Shein, the fast-fashion online retailer known for its unique on-demand manufacturing model, is now looking to sell its supply-chain technology to other brands and retailers. This move, as reported by The Wall Street Journal in March, could potentially boost Shein's revenues. However, industry experts suggest that getting brands to sign on could be an uphill battle due to the company's reputational concerns.
Shein's supply-chain technology has been a key factor in its success, enabling the retailer to turn around designs in a matter of weeks, compared to the several months more typical among its fast-fashion competitors. Evelyn Gong, an assistant professor of operations management at Carnegie Mellon University's Tepper School of Business, notes that "supply-chain technology is a top secret for a business like this," and that Shein's willingness to share it with everyone who's willing to pay, including its competitors, is a surprising move.
The company, founded in China in 2012 and now headquartered in Singapore, has experienced rapid growth in a short amount of time. Coresight Research estimates that Shein generated nearly $32 billion in revenue in 2023. The company has also expanded beyond its fashion roots, selling products in categories such as home goods, electronics, and office supplies, and has opened up its site to third-party sellers in a marketplace model similar to Amazon's.
Shein's on-demand manufacturing model could appeal to small, up-and-coming brands that might want to experiment with designs before fully scaling production. The company's Shein X program, launched in 2021, already involves Shein manufacturing, marketing, and selling designs created by individual designers. Making the technology available more widely could help partner brands gain valuable insight into inventory levels and forecast demand, while also benefiting from Shein's cost-effective supplier network. However, Shein's rise has not been without controversies. The company has faced allegations related to its labor practices and import strategy, which could hamper its efforts to expand to new business lines. Reports of laborers in Shein's partner factories working excessive hours in poor conditions have drawn criticism and scrutiny, with lawmakers calling for investigations into potential violations of the US's Uyghur Forced Labor Prevention Act.
Brands considering partnering with Shein might also have hesitations about sharing their detailed design information, as the company has faced multiple lawsuits alleging it stole designs from other companies. It's unclear whether Shein would gain access to its partners' customer data or if it could use that data to inform its own product decisions.
Despite these concerns, working with established brands could help Shein improve its image as it prepares for its US initial public offering, which is expected to be one of the largest public debuts in years. Anand Kumar, an associate director of retail research at Coresight Research, suggests that including various brands on its platform could help Shein sell products at various price ranges and position itself to compete with more global retailers.
