Shein is working on expanding its global presence to other regions such as Europe and Mexico this year. By so doing, the fast fashion giant is hoping to diversify its supply chain and reduce delivery time by having physical locations in more areas.
Shein’s Ambitious Growth Plans
Shein can easily be termed the world’s largest online fashion company. The platform, which began as a place for women to buy wedding dresses, quickly expanded to become the most popular clothing shop among young women.
With thousands of new products being produced each week to keep up with the latest trends, it is now the innovator of a new fast fashion generation that puts Zara and H&M to shame. The Chinese company typically adds 2,000 new products to its marketplace each day.
Despite its market dominance, Shein is still looking to expand. This month, the company has announced the launch of an online marketplace in Mexico where customers can purchase items from independent vendors in addition to Shein’s own range of extremely affordable items.
Shein already established similar marketplaces on-site in-country in the US and Brazil which are some of its largest markets. After Mexico, the third quarter will then see rollouts of the same in Europe starting with Germany, Spain, France, and Italy.
This move is centered around onboarding more vendors that respond to its market’s needs both in terms of product variety and order fulfillment time. So far, Shein has revealed that it will work with global brands like Skechers, a leading footwear company, and Lansinoh, a company that sells maternal care products.
I expect the attacks on Shein to intensify as they move more obviously into Amazon territory and become a complete ecommerce platform. If you search for non clothing items, many are labeled “Marketplace” on top now, ie 3P sellers pic.twitter.com/TVdEd7ZZ6d
— Rui Ma 马睿 (@ruima) June 21, 2023
Along with the marketplaces, Shein has also launched a new program named AcceleraSHEIN, which is aimed at enticing vendors to join the marketplaces. The program entails training and upskilling, seller benefits, and incentives to help vendors as they join the list of Shein vendors.
Additionally, with mentorship, the program is expected to help 100,000 sellers across all marketplaces to generate $100,000 in sales annually within three years. Similarly, another 10,000 will be helped to reach $1 million each year in the same period.
Another goal the China-based company has is to move its center from its home country and establish more distribution points in other regions. Shein’s location in China has proven to be its greatest disadvantage since it results in very long delivery times for its market which is concentrated in other regions.
Of course the location was vital for cheap labor and access to cheap goods and parts but the delivery times are simply too long for many customers.
So far, the company has established distribution centers in the US Midwest and California. It has also constructed a warehouse in Toronto and has a facility in Poland. This has helped it cater to its consumers in America more efficiently.
Regardless of its desire to move far from China, the company’s systems and supply chains are deeply rooted in the Asian country. Due to the level of technology that Chinese manufacturers employ, these factories have the ability to produce new designs in less than 10 days to keep up with the constantly-evolving demands of Western consumers.
This also enables the company to produce very cheap products for which it is known. Currently, the company plans to have about 85% of vendors in its marketplaces to be local producers. While this will quicken delivery time and provide more diverse products, the platform also risks increasing the price of its products which could affect its consumer base.
The trajectory Shein has taken with its expansion is very similar to what Temu currently offers. The platform which is backed by China’s PDD Holdings has continued to gain popularity such that it surpassed Shein’s sales in the month of May.
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