China-based fashion company Shein has reportedly submitted confidential paperwork for its initial public offering (IPO) in the United States, as reported by Reuters on Monday.
Established in 2012 by Chinese entrepreneur Chris Xu, Shein has evolved into a global fashion marketplace. The company caters to customers in over 150 countries and boasts a workforce of more than 11,000 people, as per the details available on its website.
Known for its prolific creation of thousands of new designs daily, Shein employs a direct-selling model that engages its extensive social media following.
The company heavily utilizes influencers and discount codes in its marketing strategy. Shein, recognized for budget-friendly items like $10 tops and $5 biker shorts, claims to have over 250 million social media followers. It manages a diverse portfolio, including brands like Romwe, MOTF, and Cuccoo.
Overview of Shien
Shein manufactures clothing in China for online sales across the United States, Europe, and Asia (excluding China). Rather than owning manufacturing facilities, the company collaborates with about 5,400 third-party contract manufacturers, primarily located in China.
It employs an on-demand manufacturing system, allowing for swift production adjustments based on the popularity of items. This approach enhances production speed and optimizes inventory management.
Shein asserts that this strategy consistently maintains low single-digit rates for unsold inventory.
United States: One of its biggest market
Shein predominantly ships its products directly from China to customers through individualized air packages.
Its strategy helped the firm avoid unsold inventory piling up in warehouses and avoid import tax in the United States, one of its biggest markets, as it allows the e-tailer to take advantage of the "de minimis" provision that exempts cheap products from tariffs.
Despite its online-only sales strategy, Shein faces challenges such as growing wait times for U.S. customers—often exceeding two weeks. This has positioned the company at a disadvantage compared to competitors like Target, Walmart, and Amazon. In response, Shein is reportedly sending more low-priced apparel and home goods to U.S. warehouses to expedite shipping times.
It is now sending more low-priced apparel and home goods to U.S. warehouses to speed up shipping times, according to trade analysis firm ImportGenius.
In a private fundraising round in March, Shein achieved a valuation surpassing $60 billion following a $2 billion investment. This valuation positioned Shein ahead of Swedish retailer H&M, valued at $27 billion. However, Shein still trails behind Fast Retailing (owner of Uniqlo) with an $80 billion valuation and Inditex (owner of Zara) with a valuation of $126 billion.
Shein relocated its headquarters from Nanjing, China, to Singapore in late 2021, a move analysts believe was made to navigate stringent new regulations on overseas listings imposed by the Chinese government.
