SHENG: Our industry is not just about a commodity. The company says they have a zero-tolerance policy against the use of forced labor. Like other fast-fashion brands, they've been under fire for their labor practices. WOODS: But all this spectacular growth has brought scrutiny of Shein. customers, it gets to avoid a lot of that custom stuff. And because Shein is usually shipping relatively small orders direct from factories to U.S. But Shein does not have to do that because the law makes an exception for de minimis, or low-value, goods, as they're called, basically anything under $800. They have to pay tariffs on them, things like that. port, those pants have to go through inspections. MA: Meaning when other retailers have big containers full of thousands of pairs of pants coming into a U.S. You have to go through the normal customs procedure. SHENG: So for conventional retailers and brands, when they import the products at the beginning, it has to go, you know, through big container. MA: And fourth, maybe the most interesting of Shein's competitive advantages has to do with U.S. According to the company, it has about 6,000 of them. While other brands work with manufacturers all over the world, pretty much all of Shein's contracted factories are in China. WOODS: The third ingredient in Shein's special sauce is that it's very different to its competitors in its supply chain. WOODS: But over the same period, Shein offered around 1.3 million different products. Sheng says that during a recent 12-month period, H&M offered around 25,000 different products for sale. WOODS: Here are some numbers that really put it into perspective. So retailers like H&M and Zara are constantly worried about replenishing old products when they sell out. MA: Anyway, Shein's second competitive edge has to do with its approach to launching new products. MA: So data scientists is, like, the new fashion designers. Sheng says they even hire data scientists to help design clothing. All fast-fashion brands use tech to identify trends and find customers, but Shein just takes it to another level. MA: And he pointed us to four main things about Shein's business model.ĭARIAN WOODS, BYLINE: First, the way the company uses technology. SHENG LU: So sometimes I'm joking I'm the least fashionable fashion professor in, now, maybe in the U.S. He teaches the business of fashion and apparel at the University of Delaware. From our daily economics show The Indicator, Adrian Ma and Darian Woods explain how Shein's unusual business model helped it grow into a fast-fashion behemoth.ĪDRIAN MA, BYLINE: To better understand how Shein has been able to grow so fast and sell clothes so cheaply, we reached out to Sheng Lu. In the process, the Chinese-owned company has also drawn criticism from some U.S. In the past few years, Shein has grown into the world's largest online-only fashion retailer known for trendy clothes on the cheap.
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