Online fast-fashion retailer Shein is considering selling it coveted supply-chain technology to other brands and retailers.
As per an investor letter from the company’s executive chair, Donald Tang (seen by Wall Street Journal) the company’s unique on-demand manufacturing model is the secret behind Shein’s retail success.
Why the big fuss? Shein’s supply-chain technology has been instrumental in its rapid growth. It has enabled the company to turn around designs at record speeds. The industry standard in the fast-fashion field tends to take several months to achieve the same results.
This tech has been a closely guarded secret… until now.
Shein’s shine
Shein was founded in 2008 but expanded significantly into the US market in 2017. The retailer was crowned as the most downloaded fashion app globally in 2022, with nearly 52 million consumers hailing from Brazil alone.
To date, Shein has more than doubled its profits. The company, which recently moved its headquarters to Singapore, raked in more than $2 billion in profits during 2023 (an increase of 185%).
As reported by Financial Times, it also recorded roughly $45 billion in gross merchandise value.
Entrepreneur Timothy Armoo succinctly points out: “You think Shein is just another fast-fashion company. But really, they are one of the biggest technology companies you’ve never truly understood.”
Shein’s quick turn-around
According to Armoo, Shein uses its own proprietary tools to determine the latest fashion trends through Google Search and social media. These insights are then passed on to a team of 800 designers to bring the products to life.
Thanks to Shein’s manufacturing model, designs are created within 36 hours. Says Armoo: “Social trends generate hype before the item has even been produced by Shein. This is incredibly smart… They sell into pent-up demand for a certain style.”
Despite the hype, the company creates small batches at first – sometimes even as small as 10 items. Then, using AI, they track user behavior like browsing metrics, the number of items added to carts, and how long a user stays on the product page.
Their suppliers have access to this platform and can see in real-time which products are the most popular. They can then instantly reproduce more of the fan favorites. Armoo explains: “This real-time model reduces the time from design to finished product to 3 days and drastically reduces excess waste.”
Challenges
But despite the potential benefits, Shein may face challenges in bringing partners on board.
The company has faced criticism and scrutiny over reports of poor working conditions in its partner factories, as well as allegations of design theft from other companies.
Recently, the Seoul government in South Korea found “significant quantities” of potentially dangerous chemicals. One pair of shoes reportedly contained “428 times the permitted levels of phthalates.”
NOW READ: Shein products: Seoul government warns of toxic chemicals
About the author
Cheryl has contributed to various international publications, with a fervor for data and technology. She explores the intersection of emerging tech trends with logistics, focusing on how digital innovations are reshaping industries on a global scale. When she's not dissecting the latest developments in AI-driven innovation and digital solutions, Cheryl can be found gaming, kickboxing, or navigating the novel niches of consumer gadgetry.
