Shein’s latest acquisition of Missguided is a clear sign that tis definitely the season for the fast fashion goliath to be jolly. The last week of October 2023 brought an early Christmas to Shein as a result of it buying the British fast fashion brand Missguided from the Frasers Group. This can be read as a strategic move that was aimed at widening its market presence and global expansion in anticipation of a U.S. initial public offering (IPO). Shein shaking hands with Missguided and claiming ownership of a chunk of it will allow the former to be involved in manufacturing the latter’s products and sell them on both Shein’s and Missguided’s websites. The acquisition does not imply that Missguided will lose its individuality as a brand. While Shein will have authority over certain sectors, the Frasers group will retain ownership of Missguided’s physical properties and employees.
The agreement signed by both parties entails that Shein will licence Missguided’s intellectual property to Sumwon Studios, a joint venture established by Shein and Missguided founder Nitin Passi. Sumwon Studios will be responsible for managing and operating the Missguided brand. The specific financial terms of the acquisition were not disclosed to the public. This acquisition follows on the heels of Fraser Group’s purchase of Missguided for £20 million just over a year ago when the brand was bogged down in financial difficulties after gaining popularity for selling £1 bikinis.
Shein came, Shein saw and Shein conquered
In the world of online retailing, Amazon is now conquered by both Temu and Shein. While we have read about Amazon and Temu’s headlock and Temu’s and Shein’s rivalry, we have never stopped and wondered how far Shein has penetrated the market. It is intriguing to witness Shein’s rise to fame, but it will be even more interesting to discover the inside scoop on how Shein paved the way for themselves. To put it into perspective, currently, Shein holds the title of being the clothing website that has the most traffic globally. Visitors spend double the amount of time on Shein’s site compared to the next most popular site, nike.co, as per Similarweb Digital Data.
As mentioned in Business Insider, Shein’s dominance in the world of fast fashion happened within a decade. Chris Xu, the billionaire founder and CEO of Shein, kickstarted the business in 2008 as an e-commerce platform specialising in Chinese-made wedding dresses. Initially known as SheInside, Xu made a calculated shift in 2015 to concentrate on fast-fashion clothing and subsequently rebranded the company as Shein. The breakthrough happened in 2020 when the surge in online shopping during the COVID-19 pandemic blew through the roofs. And now, it is a popular shopping destination, mostly for Gen Zers.
Shein redefined fast fashion by leveraging AI technology to pinpoint emerging trends and adopting an online-exclusive approach to swiftly produce a vast array of garments. Industry analysts have characterised Shein’s business model as “real-time retail” due to its ability to create new designs in as little as three days, allowing the company to maintain an astonishing inventory of up to 600,000 items on its website at any given moment.
As mentioned in abcnews, according to Elizabeth Cline; author of ‘Overdressed’ and ‘The Conscious Closet’, the business model that Shein follows completely deviates from the ones that fashion brands such as Zara and H&M have adopted. As Cline explains, what Shein does is digress from the set mould of predicting trends for the season and utilise data and algorithms to keep tabs on the existing trends. Once their radar detects a trend with potential, they place bulk orders and then observe which product is going to pick the biggest traction. After they have their data catalogued, they notify their factories that ‘this is what is selling, let us mass produce’. A method which permits Shein to sell trends to customers while it’s at its prime.
Unsurprisingly, this brand is not only known for its trendy and affordable clothing but also for controversies that range from M to L to XL to XXL. Currently, it is engaged in a legal battle with e-commerce competitor Temu, and it is striving to emulate Amazon Marketplace by allowing third-party retailers to sell their products on its platform. Shein has also recently forged a partnership with Forever 21, potentially leading to Shein products being sold in Forever 21’s physical stores.
Shein’s dark side
The velocity at which Shein is topping the charts is suspicious, to say the least. Dismissing the grasp it has on the world of online shopping by calling it a rookie that will not last is a grave mistake. Shein sells cheap and Shein sells a lot. This is their modus operandi. However, for them to have thousands of pieces stocked and ready to be shipped, whenever needed, does raise a few eyebrows. The spidey tingle senses trouble, as it rightfully should. Media reports said that in December 2022, they themselves admitted to making their staff work for over 12 hours a day with no set structure for days off.
Shein has been marred by several other controversies in addition to this. These include allegations that factory workers left pleas for help on clothing tags, and another that pointed to them selling a metal swastika necklace on its website, being accused of stealing independent designers’ garment patterns and facing criticism for its 1p Black Friday Sale, where prices were slashed by up to 90%.
Additionally, Shein’s clothing perpetuates an unsustainable shopping model, reportedly contributing to massive amounts of clothing ending up in landfills. The brand’s consumption of virgin polyester and oil reportedly emits an equivalent amount of CO2 to about 180 coal-fired power plants, as per the Synthetics Anonymous 2.0 Report on Fashion Sustainability.
Despite all this, Shein continues to rise.
(Sandunlekha Ekanayake)