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Shein: Fast fashion, sacred cows and an AI turbocharge

Shein: Fast fashion, sacred cows and an AI turbocharge
Steven Boykey Sidley
By Steven Boykey Sidley
22 Sep 2024
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Shein has built the world’s largest online clothing retailer with, in essence, little more than a laptop. An oversimplification, certainly, but it’s not too far from the truth.

You know those ads for fancy-looking apparel that seem to appear with irritating frequency on Facebook and other social media? I don’t buy clothes online so I generally just scroll on, or sometimes ask Facebook to “show less” of them, which never seems to make any difference. The ads are persistent and the variety of items on offer is both startlingly diverse and, at least to my untrained eye, extremely trendy (the very word “trendy” will surely mark me as hopelessly outside the target demographic). 

Anyhow, I didn’t pay much attention to this sector until I read that Shein (pronounced “she in”), one of the most visible social media-savvy fashion retailers, is on track to become the biggest online clothes retailer in the world. Within 12 months it is expected to outstrip the two better-known giants, Amazon and Walmart, with sales that will exceed $9-billion.   

Say what? No one had ever heard of Shein a couple of years ago, at least not where I live. Shein started life in China in 2008 as Nanjing Dianwei Information Technology, before pivoting to selling wedding dresses online, and then all fashion apparel. Around 2019 it ramped up its use of leading-edge software technologies like AI and quickly became the largest whale in the sea. 

How did this happen?  


The answer lies in this astonishing fact: Shein owns no assets. No factories, no textiles, no machines, no trucks, no stores. It is, to put it simply, an orchestrator of other people’s assets. And it’s all driven by software and, increasingly, AI.  

Shein has built the world’s largest online clothing retailer with, in essence, little more than a laptop. An oversimplification, certainly, but it’s not too far from the truth.  

Here is the business model: Shein’s smart data and AI software continuously sniff through social media and the rest of the vast internet, in real-time, to see what is hot (and what is not) by analysing posts — shares, likes, sentiments and purchases. That information is instantaneously sent to a slew of designers who use smart design software to come up with design ideas at a reputed rate of 6,000-10,000 items per day. That is not a typo. Per day.

These designs are instantly outsourced to a number of the 6,000 small to medium-sized manufacturers with whom Shein has a relationship, and small-batch runs are commissioned. These companies are happy to take orders for as few as 50 or so units, which would be uneconomical for a large manufacturer. Shein pays within a week, rather than within the traditional 90 days, so smaller manufacturers are thrilled to do business with it.  

The manufacturers are also connected to Shein’s cloud software, which can monitor the manufacturing process in real time. 

Many thousands of new items are simultaneously advertised in the online wild — on Facebook, TikTok, Instagram, Twitter et al, often with the boost and bark of well-paid influencers. As soon as orders start coming in, Shein automatically (brutally) culls the losers — fewer than 6% make it past 90 days.  

Finally, a series of logistics companies, also connected to the same cloud, ship the items to Shein’s central warehouse and from there to customers — within hours of order placement. (Shein used to ship only from its warehouse in Nanjing, China, which made international delivery times maddeningly long; it has since established multiple international warehouses.)  

Virtuous circle


This all amounts to a very virtuous circle. Everyone seems happy — the company, its suppliers and partners, and consumers (excluding those of us who like going into stores to buy clothes, looking like wanderers from a distant era).  

Speed, cost, choice — it wins on all fronts. What more could a consumer ask for? Zara might have pioneered fast fashion, but Shein has perfected and turbocharged it, making competitors seem positively torpid in comparison. 

It has not been all smooth sailing though. Shein has had a fair amount of bad press, ranging from accusations of tax avoidance to environmental neglect (it relies heavily on airfreight) to its choice of less-than-labour-friendly manufacturing partners. 

Also, there has been a lot of grumbling about the company aiding and abetting overconsumption, although I roll my eyes a bit at that one. (An article in Time magazine was published that digs deep into multiple criticisms of Shein’s business practices before reluctantly concluding that it may yet be on the way to becoming a better corporate citizen.)  

Stitched together with code


Marc Andreessen, the famed US venture capitalist and inventor of the first browser, wrote an iconic blog in 2011 titled “Software is Eating the World”. The blog made headlines for weeks — with reactions ranging from derision to “duh, obviously”. But, with the added spice of AI (software’s new emissary), Shein is a crystallised example of what Andreessen was referring to. Other than the fact that there are real physical products at the end of the chain, the whole enterprise is stitched together with code. All of it.  

Which is, of course, the bigger story. As AI continues its dizzying rate of innovation, it seems as if businesses which do not follow this model will simply stumble and fall. Quickly.  

Over the past five years, Shein’s revenues have gone from $3-billion to $32-billion and its users have increased from three million to 90 million within an industry where some sacred cows have always been uncontestable — you must have a global brand, you must have a celebrity designer, you must have a flagship store, you must have prestige merchandise positioning in your stores, you must produce at scale to keep costs down, you must spend a fortune on advertising and you must lead the pubic with your inimitable style.  

All wrong. The public tells Shein what they want.

The rest is code. DM  

Steven Boykey Sidley is a professor of practice at JBS, University of Johannesburg. His new book It’s Mine: How the Crypto Industry is Redefining Ownership is published by Maverick451 in SA and Legend Times Group in the UK/EU. It’s available now.

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