How to build a fashion business on counterfeit products and manipulate customers? Answer: In the image and likeness of Shein

Despite the world community’s way of reducing overproduction of clothing and footwear, or the development of upcycling and recycling, fashion so far does not bode well for the environment. The United Nations Economic Commission for Europe cries out that the fashion industry is in an emergency for the planet. Yes, the endless production of clothes and sneakers consumes around 20% of wastewater and emits 10% of global carbon emissions.

Fast fashion still dominates the global fashion scene: As of 2020 alone, the market was valued at $1,003 billion. The CAGR between 2021 and 2028 is expected to reach $1,412.5 billion by 2028. Owning brands such as H&M, Zara, Bershka, Pull&Bear, and not only in 2022, the founders of the Inditex holding resolutely declare that they have radically changed their business model, and now offer customers “only quality” in the spirit of “only quality”. Positions of Massimo Dutti, Zara and Oysho, the market is still the biggest player in fast (and cheap) fashion – the shopping app has become the most popular in the USA. His name was Shein.

A little history, numbers and scandals

Meet Shein, China’s largest online B2C retailer, founded in 2008 by Chris Xu. A well thought-out business model has literally revolutionized and shaken up the fashion foundations a bit – all thanks to new ways of real-time retailing and targeted and impactful advertising to Gen Z. And more importantly, the manipulation of consumers and, in the latter, the development of a sense of Fomo (read – fear of missing something important).

It originally specialized in selling platform wedding dresses. Qingdao Xu, a consultant to the company’s CEO, researched the Chinese wholesale market and identified options for the West. The result is big sales. The downside is that they don’t have their own products. Therefore, Xu completely changes direction and reclassifies Shein as a women’s clothing brand.

A team of 800 designers appears. New fashion trends are followed by Google Trends so quickly and on a wide scale that materials are delivered to 220 countries with an annual turnover of 10 billion dollars. Over time, the story of ways to truly watch trends will not lend itself to a sound explanation, but will tell more about it later. Let’s leave it for dessert.

Multiply that by the impressive advertising that Chris Xu paid for tens of millions of dollars and we get a new round. And not to mention the 2020 pandemic: While Inditex has suffered huge losses as physical store closures, thanks to online-only sales and well-stocked website, Shein is ahead of the rest. Then the story is traditional: the launch of a virtual Fashion Show with Rita Ora and Ellie Goulding, the emergence of Alibaba and ByteDance impersonators, and … the first criminal complaints.

In mid-November 2021, the Swiss watchdog group Public Eye published a report on the company and China’s repeated violations of labor laws. Many of the platform’s partners forced employees to work more than 70 hours a week. Some manufacturers have even opened stores in residential buildings that lack basic means of protection, such as emergency exits.

The reactions from customers who were angry with the retailer’s business model did not have to wait long either. Employees of the company copied (and copied) the designs of fashion designers and produced inexpensive counterparts, and the “borrowing” of the idea is exactly the same – a kind of global “Gardener”.

Of course, we do not forget the calls for help on the brand’s clothing labels and the latest news. Photos leaked to the network, where, next to recommendations for washing things, the words “Need your help” appeared in the latter. Public opinion fell on the factory workers’ calls for help. Shein’s official comment says this is just an unfortunate statement: “Our goal was to remind customers to soften the fabric with fabric softener the first time they wash it.” Suspicious. Now the company is waiting for a video report showing the working conditions in the enterprises.

peak

As of April this year, Shein is the world’s third-largest private company, valued at approximately $102 billion. For a moment, Elon Musk’s SpaceX has the same dollar figures. Therefore, it would seem that a simple wholesale clothing scheme has become one of the most profitable businesses. It looks like it’s time to start dessert and lay out the main cards.

low cost clothing

Most orders under $800 at Shein are tax free to the US. Suppliers do not need to pay any tariffs – it equates to a lower price for the consumer.

to step

Unlike Zara, Shein employees follow TikTok trends, not runway trends. The neural network collects data from social networks at lightning speed, switches to the call signs of the creator of the thing, and immediately sends the specs to 6k vendors (we’re assuming no WhatsApp chat) – whoever does it faster does it. take the slippers. It can take anywhere from 3 to 10 days from placing an order to the finished product. Additionally, Shein partners with ghost factories (unbranded factories) and in that respect is more like a food delivery company – convenience over brand is preferred.

Such speed, “isn’t it a shame to see something you can’t get?” It is unthinkable even for Asos who says. Just in a batch of 100 pieces, new things are sewn, their photos are uploaded to the site and they look at the number of purchases – if the number of clicks on the “Buy” button is considered successful, we will storm suppliers with orders of a larger scale. Short lead times allow thousands of products to be tested daily and move from just-in-time to real-time production. And yes: 6,000 new products are added to the site every day.

Customer manipulation

First, the well-known gamification, countdown timers, discounts, stickers – everything to make the customer make impulsive purchases. Canadian agency RougeMedia even named the retailer the most manipulative fashion site. Most of all, such psychological tricks, for example, Fomo or the fear of missing something important, are driven by jenzers – they buy Shein products by the kilo, and Zara clothes are classified as overpriced.

Fortune came to the conclusion that, with the help of the above-described tricks, the platform “teaches” users to visit the site every day, warmly watch trending news and, of course, catch them – quality will wait, fit in a photo.

Focusing on Generation Z

The hashtag #sheinhaul even appeared on social networks as the outfits were tried on from the platform. On the theme of the unbreakable alliance between Shein and Jenzers, Marketplace media group published an interview with Janet Addai, a 22-year-old average student who represents the demands of her generation. showcases new images in online retailer and social networks. “Let’s say I’d rather pay $50 to buy a $50 outfit from H&M than to buy four from Shein,” Janet explains. For Jenzers, navigating the platform feed has become a form of total relaxation – looking at 5,478 open-back dresses is no longer perceived as a nightmare: “Whenever I want positive emotions or do something, I immediately go to Shein. I go through clothes just to feel good,” says Janet. University of Michigan marketing professor Scott Rick explains the nature of guilt this way: “Having thousands and thousands of options succumbs to the endless scrolling effect and the idea that something is going to happen on page N soon. Eventually you will find something. This kind of fantasy is a real source of pleasure. It’s a way of daydreaming a little.”

instead of output

Dreaming is not daydreaming, but the Shein phenomenon and business model has become the next step in the evolution of the cheap segment of the industry – let’s call it ultra-fast fashion. Despite the massive scale of production and ultimately the development of a throwaway culture that would play an even worse joke on the environment, we’re pretty sure the platform’s founders didn’t plan to stop. And it is quite possible that in the future its creators will open additional monetization channels. Let’s say manufacturers can buy ad space on a retailer’s website or go to the dark side of the market directly paying Shein’s commission, hoping to sell goods with a 110% probability – Poshmark already has such experience. Product quality and ecology can wait. But the question is how much.