Shein Business Strategy
note: This article was created using Rytr, an AI writing tool as well as some of my research and additions as part of an NCSU project for my BUS 465 — Integrated Brand Promotion class. The only edits were made by myself to fix any issues from the AI writer.
The objective is to better understand the growing ecosystem of AI content-creation tools and how they will be used in the marketing profession.
SHEIN
Shein is a fashion retailer that offers clothing and accessories for women, men, and children. It is a direct-to-consumer company with its headquarters in Shenzhen, China.
The company was founded in 2008 by Chris Xu. Shein’s business model is based on fast fashion. It offers new products every day, which are often priced well below the price of similar items from other retailers. This strategy has made Shein one of the most popular clothing stores in China and around the world since it was founded. It has expanded to more than 150 countries with millions of customers worldwide every month.
How is the brand performing today?
The growth of the Shein brand has been phenomenal, with the company now boasting more than 43.7 million users across the world and a total of 3.2 billion views on social media accounts with the #Shein. Shein’s online users increased from 2.8 million in 2017 to 43.7 in 2021. Shein has a strong presence on social media channels with over 26 million followers on Instagram and 5.4 million followers on TikTok, They also have a significant number of likes and followers on their various social media accounts.
Shein is also ranked as one of the top brands in China, according to many metrics including financial performance and sales. Shein stated in April of 2022 that they are valued at nearly 100 Billion Dollars and are continuing to grow.
According to a BusinessofApps article, Shein generated $9.8 billion in revenue in 2020 alone and experienced a shocking 60% increase in 2022 leaving their revenue at a whopping $15.7 billion. These numbers alone are proof of Shein’s insane grasp on the market of fast fashion.
Yes, Shein is dominating the women’s clothing market. But how are they doing in comparison to other companies? Zara and H&M are two of the main monsters in the fashion industry. With revenues and customers nearly doubling Shein’s in 2020, Shein was in their rearview for a while. Due to the recent increase in every aspect of Shein, it has become a serious threat to these huge brands.
As seen above, Shein has quickly dominated sales compared to H&M and is giving them a run for their money. Not only has their sales skyrocketed, but so has their interest. The graphic below which was pulled from the same site as above shows the google trends increase of the brands mentioned. Shein is clearly dominating here as well.
Who is buying Shein?
Shein is popular among the younger generation because it offers clothes at an affordable price point. The company is mainly targeting college girls who are looking for affordable clothes that they can wear to parties, clubs, or just on campus. Shein’s customer persona is young, broke students who want to look fashionable but don’t have a lot of money to spend on clothes.
Target Persona
This is Meredith. Meredith is a current college student at North Carolina State University. She works a waitressing job on the side but is struggling to pay for her rent, and living expenses, and keep herself fashionable. She has been shopping at big retailers like Zara, H&M, Hollister, Abercrombie, etc. But she simply can’t afford it anymore.
Meredith loves to go out on occasion and wear cute clothes that represent her style. She loves to occasionally travel and go out to eat with her friends at their local Italian restaurant. She drives a Nissan Altima and has a fun fuzzy key chain.
Where do shoppers learn about Shein?
There are many ways that shoppers, like Lily, learn about the Shein brand. One of the most popular ways is through word of mouth. When college students are out at parties and events and see someone wearing a cute top, they ask where it is from. From there, it trickles down until 5 more people have bought that same top. The company also uses influencers to promote its products on various social media sites like Instagram and TikTok, where they have millions of followers.
Having micro-influencers post reviews, hauls, try-ons, and unboxing videos are one of the main ways Shein gets its name out there. Constantly circulating their brand intentionally, and unintentionally has been a major gateway into the fashion world.
Shein as a DTC
A DTC brand is a company that sells its products and services directly to consumers without going through a retailer. These brands are often seen as more authentic and have a closer connection with the consumer.
The advantages of these brands are that they can get feedback from their customers faster, they don’t have to wait for their products to be stocked on shelves, and they can customize the customer experience according to their needs. Shein utilizes all of these perks as a DTC brand by dominating the fast fashion world. They use the high speed of a DTC brand to their advantage so they can always be first when it comes to releasing new clothing.
Shein started as a Pure DTC brand, they utilized their online website and app as the main and only point of sale for their products. Shein recently opened a few pop-up stores in the US to sell some of their clothes but these are temporary and only last for a short amount of time, sometimes only hours. There are also some outside sellers that resell Shein products on Amazon.
How does the DTC affect the brand?
Being a DTC and only using their online site as a way for purchases is a good thing in many people’s eyes. The overall consensus now on in-person shopping is very negative. People do not want to have to physically go into a store and shop, they want to do it at their leisure and in the comfort of their homes. Shein capitalizes on this. They make their website easy to use, filled with items, and offer many discount codes to entice people to buy their products. Since Shein is a DTC brand, they also have the luxury of being able to have quicker handling and shipping times which leaves the customers far happier.
Since the site is so large, customers believe that they can find just about anything on the Shein site, get it quickly, and do so in an affordable manner. This is one of the main reasons Shein has grown so quickly, and why its business model works as well as it does.
What should be next?
As mentioned previously, Shein is huge and is continuing to grow. But what should be next?
This is a question that has been on the minds of many Shein customers. With the new fashion trend of wearing clothes with larger celebrities, Shein should use this trend to their advantage and design some ads with larger celebrities in them. This would help their promotion by gaining a larger audience due to the reach those large celebrities have. Right now Shein only utilizes micro-influencers, using large celebrities would be a whole new world. They could also start designing some gameday outfits for college universities. This new product would be a gateway to an entirely new market. Leaning into affordable gameday outs and possibly sponsoring a college game or greek life event would be huge for their product, promotion, price, and placement aspects. Overall, Shein does not have to change much since they are one of the only fast fashion brands that are this well known and liked, but they do need to keep up with current trends. Assuring their clothes are something that people will constantly want and need, as well as good quality.
Note: This article is a class assignment for BUS 462 — Integrated Brand Promotion and advertising at NCSU Poole College of Management.
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