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Background

Fast fashion upstart Shein set the industry ablaze this month after reports it was seeking to raise $1 billion in funding at a $100 billion valuation, according to Bloomberg. Shein has upended fast fashion by making apparel at jaw-droppingly low price points and gaining market share, attracting major investors. But is it profitable?

“Even if Shein isn’t profitable now, the thesis is that if enough people shop from the brand it would be able to leverage some of its operational costs … It could become a very lucrative business,” said Chen.

Key Insights

• While it is unknown whether Shein is profitable, the retailer drives ultra-high sales volume with razor-thin margins
• Shein is powered by a nimble, AI-driven supply chain, which allows it to produce a plethora of trendy items for an internet-obsessed young fashion audience almost instantaneously.
• The retailer’s app uses casino-like tactics and rewards to draw shoppers in and keep them buying, sharing and engaging.
• Despite its murky manufacturing process and reputation for amplifying rates of consumption, Shein is popular among young consumers — who purport to care about sustainability.

Additional Resources

• The $100 Billion Shein Phenomenon Explained: Reports revealed that Shein is seeking over $1 billion in funding at a $100 billion valuation. BoF breaks down how the fast-fashion disruptor has built a global business that now rivals Zara and H&M.
• How to Compete With Shein: The Chinese fast fashion giant built an empire on unmatched speed-to-market and unbelievably low prices. To compete, others must play a different game.

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