With prices catastrophically lower than competing retailers, fast-fashion behemoth Shein's business seems too good to be true. So what’s really going on inside Shein that makes it so cheap — and controversial? Ahead, retail and business experts weigh in on the meteoric rise of Shein, its current role in retail, and exactly how the store works.
Shein is an online fast fashion retailer founded in China in 2008 and headquartered in Singapore. By 2022 it had soared to become the biggest fashion retailer on the planet, worth a staggering $100 billion, and especially popular with Gen Z. For scale, that makes its value higher than the combined total values of competitors H&M and Zara.
“Shein has emerged as a global phenom in the world of fast fashion, revolutionizing the way we shop for clothes online,” says Phil Masiello, founder and CEO of Crunchgrowth Revenue Acceleration Agency.
Browse and you’ll notice right away that Shein is cheap — really cheap. The company’s lightweight business model cuts out lots of traditional retailer costs including storage, inventory management, and excess supply. Let’s dive into a deeper investigation of Shein’s business operations that contribute to it being able to profitably sell merchandise so cheaply.
“[Compared with] traditional brick-and-mortar stores… this approach significantly reduces overhead costs associated with physical retail spaces and allows the brand to offer trendy clothes at unbeatably low prices,” Masiello explains.
It’s also a direct-to-consumer platform. This way, it can cut operational costs associated with transportation, storage, and physical stores, and reduce its production time to just a few days.
And its system is real-time responsive: By leveraging data and software technology, Shein can adapt to fashion trends and customer preferences quickly. Sophie Janaskie, carbon strategy manager at the carbon footprint-tracking and sustainable brands app Commons explains, “because they use big data and advanced AI algorithms, Shein can analyze customer data to forecast trends, managing production volumes and inventory to keep costs low.”
And its practices are widely believed to come with a human cost: The company has been accused of human rights violations through low wages and unsafe working conditions, alongside sustainability hazards.
Research done by PublicEye indicates the brand has violated Chinese labor laws. The company pays workers as little as 4 cents per item for shifts as long as 75 hours, according to a UK Channel 4 documentary. Journalists have also found evidence of unsafe workshops that lack safety protocols like windows and emergency exits.
“Shein pushes its prices so low by producing as many pieces of clothing as possible with the cheapest materials and the cheapest labor available,” says Erin Houston, co-founder of the sustainable marketplace Wearwell. “This means that the millions of garment workers that their production involves are being paid abominably low wages and working in unsafe conditions where corners are cut in order to reduce costs.”
“One major factor that characterizes Shein’s business model is a lack of transparency on their internal operations,” Commons’ Janaskie says, noting that the 2023 Fashion Transparency Index, which ranks the world's top 250 brands on social and environmental efforts, ranked Shein in the lowest category.
Shae Haning, tailor and host of The Sew Show with Shae, views the lack of transparency with keen suspicion: “I go by a simple policy based on a military saying; if it looks wrong, and it sounds wrong, it probably is wrong.”
Is Shein's Ultra-Fast Fashion Sustainable Long-Term?
Not only is there a human toll to this type of manufacturing, but an environmental one, too, Wearwell’s Houston says: “By choosing to produce with the cheapest materials, Shein isn’t just promoting a culture of over-consumption — they are contaminating the Earth’s precious bodies of water with harmful and toxic dyes and creating textile waste that sits in landfills for up to 200 years before breaking down.”
Further, she says, there’s little evidence to indicate the company is taking meaningful steps to address the significant environmental impacts of its ultra-fast fashion model: Findings from a Changing Markets Foundation report show that, between January and April 2022, Shein added 314,877 new styles to its US website, nearly 20 times the amount released by fast fashion rivals. “This rapid mass production of items using primarily virgin polyester requires massive amounts of energy and resources,” Houston says.
Greenpeace found that 15 percent of Shein’s products exceeded EU regulatory limits for hazardous chemicals, which poses both environmental and human risk. And according to its own sustainability reports, Shein’s absolute GHG emissions grew from 6.04 to 9.17 million tons CO2e in 2022, despite making commitments to reduce its footprint by 25 percent by 2030.
Despite criticisms, the company's success and popularity illustrate the potential of online-only retail and data-driven decision-making. “Shein's business model is a masterclass in digital marketing, inventory management, and trend forecasting,” Masiello says. “However, as consumer awareness about sustainability grows, Shein may need to adapt its business model to stay relevant in the future.”
Indeed, a growing subset of shoppers view as truly fashionable only clothing that is ethically and sustainably produced, and made to last. “When thinking about making sustainable purchasing decisions, Commons encourages our community to ‘Buy Less, Buy Better,’” Janaskie notes. “Shein’s model encourages consumers to do the opposite.”
Expect very cheap prices, but varying product quality
Reliable delivery and order management
Ethical and sustainability issues around manufacturing
Lack of supply chain transparency from Shein
For affordable trendy fashion not meant for daily wear, Shein is likely reliable. But better options may exist for higher quality and ethical production.
Alesandra Dubin is Los Angeles-based lifestyle journalist with an emphasis in commerce and deals content. Her work has appeared in Good Housekeeping, Woman’s Day, Prevention, Insider, Glamour, Shondaland, AFAR, Parents, Travel + Leisure, TODAY and countless other online and print outlets. Alesandra has a masters degree in journalism with an emphasis on cultural reporting and criticism from NYU, and a bachelor’s degree from UC Berkeley.
