A powerful combination of rock-bottom prices and seemingly endless variety has helped fast-fashion retailer Shein climb to the top of the retail industry. But as ethical breaches against the fashion giant mount, some targeted Gen Z consumers are questioning the company’s impact on the environment and business.
Shein (pronounced “she-in”) may not be as well known to older shoppers, but the online retailer’s sales compete That H&M and Zara – and without physical stores. By marketing clothing that can cost as little as $3 an item and tapping into social media influencers to promote its brand, the company quickly built a following with Generation Z, a generation of consumers mostly in their teens and early twenties.
“Shein has been very good at creating wants and must-haves,” Neil Saunders, retail analyst at GlobalData, told CBS MoneyWatch.
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Behind Shein’s marketing success lie legal allegations about Infringement of property rights and intense American audit on alleged inhuman and forced labor practices conditions For workers who produce very cheap clothes.
The US-China Security and Economic Review Committee earlier this year cited several “controversial” trade practices by Shein and her rival, Temua Chinese shopping app. in April reportThe panel described its growth as “a case study of Chinese e-commerce platforms outperforming regulators to grow a dominant presence in the US market.”
What is Shein?
Incredibly low prices and its expertise in ever-changing apparel trends has positioned Shein to become the largest online-only retailer in the world, according to GlobalData’s Saunders. By aggressively marketing its clothing to young shoppers on social media sites like Instagram and TikTok, the brand has catapulted itself to the top of the US consumer scene.
According to her websiteShein as we know it was started in China in 2012 by four co-founders, but little is known about the man believed to run the company, Chris Xu, described in one lawsuit as a “mysterious technical genius”. The closely related e-commerce company has moved its headquarters to Singapore in 2022.
In order to sell the wide range of items it offers, the company has developed a production model that allows it to quickly process thousands of new designs every day. By providing a seemingly endless variety of new fashions at a low cost, they attract young shoppers who are eager to buy cheap and trendy new clothes.
Despite some recent cracks in popularity, Shein remains a popular brand among young shoppers.
One such shopper, a creator who once promoted Shein’s clothing but says she has since scaled back her products, said the retailer’s low prices make it a no-brainer for many young consumers.
“Think process is, cargo pants won’t last forever, so why not get a $21 pair from Shein to make it through fall and a half winter?” said Mia Meltzer, 22, a content creator in New York City.
Underwriting challenges
As a privately held company, Shein does not have to disclose details such as sales, employment, or other information that publicly traded companies in the US are required to share publicly, and much about its ownership and governance remains murky.
Despite the transparency and other challenges, rumors that the company intends to go public still persist. Generalization, along with talk of the company’s plans to expand its manufacturing from China to Mexico and Brazil. However, the company may lose its luster. The latest funding round pegged Shein’s valuation at $66 billion, or about a third lower than it was a year ago, according to The Wall Street Journal.
As questions arise about Shein’s operations, its popularity appears to be eroding with younger consumers, with the share of Gen Z adults considering making a purchase on the clothing site down 7 percentage points over the past year, according to a recent Morning Consult. reconnaissance is found.
In May, a bipartisan group of two dozen lawmakers asked the Securities and Exchange Commission to put the brakes on. Shein initial public offering Until it verifies that it does not use forced labor from the country’s predominantly Muslim Uyghur population.
Shein did not respond to requests for comment from CBS MoneyWatch.
Why is Shein clothes so cheap?
“Shein has taken the lead in lower pricing, which is achieved due to its low-cost model and inappropriate labor practices, and the end result is a lower price to the consumer that’s key,” said Saunders.
He describes Shin’s model as “real time fashion”. Equipped with its own in-house design team that closely analyzes trend data, Shein is able to single-handedly design, prototype, and ship products, delivering ephemeral clothing styles faster and for much less money than its fast-fashion competitors. Shein releases up to 2,000 new items each day, according to Saunders.
“Shein drops a massive amount of new products, and it’s an addictive model for consumers,” said Saunders. “There is a division between people’s needs and their wants, but we consume far above our need level.”
Fast fashion ethics
As Shein has gained fans, critics have also raised concerns about her environmental impact and questionable work ethic.
“Most of the waste and environmental damage comes from overconsumption, so to be truly green and sustainable you don’t want people to buy too much,” said Saunders. “Shein is the one that takes fast fashion into hyper speed, which leads to a huge amount of unnecessary and disposable consumption, which is not good for the environment.”
The fast fashion model can be harmful to the environment due to the massive amounts of textile waste and the natural resources needed to produce its items, according to energy and sustainability expert Jasmine Schmidt at consulting firm ICF.
Clothing waste has doubled since 2000, and the United States and Europe generate 90 million tons of clothing waste annually, according to Schmidt. She added that less than 1% of that clothing is recycled.
“One of the biggest problems with Shein is the lack of disclosure,” Schmidt said. “It’s one of the largest private companies and they don’t really disclose how much they produce, where they get their materials from and their emissions.”
Clothes in landfills
Garments are often discarded within North America It ends up in landfills In South and Southeast Asia, such as the Atacama Desert in Chile, it is a garbage dump that can be seen from outer space, Schmidt said.
Often, these communities are forced to burn discarded clothing, which leads to local air and water pollution, according to Schmidt. Recycling is not always an efficient alternative, separating the different materials used into one garment complicated. Reprocessing systems are unable to break down some synthetic clothing fibers or remove dyes.
“It’s a stressor on the system, and the effects will be tenfold in the next 20-30 years if we don’t fully deal with it now,” Schmidt said. “We need to be able to understand the sheer volume of waste we’re producing.”
Schmidt said it’s a crucial time for lawmakers to step in with stronger regulations on the fashion industry. For example, states could introduce extended producer responsibility (EPR) laws, which have already required producers in California, New Jersey and Washington to take responsibility for environmental waste from their products.
Buy for good
Schmidt said that while companies are primarily responsible for creating quick waste, they are also responsive to consumer demand, which places some responsibility on shoppers to think before they buy.
“We have to be very careful with our purchasing power,” said Schmitt. She added that buying less, the first “R” in “reduce, reuse, recycle” could be the most direct way to consume ethically.
“It can help to buy from companies that have transparent policies and sustainable practices,” Schmidt said. Plus, buying used clothes from stores like Plato’s Closet, Rent the Runway, and Depop can be viable options for finding trendy clothes without adding to environmental waste—something Schmidt and Meltzer suggest consumers should do.
“You have to quickly remove the adjective when you think of fashion,” said Schmitt. “Consumers should consider whether they want their legacy to be known as ‘quick, wasteful, and unknown.'”
