SHEIN:RedefiningGlobalFast Fashion

In June 2021, China-based online-only retailer SHEIN (Shein) surpassed global giants ZaraandH&M to become the largest fast fashion retailer in the US by sales, according to data analyticsplatform Earnest Research. As of June 16, 2021, Shein comprised 28% of US fast fashion sales,ahead of H&M (20%), Zara (11%), Forever 21 (10%), and Fashion Nova (8%).The platform attributed Shein's sharp growth to the brand's mobile-first strategy, which caught onwith consumers in a big way during the COVID-19 pandemic that accelerated the adoption ofmobileandotherformsof digitalshopping.

Shein, a global Business-to-Customer (B2C) fast fashion brand founded in 2008 by Chris Xu (Chris), mainly focused onwomen's wear but also offered men's apparel, children's clothes, accessories, shoes, bags, andother fashion items. Its products were available to customers in more than 220 countries, but it didnot sell to China. The brand was popular among Gen Z and young millennial shoppers for itsfashion-forward trendy designs,affordable prices,and wide assortment of products. The onlinefast fashion brand undercut rivals on price and used innovative digital marketing strategies to winover young shoppers. Shein pioneered the real-time fast fashion businessmodel which cut designto production from three weeks to as little as seven days and added, on an average, nearly 2,000new styles to its website every week at significantly lower price points than competitors such asZara and H&M. The pandemic pushed Shein to global success. In 2019, the company launched an average of 10,000 new products a month. Its revenue wasUS$2.83 billion in 2019. As of June 2021, Shein had a presence in more than 220 countriesglobally.Theonlineretaileremployedmorethan10,000people. In 2020, Schein generated anestimatedUS$10billioninrevenue.

Shein was launched in 2008 by Chris under the domainnameSheInside.com.Theonlineplatforminitiallysoldweddingdressestowesterncustomers. Slowly, Shein began to expand its offerings tosell womenswear. It operated much like a dropshipping business that sold products fromthird-party wholesalersdirectly to overseasshoppers. In 2012, Shein expanded its offerings to include cosmetics, shoes, bags, and jewelry. In 2014, it established its own supply chain system, transforming itself into a fullyintegrated retailer. The same year, Shein launched its mobile shopping app on the App store. In2015, Chris shortened the domain name from SheInside to Shein and rebranded the company froma website with a focus on fashion to a fully-fledged fast fashion brand with a website. In 2015,Shein introduced own clothing and production line with in-house design team responsible for designs and prototypes for fast production. The team identifieddesigns trending in the West and produced similar items ready for export in just a few days.

Despite its popularity, the Shein brand was practically unknown to Chinese consumers as theretailer did not sell directly in China but is available on online ChinesestoressuchasAlibaba.Itsbusinesswasfocusedonexportingabroad. Shein did not operate any permanent physical stores. Shein's had a user-friendlymobile app interface with appealing photos that facilitated the searching and browsing of productsbased on the specific demands of shoppers. Sheindidnotpayexporttaxesonanyofitsproducts.In2018,astraderelationsbetweenChina and US were spiraling downward, China waived export taxes thus making small-valueshipments duty-free.

Despite its phenomenal success, Shein came under fire for its fast fashion practices that criticsalleged encouraged over consumption, generated waste, and impacted the environment negatively.Shein was also subjected to allegations of engaging child labor in its supply chain. Further, theretailer was accused of cultural and design appropriation and creating copycat products of designerwear. Meanwhile, there were numerous complaints on social media over poor product quality thathurt its reputation. Moreover, the firm's lack of transparency and reclusiveness attracted unwantedmedia attention, with critics questioning whether Shein's low prices would be sustainable if highethical standards were maintained. Growing competition was also a concern for Shein as severallow-priced online retailers such as Blush Mark, Romwe, and Poshmark were flooding the fastfashionmarket.

Experts attributed Shein's success to its aggressive, data-driven, real-time fast-fashion businessmodelthatcutthetimefromdesignofanewgarmenttomassproductionfrom2-3weekstojust5-7days. Shein derived new product ideas from the search and social media behavior within a specificcountry. It used in-house algorithms and data science to identify new trends. Sheinalsostudiedcompetitorwebsitesforreal-timedataanalysisofthe existing fashion trends in various individual markets. This customer data was used by Shein'sdesign team to develop new designs in as little as three days. Using real-timedata,Shein wasable to cr eate adifferent, relevant offer for different countries and regions around the world without having tounderstand the cultural nuances between those countries. Through high-volume manufacturing,Sheinbenefitedfromeconomiesofscale.

Shein's mission was "everyone can enjoy the beauty of fashion," and it aimed to offer stylishquality clothing at appealing prices to every userin the world. The affordability of clothes onShein made it an attractive platform for price-conscious teenagers. Shein enticed young price-conscious customers through a barrage of discounts for its low-coststyles. Additionally, the company offered generous shipping deals in return for ordering in bulk orwriting feedback on its app or website.

Sheinofferedanincrediblywiderangeofclothesindifferentstyles,colors,patterns,andsizes.Shein's website featured clothes for women for all occasions and in all sizes, including a hugecollection of Plus Size styles that were rare on the market. Shein added an average of 2,800 new styles to its website each week.Thiswaspossiblebecauseofitsstrongsupply-chainsetupthatincludedmaterialsuppliers,manufacturing partners, and finished product vendors. The company assessed suppliers based on a stringent set of key performance indicators (KPIs),including timeliness ofon-demand procurement, timeliness of stock delivery, and defective ratesof products.

Sheinadopted an aggressive marketing strategy that combined social media, user-generated content, andlivestreaming. Shein attractedyoung customers mainly through its mobile app, website, and social media networks such asInstagram, TikTok, and Facebook. AsofSeptember2021,Sheinhadabout22million followers on its globalInstagram account. Shein's Facebook page had about 15 million followers.It also had a presence on Pinterest whose users were mostly female. On TikTok, Shein createdarmies offashionbloggerssupportingthebrandandmakingpostswiththehashtag#Shein.InApril2020 on TikTok alone, the #shein hashtag generated 6.2 billion views.

The COVID-19 pandemic boosted sales of online retailers, giving online-only players, such as Shein, an edge over fast fashion giants such as Zara and H&M that had bigphysical stores.The pandemic gives advantage toSheinas it spurred annual salesin2020 to almost three times that of the previous year. However, as Schein target global customers, its position without a physical presence in individual countries becomes a disadvantage as compared to fast fashion heavyweightssuch as Zara and H&M. As a fast fashion retailer, Schein face a lot of complaints from apparel brands that claimed it had infringed their intellectualproperty. Over the years, several independent designers had accused Shein of replicating their designs, oftenclaiming that the company had ignored their pleas for copycats to be removed from its website. Shein was also accused of lacking cultural sensitivity and understanding of its global audiences for using religious symbols on its products. Shein failed to provide adequate transparency over its supply chain and was also subjected to claims that it used child labor in its supply chain and used disturbing practices to ensure it could produce clothes quicker and cheaper than its rivals, tactics that left workersvulnerable to exploitation. Shein was harming the environment as a "real-time" fashion companyand its business model was dependent on overconsumption. Combined with its ultra-low prices,Shein influenced its buyers to buy more frequently, thereby worsening the issue of a global rise intextilewaste. Its super-speedy supply chain approach with low quality product offerings that arenot made to last, making it even harder for the fast-fashion loop to be closed by recycling.

Describe the competitive advantage of Schein. Use the VRIO approach to explain FOUR (4) key resources that gives competitive advantage to Schein for business sustainability. Justify your answers.

Resources	Justifications