SHEIN expands in the US, further pressuring other fast fashion brands

It is reported that in order to allow consumers to receive packages faster, S HEIN is optimizing its US logistics network - establishing distribution centers in the Midwest and California - which is a major change compared to its previous practice of shipping directly from the country .

Fast fashion giant S HEIN has attracted many Generation Z consumers in the United States, but it has a fatal flaw : logistics time usually takes 10 to 15 days, making it easy for competitors to target it .

Now, SHEIN's investment in logistics makes it a greater threat to fast fashion brands such as H&M and Forever 21. In addition, it may also affect the profit margins of new entrants and bring some potential risks to its own business model .

Adam Cochrane, retail and luxury goods analyst at Deutsche Bank , said: "In the fast fashion sector , the time it takes for products to reach consumers is very important because young consumers , especially young female consumers, may not want to think about what will happen two weeks later . "

It is understood that the SHEIN distribution center in Whitetown, Indiana has been put into operation and is expected to shorten the delivery time by four days. The distribution center currently has 800 employees and plans to reach 1,000 by the end of this year. SHEIN expects to open a second distribution center in Southern California in the spring of 2023 .

These warehouses will not stock all types of clothing from S HEIN , but will stock specific products, especially popular basic styles , and the specific inventory will be based on the sales of the products . In addition, these distribution centers will also handle product returns.

Shein is also preparing to advance similar strategies in other regions . Shein previously announced plans to build a distribution center in Poland. Last Tuesday, Shein said it opened a 170,000-square-foot warehouse in Toronto and an office at the same location .

According to Morning Consult's survey data, it is the ninth most popular clothing brand among American Generation Z women , even on par with classic American brands Levi's and CK. In addition, SHEIN has become a strong challenger to American fast fashion brands such as Forever 21 and American Eagle Outfitters.

According to an unnamed person familiar with the matter, SHEIN expects to achieve $24 billion in revenue this year . Bloomberg data shows that in the first quarter of this year, SHEIN's sales in the United States increased by 43% year-on-year, while H&M's sales fell by 10%.

Previously, SHEIN’s valuation once exceeded 100 billion US dollars. After this logistics optimization, its development speed is expected to reach a higher level.

SHEIN

USA