Fashionable advantage

Understanding Shein’s business practices and their impact on fast fashion

ast fashion has been around since the 1970s, with the express aim of bringing runway-

F inspired designs to the masses quickly and at competitive prices. The original fast fashion
company was Zara, which was launched in Spain in 1975. Zara identified an exploitable
gap in the market for people who wanted to buy clothing similar to the type worn by celebrities
and other famous figures, but who did not want to, or could not afford to, spend the amounts of
money high fashion brands charged. Zara based their designs on the ones seen on fashion
runways, but utilized modern textile manufacturing processes to mass produce these designs at
significantly reduced prices. This approach meant Zara was able to corner the fast fashion area
of the market, and expand across the globe over the next few decades. Other major brands
followed Zara’s model, such as H&M, UNIQLO, Forever 21, and in later years, GAP. They
similarly identified the gap in the market left by high fashion and slow fashion brands, and the
opportunities presented by approaching market demands with vast product lines which seek to
spread the risk of a failed product line much akin to spreading bets or investments in finance.
Whilst Zara and H&M have been vying for market dominance in fast fashion over the years,
their preeminence has been usurped by Shein, a Chinese-based online retailer. Shein was
relatively unknown on the global market before 2018, but as outlined by Lu and Mullen (2024)
Shein has grown to having over US$100bn in global sales revenues in 2022. In the US this
translated to having market share of 1.7%, compared with Under Armor at 1.3% and Levi’s at
1.2%, both of which have been operating in the US market for over 25 years (171 years for
Levi’s). This demonstrates the rapid growth of Shein, and the manner in which it is operating
that enables such massive market share grabs. This business model, however, has been
robustly challenged by market pressures and consumers in the last few years. Several fast
fashion brands have attempted to join this crowded market and, for a period, introduced
destructive business practices such as free unlimited returns. Whilst free unlimited returns has
been incredibly attractive to consumers, brands such as Boohoo and ASOS have discovered
the high economic cost of such an approach.
The main issue with this is how slow returns can be processed and put back out for sale, due
to quality control (are the items damaged or dirty) requiring humans to inspect each garment
meaning the lag between return and resale often being longer than the time allotted for the
entire product line to be listed for sale. A key driver for fast fashion is having a shallow product
line (limited numbers of sizes and colors of items) to support fast manufacturing. This means,
however, that brands have to routinely introduce new product lines, thereby introducing mini-
seasons and constant change. As such, once a product has been on sale for a brief period,
an entirely new line has to be released to keep consumers interested and purchasing.
Therefore, any products returned were likely to be destroyed rather than resold.

Fast faux pas

DOI 10.1108/SD-09-2024-0155 VOL. 40 NO. 8 2024, pp. 29-30, © Emerald Publishing Limited, ISSN 0258-0543 j STRATEGIC DIRECTION j PAGE 29
 Zara was able to corner the fast fashion area of the market,
and expand across the globe over the next few decades.

of waste and reductive manufacturing processes that encourage the cheapest options possible.
The focus on fast fashion through the lens of CSR has brought levels of scrutiny by consumers
that has resulted in brands such as Zara and H&M changing their business practices.
Sustainability is now the core brand value for these brands, with H&M pioneering sustainable
and waste free textile manufacturing, and Zara focusing on ethical textile manufacturing. This
has led to a slowing of these fast fashion brands, and has allowed Shein to capitalize.
Shein’s current business model differs from Zara and H&M in several ways which allow it to
remain preeminent and expand market share. Shein has no physical stores, operating
solely online, reducing overheads but also reducing returns and try-it-out options for
customers. Shein also sources items exclusively from China, rather than the approach taken
by competitors which seek to diversify supply chains to reduce environmental impacts and
mitigate against supply chain disruptive risks. Shein’s product range differs from
competitors through focusing on “trendy” options rather than multiple color variants of plain
clothing, and seeks to produce a narrow product assortment instead of extensive ranges of
different product lines and seasons. Shein also opts for a slow product replenishment rate,
meaning when something sells out it remains sold out for longer, if it is restocked at all.
Finally, Shein opts to offer moderate discounts rather than engaging in the race to the
bottom of other brands, although its starting price point typically hits lower than competitors.
These approaches do set Shein apart from the traditional fast fashion brands such as Zarah
and H&M, although the work by Lu and Mullen (2024) indicates that Shein is more akin to
fast fashion brands of the 2010s and early 2020s than the competition now. This is
demonstrated by the lack of transparency over Shein’s internal practices and supply chain,
meaning that the environmental damage caused by its approach is unquantifiable. That
said, to be able to produce the volume and range of clothing it does, at the price point and
with likely large numbers of returns, in fabrics that cannot be recycled or reused, it is
unlikely that they are hitting any sustainability goals. As such, whilst Shein is able to corner
the market in fast fashion, it might only be able to do so because it is willing to ignore
sustainable and environmental business practices in a race to the bottom line.

Keywords:
Pricing, Comment
Fast fashion,
Product assortment, This review is based on “Does Shein redefine fast fashion merchandising strategies? A
Shein, product-level analysis in the US retail market” by Sheng Lu and Noelle Mullen, published in
Merchandising strategies Research Journal of Textile and Apparel.

Reference
Lu, S. and Mullen, N. (2024), “Does Shein redefine fast fashion merchandising strategies? A product-
level analysis in the US retail market”, Research Journal of Textile and Apparel, Vol. Ahead-of-print,
No. Ahead-of-print, doi: 10.1108/RJTA-01-2024-0001.

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