This article was written with the assistance of ChatGPT.
The news: Shein has strong positive momentum, the company argued in a letter to investors, noting that its sales volume growth accelerated and profits improved during the first half of 2023 compared with the latter half of 2022, per CNBC.
- The company says it recorded its highest profit ever during the first half of this year.
Shein’s growth strategy: Shein is increasingly focused on rolling out and growing its online marketplaces, which recently launched in Brazil and the US.
- The marketplace has roughly 6,000 active sellers and accounts for about a third of the Brazilian total gross merchandise value, according to the letter.
- In the US, the company is dangling incentives such as waiving its commission fees for several months to lure more sellers to its site, per The Information.
- The company plans to roll out marketplaces in Mexico, Germany, Spain, France, and Italy.
The context: Shein has a dominant (40%) share of the US fast-fashion market thanks to its vast assortment of low-priced apparel that appeals to Gen Z and millennial shoppers, per Bloomberg.
- Despite its success, the company has significant challenges. It has no shortage of competition from Temu and other Chinese companies selling ultra low-cost goods, and it faces growing scrutiny over intellectual property infringements, its trade practices, the environmental impact of its business model, and its supply chain—including whether its cotton is sourced using forced labor.
- Shein recently raised $2 billion in a funding round that valued the company at $66 billion—one-third less than its valuation last year.
The big takeaway: Shein looks as though it is in a great spot if one looks solely at its top- and bottom-line numbers.
- But as the company pushes toward a US IPO, it will need to clearly and definitively address the vast array of issues that cloud its business model.
Go further: For more on how Shein and Temu have taken US ecommerce by storm, read our report on Chinese Ecommerce in the US.