What: A new, well document article on the ultra fast fashion phenomenon Shein.

Why it is important: Shein shows that new business models can successfully compete in the fashion segment, which is a point not taken for granted by investors and bankers. It also shows that new players can acquire a dominant position in a very short period of time provided it has the right production and business model, as well as the adequate price point.

The Financial Times follows suit after BBC and The Economist and explores the business model of Shein, the Chinese ultra-fast fashion phenomenon that is rapidly growing market shares in the West. Based on a low price range (only Primark has lower average retail prices), ‘test and repeat’ approach with algorithms evaluating in real-time the success of some 6,000 daily new items launched in small batches, Shein grew its market share from 13% in January 2021 to 28% in June 2021, even surpassing Zara (20%) which used to be the uncontested leader. One must say that Shein made some fruitftul bets, especially by focusing on TikTok instead of Instagram. In addition, Shein benefits from a local ecosystem of suppliers able to sustain its demand on short series potentially being expanded provided the demand grows, as well as the capability to ship internationally without being affected by international taxes and duties thanks to its very low retail prices.

The FT focuses as well on the environmental issues that Shein is facing, even though it denies any wrongdoing, but most importantly, concludes on the fact that the rapid rise of such a prominent actor in such a short period of time implies that other or more disruptive players might very well appear on the fast fashion segment in the future, further increasing the competitive pressure.

Shein the Chinese company storming the world of fast fashion