According to Shein's latest public financial data, its sales from January to September this year reached 24 billion US dollars, surpassing H&M, another fast fashion giant, and narrowing the gap with Zara. Currently, Shein is accelerating its transformation to a platform model, expanding merchants, categories and partner brands, and seems to be moving towards becoming a global platform like Amazon.

Fast fashion rivals are trying hard to catch up, but are still left behind by Shein

In 2022, Shein's sales reached $23 billion and its net profit was $800 million. The goal is to increase revenue by 40% by the end of this year. In the nine months ending September 30 this year, Shein has achieved sales of $24 billion, and the possibility of achieving the goal is very high.

More importantly, Shein has surpassed its fast fashion peer H&M and is approaching Zara. According to H&M data, its net income from December 1, 2022 to August 31, 2023 was US$16.4 billion and its gross profit was US$8.2 billion. Zara data showed that in the six months from February 1 to July 31 this year, its revenue was US$18.3 billion and its gross profit was US$10.6 billion (9.8 billion euros).

This year, H&M has been making efforts in many ways to try to catch up with Shein. In the summer of this year, H&M was forced to lower the prices of its products to compete with Shein. Without discounts or promotions, the price of a top at H&M is close to that of Shein. In addition, H&M has also clashed with Shein in court. In July 2023, it sued Shein for copying H&M's designs and styles.

Despite this, Shein is still far ahead in the fast fashion field. According to a research brief from the U.S.-China Economic and Security Review Commission (USCC), in March 2020, Shein accounted for 18% of the US fast fashion market, a figure that soared to 40% within two years. By November 2022, Shein accounted for 50% of all fast fashion sales, ahead of H&M (16%) and Zara (13%). By May 2022, its app downloads in the United States once exceeded TikTok, Instagram and Twitter.

However, affected by the cooling of online consumption after the epidemic and the endless accusations faced in the United States and other parts of the world, Shein's valuation suffered a sharp drop in 2022, from $100 billion at its peak in 2021 to $66 billion. In addition, there are constant rumors about Shein's IPO in the United States, and handing over a better report card to investors has become an important task for Shein.

Therefore, although Shein's sales have surpassed its competitors, it does not seem to be content to dominate only the fast fashion field. Today, Shein is accelerating its platform transformation and promoting the globalization of its supply chain in pursuit of higher valuations.

Not content with being just a fast fashion giant, Shein is targeting Amazon

In fact, Shein today cannot simply be defined as a fast fashion brand. In May this year, Shein announced the launch of a platform model in the US, and then launched the "Hypergravity" million sellers plan to provide incentives for merchants with annual sales of more than $2 million. According to MarketplacePulse, Shein is actively extending an olive branch to Amazon sellers, which has indeed brought a large number of Amazon sellers to its platform.

At the same time, Shein has also expanded its platform categories to smart home, electronic products, etc. This year, Shein has expanded the number and scope of brand cooperation, such as the cooperation with Forever21 in the United States, covering from physical stores to online platforms. As of August this year, Shein announced that its number of users has reached 150 million.

Judging from various measures, Shein's goal seems to be to become a comprehensive platform like Amazon. The reason may be that no matter how large the scale of H&M and Zara is, the ceiling of their valuation is far less than that of global companies like Amazon, which has a valuation of one trillion US dollars.

However, Shein clearly still has a long way to go to achieve its goal of surpassing Amazon, as the valuations of the two companies differ by more than ten times.

Recently, Amazon also announced a partnership with Meta and Snap to allow buyers to complete the purchase of Amazon products on the platform when browsing ads on social platforms. Amazon is one of Meta and Snap's largest advertisers. In 2022, Amazon's advertising spending reached US$20.6 billion, almost double that of 2020, equivalent to 4% of its sales.

Therefore, Shein does not have an advantage in advertising and marketing compared to Amazon. Amazon has spent decades and a lot of money to build a logistics network, which Shein cannot surpass in the short term. However, Shein's flexible supply chain model of small orders and quick response and huge traffic on mobile terminals are also its weapons to compete with its rivals.

At present, the Black Friday promotion is coming, and TikTokShop and Temu are also increasing their layout. Black Friday is a key battle to determine the year-end performance, and it is also the first peak season after Shein opened its platform model. Whether Shein can win a victory in this promotion remains to be seen.

Editor✎ Ashley/

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