Shein’s ascent to the top of the retail industry has been facilitated by a potent combination of incredibly low prices and seemingly endless variety. As ethical violations continue to mount against the fashion colossus, however, some Gen Z consumers query the company’s environmental and economic impact. Shein’s (pronounced “she-in”) sales have surpassed those of H&M and Zara, despite the absence of physical stores. By marketing apparel for as little as $3 per item and utilizing social media influencers to promote its brand, the company has rapidly built a following among Gen Z, a cohort of primarily teenage and young adult consumers.
Neil Saunders, a retail analyst for GlobalData, told CBS MoneyWatch: “Shein has been very good at creating must-haves and desires.” Behind Shein’s marketing success are legal allegations of copyright infringement and intense U.S. scrutiny over alleged forced labor practices and inhumane working conditions for the workers who produce the extremely low-cost apparel.
Earlier this year, the U.S.-China Economic Security and Review Commission flagged numerous “controversial” business practices by the Chinese purchasing app Shein and its rival Temu. In an April report, the commission characterized their growth as “a case study of Chinese e-commerce platforms outmaneuvering regulators in order to establish a dominant U.S. market presence.”
What is Shein?
According to Saunders of GlobalData, Shein has become the largest online-only retailer in the world due to its extremely low prices and knowledge of ever-evolving fashion patterns. The brand has skyrocketed to the top of the U.S. consumer landscape by aggressively marketing its apparel to youthful consumers on social media platforms like Instagram and TikTok.
According to its website, Shein was founded in China in 2012 by four co-founders, but little is known about the man believed to manage the company, Chris Xu, who was described in a lawsuit as “a mysterious tech genius.” In 2022, the privately held e-commerce corporation relocated its headquarters to Singapore. In order to sell its broad variety of products, the company has developed a production model that enables it to process thousands of new designs per day with speed and efficiency. By offering a seemingly endless selection of new fashions at such low prices, it attracts youthful shoppers who are anxious to purchase inexpensive and fashionable new apparel.
Despite recent declines in its prominence, Shein remains a leading brand among youthful consumers. One shopper, a content creator who once promoted Shein apparel but has since reduced her purchases, stated that the retailer’s low prices make it an obvious choice for many youthful consumers. Mia Meltzer, a 22-year-old content creator based in New York City, stated, “The logic is that cargo pants won’t be in style forever, so why not purchase the $21 pair from Shein to get you through fall and half of winter?”
IPO challenges
As a privately held company, Shein is not required to disclose information such as sales, employment, or other data that publicly traded companies in the United States are required to disclose, and much about its ownership and governance remains obscure.
Transparency and other obstacles notwithstanding, rumors continue to propagate that the company intends to go public, as well as rumors that the company intends to expand its manufacturing operations from China to Mexico and Brazil. Nonetheless, the company might be losing its luster. According to the Wall Street Journal, a recent funding round placed Shein’s value at $66 billion, or about one-third less than a year ago.
As concerns emerge about Shein’s operations, its popularity appears to be waning among young consumers, with the proportion of Gen Z adults considering making a purchase on the apparel site decreasing by 7 percentage points over the past year, according to a recent survey by Morning Consult.
In May, a bipartisan group of two dozen legislators asked the Securities and Exchange Commission to halt Shein’s initial public offering until the company verifies that it does not use coerced labor from the predominantly Muslim Uyghur population.
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Why is Shein clothing so cheap?
Saunders stated, “Shein has taken the lead in low prices, which is a result of their low-cost business model and improper labor practices, and the end result is a low price for the consumer, which is crucial.” He calls Shein’s design “real-time fashion.” Shein is capable of designing, prototyping, and shipping products on its own, delivering transitory apparel styles significantly faster and for a lower price than its fast-fashion competitors. According to Saunders, Shein releases as many as 2,000 new items every single day.
“Shein releases a massive amount of new merchandise, and its business model is addictive for consumers,” Saunders explained. There is a distinction between people’s requirements and desires, but we consume far more than we require.
The ethics of fast fashion
As Shein has acquired admirers, it has also attracted critics who are concerned about its environmental impact and dubious business ethics.
“The majority of environmental waste and damage is caused by overconsumption, so to be truly green and sustainable, you want people to purchase less frequently,” Saunders said. “Shein has taken fast fashion to a whole new level, resulting in an enormous amount of unnecessary and disposable consumption, which is not good for the environment.” According to energy and sustainability expert Jasmine Schmidt of the consulting firm ICF, the fast-fashion business model can be harmful to the environment due to the vast amounts of textile waste and natural resources required to produce their products.
According to Schmidt, textile waste has multiplied since 2000 and the United States and Europe produce 90 million tons annually. She added that less than 1% of this apparel is recycled. Schmidt stated that Shein’s lack of transparency is one of the company’s major problems. They are one of the largest private corporations, but they do not disclose their production volume, where they source their materials, or their emissions.
Clothing in landfills
When apparel is discarded in North America, it frequently winds up in landfills in the Global South and Southeast Asia, such as the Atacama Desert in Chile, a waste dump visible from orbit, according to Schmidt.
According to Schmidt, these communities are frequently compelled to torch discarded clothing, resulting in air and water pollution. Recycling is not always a viable option due to the difficulty of separating the various materials used in a single garment. Reprocessing systems are incapable of degrading certain synthetic fibers or removing pigments from apparel.
Schmidt stated, “It’s such a strain on the system, and if we don’t fully address it now, the consequences will be tenfold in 20 to 30 years.” “We must be able to comprehend the magnitude of the waste we produce.”
Schmidt stated that now is a crucial time for legislators to strengthen fashion industry regulations. For example, states could enact extended producer responsibility (EPR) laws, which already require producers in California, New Jersey, and Washington to be responsible for the environmental pollution their products generate.
Purchasing for good
Schmidt stated that although companies are predominantly responsible for producing fast-fashion waste, they are also responding to consumer demand, which places some responsibility on consumers to consider their purchases.
Schmidt stated, “We must be very careful with our purchasing power.” She added that purchasing less, the first “R” in “reduce, reuse, recycle,” is often the most direct method to consume ethically.
“Buying from companies with transparent policies and sustainable practices can be beneficial,” said Schmidt. Schmidt and Meltzer also recommend that consumers consider purchasing secondhand clothing from stores such as Plato’s Closet, Rent the Runway, and Depop in order to discover fashionable clothing without contributing to environmental pollution.
Schmidt stated, “When thinking about fashion, you must remove the adjective quickly.” “Consumers should consider if they want their legacy to be remembered as ‘fast, wasteful, and unknown.'”
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Source: CBS News
