Shein, Fast Fashion Hit With Gen Z, Tries Charm to Counter Scrutiny
In its decade of doing business, Shein has grown rapidly by winning over shoppers with its tough-to-beat prices and kaleidoscope of new merchandise. Along the way, the e-commerce retailer has also gained vocal critics who have questioned, among other things, its connection to China, accused it of stealing designers’ works and pointed to how its cheap merchandise contributes to environmental waste.
Shein, for the most part, has been tight-lipped through it all. Now, the company is looking to change the perception of its business and practices ahead of its expected filing for an initial public offering.
It has poured millions of dollars into initiatives that seek to address the longstanding criticisms as a way to earn good will. In the process, Shein is positioning itself as a retail juggernaut with whom industry stalwarts will inevitably have to share space.
“We’re trying to engage with lots of stakeholders,” Peter Day, Shein’s head of strategy and corporate affairs, said in an interview. “We’re an emerging brand, and we’ve done a lot of things well. There are some things that we still need to learn how to do, and the best way to do it is to talk to the community.”
Shein has one of the most downloaded mobile apps, has a dedicated and active hashtag on TikTok (#Sheinhaul) and is right behind Amazon and Nike when it comes to Gen Z’s favorite e-commerce websites. It sells items like mesh dresses, glitter T-shirts and two-piece lime green swimsuits for under $9.
Shein, which is regularly accused of copying designs, recently held a daylong summit in Los Angeles with hundreds of designers in an attempt to show that it wanted to work with and not against them. The event was part of a $55 million initiative that Shein began in 2021 to hire and fund artisans to make clothing lines for its site.
This program was started months after the designer Justin Romero, a co-founder of the fashion brand Freak City, in 2020 joined the chorus of designers calling out Shein for selling clothes that looked like copies of their products.
After some initial conversations with Shein’s legal team, Mr. Romero talked directly with George Chiao, the president of Shein’s U.S. business. Mr. Romero asked for data on how much Shein had sold of the clothing in question. It was eye-opening, he said.
“After seeing how many items they sold of our items already, it was like, we’re already doing business without agreeing to,” Mr. Romero said.
From there, Mr. Romero and Shein started a collaboration under a program that the company calls Shein X. Mr. Romero and his co-founder, Valerie Campbell, are participants.
Through Shein X, the company provides independent designers with a budget, pays their production costs and markets their wares on Shein’s site. The designers receive either a sales commission or a share in the profits, an arrangement usually reserved for designers who have a licensing deal with a retailer. Its roughly 3,000 participants have collectively received $5 million in commissions, Mr. Chiao said at last month’s summit in Los Angeles, where his remarks were met with cheers.
Shein is trying to win over a diverse group of designers, creating a pipeline of potential industry ambassadors. The retailer does not collect demographic information on its designers, but the team that runs the program has emphasized that Shein X artists and designers come from myriad backgrounds, according to a company spokeswoman.
“What they want to do is make more money, and they are now seeing that having a more diverse roster will generate them millions and billions of more gross margin profits,” said Shawn Grain Carter, a professor of management at the Fashion Institute of Technology. “This is not an altruistic endeavor. This is a financial business endeavor.”
During the daylong event in the heart of the city’s downtown fashion district, Shein presented itself as an innovator with a profitable business model and a supporter of diversity and inclusion. It positioned itself at the nexus of pop culture and fashion by having panels with haute couture designers and health and beauty influencers. It capped off the day with a dance and musical performance. Shein’s sustainability director pointed designers to recycled materials like polyester that the company was encouraging them to use.
“We’ve grown really, really fast as a business,” Caitrin Watson, the sustainability director who was hired last April, said to the designers in the room. “But as you grow, people want to know more than just what product do you sell? They want to know who you are as a brand. What are your values? How are you making your clothes — what are they made out of?”
That kind of message seemed devised, in part, to answer questions about how Shein conducts its business. Investors group Shein as a fast-fashion player; the company rejects that title, which evokes images of heaps of textiles dumped in landfills. Critics say its ultralow prices contribute to overconsumption and environmental waste; the retailer says it’s focusing more on sustainable solutions.
And recently, Shein’s connection to China has elicited concerns that the company exploits import laws. The company was founded in Nanjing, but it is now based in Singapore. Most of the factories that produce its clothing are in China.
Critics like the group Shut Down Shein, formed in March, say that Shein avoids U.S. Customs and Border Protection scrutiny and billions in tariffs by shipping directly to its customers under a certain price threshold. It doesn’t record these shipments in bulk, the group says, like most other U.S. retailers.
Shut Down Shein also claims that the company commits human rights abuses. On Monday, two members of Congress wrote the U.S. Securities and Exchange Commission, asking that, as a condition of its expected offering, Shein be required to certify through an independent party that it doesn’t use Uyghur forced labor.
The company said in a statement that it conducted business “lawfully and with full respect for the communities we serve.”
The statement added, “As a global company with customers and operations around the world, Shein takes visibility across our entire supply chain seriously.”
Attendees at the Los Angeles event didn’t seem to dwell much on onlookers’ wider concerns about Shein. When asked about accusations of copying, several designers said that creatives often looked to others in the field for inspiration. They seemed more interested in networking with Shein executives and fellow designers. They twirled in their latest designs and said they wanted to learn more about how they could use Shein’s name to help elevate their own.
Designers in Shein X said that the retailer’s massive audience had helped catapult their brand and that their sell-through rates were high. During happy hour, two participants jumped up and down after they realized that Shein had posted their photo and tagged it on Instagram, increasing their exposure to its 1.7 million followers.
“If you look at the amount of people who gravitate to the Shein brand, it’s millions of folks, and the exciting part is even if you reach just a third of those people you’re winning,” said Kenya Freeman, whose line Sylvia Mollie has been sold on Shein since January 2021.
Shein still uses more than 250 in-house designers and third-party suppliers to design the clothes shoppers see on its website and mobile app. And on TikTok, independent designers still post videos accusing the company of ripping them off.
In 2020, Shein established a team in the United States to review potential intellectual property violations. Previously, those reviews were conducted in China. It also invested in image-recognition technology to recognize cases of potential infringement and required third-party suppliers to certify that their products don’t infringe on others’ intellectual property. A spokeswoman said there was a double-digit percentage decline in infringement claims from 2021 to 2022. She declined to share exact numbers.
Armand Mehidri, a 30-year-old Dubai-based designer in the Shein X program, said Shein used its data to help him sell more of his designs. After receiving a message from Shein alerting him that one of his shirts was selling well and suggesting he put the same design on hoodies and tank tops, he did just that, and they kept selling, he said.
While Shein X has given designers the opportunity to expand their businesses, working with the retailer still comes with baggage. After Casey Russell, 33, announced in 2022 on social media that he had been accepted into the program, he said that for two days he received “the traditional hate mail whenever you do something with a brand that’s seen as bad.” Critics flooded his Instagram comments and direct messages, calling him a sellout and claiming he was ruining the environment by making fast-fashion clothes.
Mr. Russell wasn’t given a budget when he started his Shein line, a men’s collection called Claude Russell that had 13 items go into production. In his first round, he said he made about $53,000 in sales. At the Los Angeles gathering, Shein gave him a booth to display some of his black and green capes and matching button-up shirts, which brought in about $5,000 in sales.
“When you work in the industry,” Mr. Russell said, “you also realize that a lot of stuff that people talk about, it’s actually not as bad as it looks on the outside.”
Sapna Maheshwari contributed reporting.
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