Core business growth slows, Shein diversifies US strategy

According to Modern Retail, Shein is looking for new growth paths after gaining popularity among the American fast fashion audience. The fast fashion market can no longer satisfy Shein's ambitions in the US e-commerce sector, especially in the current economic slowdown, Shein's fast fashion business is facing a slowdown in growth.

At present, third-party platforms and offline pop-up stores seem to be the two most important areas for Shein to find new growth in the U.S. The report pointed out that Shein is currently betting on offline pop-up stores and new third-party platforms to further expand its consumer audience in the United States.

On May 4, Shein officially announced that it had launched a third-party platform in Brazil for the first time. On May 12, Shein's US platform was officially launched, and Anker was one of the first brands to join. Currently, Shein's US platform mainly cooperates with some local small sellers and seeks brand sellers other than clothing to join.

In addition, Shein is expanding its pop-up store layout in the U.S. Data shows that in 2022, Shein opened more than 40 pop-up stores worldwide, including more than a dozen in the United States.

What can Shein gain by transforming into a third-party seller market?

Shein's third-party market business is not progressing very fast. It is currently only available in Brazil and the United States and is still in its early stages.

Similar to the problems faced by TikTok, Wish, and AliExpress in the United States, Shein will face great difficulties in attracting local sellers in the United States. However, Shein's third-party seller information is "quite opaque," and it is difficult to determine which of them are local sellers in the United States and which are Chinese sellers.

According to Shein, its third-party marketplace business in the United States has recruited "hundreds of sellers." Overall, Shein has added a lot of sellers since it opened up to third-party sellers in the United States. Home goods brand Costway is one of the latest domestic brands to join Shein in the United States.

A Shein spokesperson said that the third-party market will introduce more categories other than fashion, home and beauty. Although opening up third-party sellers can bring in new volume, it may also distract consumers' purchasing power and attention, causing Shein to face more intense market competition. This is because the products of new brands joining Shein may also be sold in other channels.

Still, Shein has to work hard to attract more brands and sellers to join.

Shein has a huge platform traffic and a large number of young consumers, but the growth rate of its core fast fashion business has slowed down significantly. This is because American consumers cut spending on non-essential items, which has hit the entire fast fashion industry.

On the other hand, Temu is rapidly taking over the US market through heavy marketing investment and deep discounts. In November last year, Temu's downloads exceeded Shein.

The pop-up store received a warm response, an important factor for Shein

Shein has opened pop-up stores in several cities across the U.S. to allow consumers to experience its products firsthand. The latest pop-up store will open in Las Vegas this week. These pop-up stores are not permanent, but they all offer omnichannel shopping, which can drive sales for its online business while expanding brand communication.

So far, these pop-up stores opened by Shein have been a huge success. According to the New York Times, some pop-up stores have people lining up hours before opening. Shein also offers reservations to some of their VIP customers via email, which shows how popular Shein pop-up stores are in the United States.

If Shein pop-up stores can generate publicity for the brands on its platform and can be competitive on price, Shein may be able to improve its market position.

According to the Wall Street Journal, Shein's revenue reached $23 billion last year, and this year's goal is to achieve a 40% revenue growth. However, as the fast fashion business slows down and market competition intensifies, it will take time to see whether third-party markets and offline pop-up stores can provide Shein with support.

Editor✎ Ashley/

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