100% every year and is 2014, transforming the company into a "fully integrated
reported to reach almost $10 billion in 2020 [1]. In the retailer". As one of the largest fast fashion companies,
United States, Shein has taken over the No.1 spot on iOS Shein can ship to over 220 countries around the world
and Android from Amazon as the leading e-commerce thanks to its global warehouse network. Similar Web
app in the fast fashion category [2]. Shein adopts a estimates that Shein's website received 115.5 million
unique business model - the Consumer to Manufacturer visits worldwide in 2021, second only to Nike, Zara,
(C2M) model. By using this model, Shein's production Macy's, Lululemon and Adidas in the fashion and
of popular items can be accelerated quicker than others apparel category [3].
because she can predict demand more accurately. Westerners are surprised by the Shein obsession
Consequently, the company reduces waste as well as because it seems to have appeared out of nowhere.
inefficiencies, giving it a huge competitive Nevertheless, as more startup companies emphasize
advantage. The purpose of this research is to explore the revenue and growth over profits, this kind of explosive
© The Author(s) 2022
Y. Jiang et al. (Eds.): ICEDBC 2022, AEBMR 225, pp. 1794–1801, 2022.
https://doi.org/10.2991/978-94-6463-036-7_268
Research on the Business Strategy and Deficiency 1795
growth is becoming more common. The marketing advantages and the potential crisis in achieving the
strategies Shein applied were innovative and effective. objectives.
3. SWOT ANALYSIS 3.1. Strengths
SWOT analysis stands for Strengths, Weaknesses, Shein announced sales of over 10 billion dollars in
Opportunities and Threats, which is a strategic analysis 2020 and 15.7 billion in 2021. In June 2021, the company
tool for business competition. It identifies the internal has nearly as many fast fashion sales in the US as H&M
(Strengths and weaknesses) and external factors and Zara combined [4].
(opportunities and threats) of Shein for the competitive
Figure 1. Market share of fast fashion in the US [4] (Source: earnest, Shein Now Leads Fast Fashion, 2021, Not for
commercial use)
3.1.1. Fast update consumers. T-shirts for women can be purchased for as
low as $5 and dresses for as low as $10.
From design to manufacturing, Shein handles the
entire supply chain on its own. With every step highly 3.1.3. Variety
digitised and integrated to the next, the company can
create hundreds of new products every day tailored to It offers clothes for women of all shapes and sizes,
different regions and tastes. Shein removes any from XS up to 5XL. The plus-size collection is still rare
remaining middlemen and has developed an enhanced on the market. For example, a basic t-shirt is available in
cross-border C2M(Customer-to-Manufacturer) model. 8 different colours, nine sizes, and three necklines. New
When a trend is identified, Shein can produce items in sections with tiny gadgets, makeup, technological
less than three days (usually 5-7 days) [5]. Shein devices and home decorations, as well as sections
launched 800,000 new products in 2021, on average dedicated to men, children, and pets, are also included.
more than 50,000 items every month. In just a few
months, it has surpassed the annual new product volume 3.2. Weaknesses
of Zara, and the growth is accelerating [6]. According to
their official website, there were about 8000 new 3.2.1. Quality
products added to Shein's women's clothing category
alone every day in March 2022. As what is the most common criticism of the fast
fashion industry, there are complaints on social media
3.1.2. Low price about the poor quality and condition of the products with
clothes falling apart and received with odd smells.
Despite other fast fashion brands and Amazon's Additionally, the clothing in Shein's photos does not fit
products being cheap, for example,people can buy a appropriately as seen or comes in the wrong sizes,
regular shirt at Zara for up to $30, the same thing at Shein showed in some YouTube videos [6].
only costs half that amount. Furthermore, Shein aims to
reach every type of customer and ensure they can enjoy
fashion, irrespective of their economic situation. The low
prices of Shein are attracting more and more young
1796 J. Liu
3.2.2. Slow Delivery brands are venturing into e-commerce. To continue to
succeed, Shein can incorporate new branding methods
While Shein products are designed and manufactured since it is already online.
quickly, they still take a long time to arrive. In some
regions, there are no warehouses facilities available to 3.3.2. COVID-19
speed up the delivery process. Delivery usually takes two
to three weeks from Shein’s [5]. If one is shopping for a COVID-19 may have contributed to Shein's relative
special occasion and needs the clothing item outperformance. Zara and Uniqlo's revenues declined
immediately, that is a long wait time. In that length of last year largely because of the global pandemic [5],
time, the purchase is also likely to be forgotten. Besides, which prevented people from stepping into the stores for
if shipping stays slow, what would be the point of being shopping. However, each month, Shein's US sales
fashion-responsive? increased by more than twice as much as they were
before the pandemic [1]. Additionally, Shein's targeted
3.3. Opportunities consumers had more time to browse the Web and shop
online during the lockdown period. Shein took advantage
3.3.1. Increase in the e-commerce of this opportunity to increase consumer awareness,
which resulted in a rapid rise in its popularity. During the
Both businesses and clients are increasingly turning COVID period, the increased use of digital technology
to eCommerce as they are booming in the digital world. also enabled Shein to develop their social media
Businesses and consumers are seeing the benefits, marketing strategies according to their target audience,
including lower overhead costs and an easier and safer Generation Z. The popular social media app, TikTok,
customer experience. With the growth of the e- gave Shein the opportunity to connect with their young
commerce fashion industry, an increasing number of consumers as well as build relationships.
Figure 2. Shein's monthly year-over-year sales growth during the pandemic [1] (Source: Bloomberg News, How
Trump's Trade War Built Shein, China's First Global Fashion Giant, 2021, Not for commercial use)
3.4. Threats 3.4.2. Competitions
3.4.1. Geopolitical tensions Online competition is crucial. In this way, they must
compete with both giants, like Amazon and small shops,
There are increasing volatile geopolitical tensions, which also provide affordable clothing. Additionally,
and China-related tech companies are under increased consumers have a large selection of physical clothing
scrutiny. Shein was one of 59 apps the Indian stores such as Zara and Urban Outfitters, which provide
government banned last year, including TikTok and the convenience of trying on clothes before buying. New
WeChat, as they were deemed detrimental to India's entrants also present a very significant threat, given that
sovereignty and integrity, the defence of India, security hundreds of new websites of this kind are created each
of state, and public order [1]. year.
The C2M models are not as widely accepted in those
countries, which is why the quality of the low-cost made- 4. MARKETING MIX
in-China products is questionable. Knowing they were
The Marketing Mix, often referred to the four Ps of
basically buying directly from Chinese manufacturers
marketing, includes Product, Price, Place, and Promotion
might discourage consumers from purchasing.
of a company, each interacting significantly with each
other. The Marketing Mix is used by companies to
analyse some key factors for the marketing strategies of
their business. By incorporating the marketing strategies
Research on the Business Strategy and Deficiency 1797
into the Marketing Mix, Shein can provide high-demand, 4.2. Price
accessible products that are promoted to their customers
at competitive prices. Shein uses a low pricing strategy that appeals to the
shopping preferences of Gen-Z (their targeted
4.1. Product demographic). Gen Z emphasises that they are extremely
price-sensitive and price-driven when shopping for
Shein is a one-stop shop. They offer a wide range of fashion, considering price as the most important factor.
products, including clothing, shoes and accessories from Their most advantageous marketing strategy is to offer
daily dressing to beachwear. In the clothing category, products at significantly lower prices than other fast
their products provide a variety of sizes for both male and fashion retailers like Zara and ASOS, as well as those
female customers from XS to 5XL, and to kids from new- sold on Amazon.
born to 14 years old. Clothing targeted at teens and young
adults in their 20s remains its core business. Shein's 4.3. Place
clothes are more diverse in terms of their styles, colours,
and patterns. They also have numerous products for pets, Backed by a powerful modern marketing engine,
technological devices, and home decorations. Last year, Shein sells mainly through its app. Shein's target
they announced their first beauty brand, 'SHEGLAM', demographics are the young, mobile-obsessed
which covers the cosmetic area from makeup skincare to Generation Z, which sees its app as preferable to its
body products. website and is moving the battle onto mobile app e-
commerce. Unlike generic consumer brands that rely on
Amazon for customer acquisition with no meaningful
access to customer data, Shein owns its sales channel and
user data.
Figure 3. App traffic VS website traffic for Shein and its competitors [3] (Source: Similarweb, Not for commercial
use)
4.4. Promotion TikTok and Shein are the perfect matches, not only
because they can be reached at an affordable price, but
also because people enjoy seeing others wearing their
4.4.1. Advertisement and social media
purchases. Among the 70 hashtags on TikTok, only the
The company used social media influencers to market #shein hashtag has reached 21.5 billion views [6].
its products as early as 2011. As a pioneer in every major
e-commerce acquisition channel, Shein didn't shy away 4.4.2. Affiliate program for influencers
from paid marketing. It spends heavily on Facebook and
Instagram as it is one of the largest Chinese clients of With Shein, customers can join the affiliate program
Google [5]. TikTok has emerged as a major channel in since the company is not an Amazon-like platform. By
recent years. Shein is one of the most popular brands for referring customers to Shein.com through affiliate
teens on TikTok. A continual stream of programs, people can earn commissions on all sales
discounts encourages shoppers to visit the site. TikTok made, with affiliate rates higher than any other small
users are delighted with the wide selection of clothing store. Many users post content for free to earn 10-20% of
sizes available from XS to 5XL. Fashion bloggers sales as affiliate fees [5]. Micro-influencers such as these
support the Shein with haul videos under its hashtag. are known as KOCs or Key Opinion Consumers. They
1798 J. Liu
also use an exchange model in which they offer free exchange for spreading the word. Referrals do indeed
products in exchange for content to video bloggers and serve as an effective marketing tool by spreading
influencers as another marketing strategy. By awareness of your brand. For example, according to
partnering with a number of small influencers, Shein can Similar Web, the traffic source statistics show that for the
reach new audiences with its affordable and fashionable website in February 2022, 11.69% of the click were
clothes, as well as provide many of them with the directly attributable to influencers (social and referrals)
opportunity to earn free products or commissions in and 44% to webpage search [3].
Figure 4. Markets channels distribution for Shein [3] (Source: Similarweb, Not for commercial use)
4.4.3. KOL Apart from the previously mentioned problems, their
lack of sensitivity and their willingness to repeatedly
Key Opinion Leaders, or celebrities paid for steal fashion designs are still the major concerns in the
endorsements, are another aspect of the company's fast fashion industry.
marketing. A number of artists have represented Shein Last year, Shein was reported to have stolen art from
this year, including Katy Perry, Lil Nas X, Rita Ora, and the same small artist six different times [8]. If the artist
Hailey Bieber. Similarly, the biggest star on TikTok, approached them for copyright claims, they would
Addison Rae, promotes it through her social media always pay them some money for an unlimited license
channels. As celebrities and key opinion leaders are and simply delete the products. Other giants like Zara
extremely influential in fashion among their target and H&M are involved in hundreds of lawsuits per year
demographics, their marketing strategy of promotion is for their controversial designs, which are somehow
extremely effective. always similar to others' work. As long as there is no
sound copyright law, clothing designs can still be copied
5. IMPROVEMENTS NEEDED TO without permission, meaning that designs cannot be
PROMOTE DEVELOPMENT OF THE adequately protected [9].
FAST FASHION INDUSTRY
However, a new program, Shein X, was introduced
last year to help showcase new talent to the world and
5.1. Lack of sensitivity
encourage cooperation with indie designers. After work
With the fast fashion industry being a fast-paced by the outside designers, they handle every step post-
business with an average 3-month update cycle, design, including manufacturing, marketing, and selling.
companies rely on copying trends and bringing them As a step toward protecting intellectual property, this
quickly to market. So, they usually ignore the possibility program sets a precedent for other competitors in the fast
of the controversy caused by their design, as they are in fashion business.
a tense race with speed.
5.2. Corporate social responsibility
Culture appropriation is classified as "politically
incorrect" in the West. On this front, Shein made a major The work culture in Shein's Chinese factories was
mistake by depicting Muslim prayer mats as rugs, which shockingly detailed in a new report published in
generated anger among consumers [7]. Another instance November 2021. It is found that staff work 75 hours per
involved Shein displaying the Buddhist swastika sign on week while having three shifts daily, often taking only
their jewellery. But the swastika and anti-Semitism are one day off in a month, which obviously violates the
often related in Western cultures. It is just the angle of labour law there [10]. The local labour laws in China
the jewellery piece that sets it apart from the Buddhist mandate a maximum working day of eight hours, which
swastika. Although it was not designed for that intention, equals 40 hours in a week. Workers are encouraged to
customers cannot help but compare it to the Nazi symbol. work long hours because they are paid per item of
Research on the Business Strategy and Deficiency 1799
product. In a 'paid per item' model, workers are paid for 14% of the violations detected through their supply chain
each garment they produce. As a result, they won't be are related to working hours and 28% of which involves
paid if the work is rejected for quality concerns. insufficient fire and emergency preparedness, which all
Furthermore, there is no security, as you won't be paid if result in the issues about the poor working environment
there is no work left. In the 2021 Sustainability and [11].
Social Impact Report of the company, it is shown that
Figure 5. Percentage of violations detected in the supply chain [11] (Source: Shein Group, 2021 Sustainability and
Social Impact Report, 2021, Not for commercial use)
The Shein website published its first Supplier Code social responsibility to promote development as
of Conduct in September. A key provision there calls for exploitation scandals harm their brand images.
suppliers to provide a healthy, safe, and hygienic work
environment. Clearly, this is an area in need of 5.3. Harming the Environment
improvement.
The clothes produced by Shein, like other fast fashion
It is no surprise that factories are under poor working companies, are often cheap and low-quality, which are
conditions. Not only the fast fashion industry, but the not meant to last. The clothes are supposed to be trendy,
garment industry as a whole is built around poverty, which accordingly do not need to last past their short
wages, and sweatshop conditions. This is not the fault of trendy lives. However, their low prices also indicate that
a single factory but is caused by the industry-wide push many of them are made of synthetic materials such as
for the lowest prices and shortest production periods. polyester and nylon. In contrast with the short-term
With sweatshops in East Asia competing with garment trendy cycle in fashion, clothing made of these materials
factory owners, it is a race to the bottom where workers will not decay [12]. As such, we should expect those
are paid the least for the cheapest, fastest production. pieces we buy from Shein to spend much more time in a
Brand buyers have no loyalty to suppliers and no garbage dump than in our wardrobes. Furthermore,
commitment to the workers in their supply chains. It is Shein's designs are released much faster than those of
inevitable that scandals about factory working conditions other retailers. Because of their ultra-low prices, Shein
will recur in India, China, or the UK so long as this can influence their customers to make more and more
dynamic continues. Clothing brands must change their frequent purchases, contributing to a global rise in textile
purchasing practices in order to pay decent wages and waste. Due to the lack of transparency in Shein's supply
provide better working conditions for the workers in their chain, it is impossible for us to confirm any of Shein's
supply chain. Instead of putting all the responsibility on claims regarding environmentally friendly production
the factories, this time companies at the top of the supply practices or sustainable materials.
chain are expected to be responsible for providing better
working conditions in order to address the concern Each year, the sector produces 92 million tons of
properly. waste as a result of cheap production, short-lived items,
and frequent acquisition. However, the Earth is
The fashion industry contributes over $350 billion to threatened by more than just waste. Additionally, our
GDP per year in the United States [9], so giants in clothing is manufactured with 79 trillion litres of water,
business should take action immediately and effectively toxic chemicals, and 1.7 billion tons of CO2 emissions
to change the current situation, with greater emphasis on [12].
1800 J. Liu
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