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Explainer: Will Shein’s Plan To Expand Beyond Fashion Work?

SHEIN e-commerce distribution center

Ultra-fast fashion retailer Shein wants to diversify its offerings from fashion and accessories to more consumer sectors such as home, beauty and toys, but will it succeed?

Fast-fashion giant Shein hopes to move into wider consumer sectors. Photo: Stanislav Kogiku/SOPA Images/LightRocket via Getty Images.
Fast-fashion giant Shein hopes to move into wider consumer sectors. Photo: Stanislav Kogiku/SOPA Images/LightRocket via Getty Images.

Ultra-fast-fashion giant Shein wants to do more than just sell clothes. Having already conquered the value clothing market – with sales value nearly double its closest competitor UK fashion retailer Primark in 2021 – the Singapore-based company is setting its sights on other consumer segments.

Reuters reports the company has appeared on panels alongside large companies including Colgate-Palmolive, Hasbro and Suntory Beverage & Food in recent months as part of a push to legitimise itself in home, beauty and toy markets. It hopes to operate as a market provider, allowing third parties to list their items on its store in a model similar to Amazon or AliExpress.

What is the legitimacy of Shein’s expansion proposition?

This service is already available in some markets including the US and UK, but expanding to Europe would allow the company to keep options open as probes into its human rights record and links to China heat up in the US. Hosting recognised Western brands on its platform may also help move the conversation away from these issues, something it desperately needs.

The company has faced legal troubles this year, beginning with its attempts to get an Initial Public Offering (IPO) in the US due to Chinese investigations into its cybersecurity record and subsequent US indignation.

Last month (April) the US Department of Homeland Security (DHS) was being urged to investigate Shein for alleged “slave labour” within its supply chain with senator Marco Rubio (R-FL), whose Uyghur Forced Labor Prevention Act (UFLPA) became law in 2021 alleging “evidence” of it “exporting goods to the United States made with Uyghur slave labour.”

A spokesperson for Shein told Just Style at the time the company has a “zero-tolerance policy for forced labour”.

The company has also faced scrutiny over its impact on the environment with a French MP taking aim at the brand’s “throwaway business model” in February and used it as leverage to propose a €5 ($5.42) penalty on customers for every fast-fashion purchase.

However, a Shein spokesperson told Just Style at the time that it refuted the claim it was fuelling a “throwaway” fashion culture and argued its “on-demand business model addresses the fundamental problem of the mismatch between supply and demand of the traditional fashion industry model” and enables it to reduce unnecessary waste as well as offering good value for money to customers who want affordable and accessible fashion.

Shein now hopes to float on the London Stock Exchange and a diversified portfolio and the green light from big brands – particularly if British – would likely be a boon.

Shein has its eye on new markets

The other benefit for Shein of an expansion of its marketplace would, of course, be growth. Thus far, environmental and human rights allegations have done little to deter consumers with the company seeing a year-on-year sales growth of more than 20% in the first 10 months of 2023. However, even without consumer behavioural changes, there is a limit to how large Shein can get as a purely fast fashion brand.

Despite a hefty valuation of around $60bn, this still places it well behind the largest online consumer retailers. Alibaba and Amazon have estimated market caps of $181.7bn and $1.9trn, respectively, offering a tempting target for Shein. Explaining the appeal, GlobalData apparel analyst Louise Deglise-Favre tells Just Style: “Shein has a clear focus on expanding its marketplace capabilities following its tremendous success within the apparel market.

“After taking the fashion market by storm it seems natural for the retailer to want to focus on other areas such as beauty and general merchandise, aiming to compete with Amazon but also its Chinese counterpart Temu. Shein has already seen some success in the beauty space with its own brand Sheglam, so expanding its beauty capabilities via its marketplace seems like a natural next step for the retailer.”

What brands will sell on Shein?

The problem for Shein is that, while consumers are undeterred by its practices, businesses might be. Deglise-Favre notes: “Shein’s lack of transparency surrounding its ESG practices might make some brands hesitant to be distributed through its marketplace.”

Although it shared the stage with big-name brands, several were keen to distance themselves from the fashion retailer. Reuters was told by Hasbro and Suntory that they were participating in the event for general best practice, and Suntory specifically made clear that it has no plans to sell its drinks on the marketplace.

The beauty sector may offer more hope. Shein is said to already work with numerous beauty brands, including CeraVe, The Ordinary and Rimmel – but the appeal may be larger for smaller brands.

“Third-party brands might also want to seize the opportunity to sell through a marketplace that has been getting a lot of press and attention, boosting their visibility in the process,” adds Deglise-Favre.

Source from Just Style

Disclaimer: The information set forth above is provided by just-style.com independently of Alibaba.com. Alibaba.com makes no representation and warranties as to the quality and reliability of the seller and products.

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