China’s turbo-charged online fashion takes on Zara and H&M

In this news, we discuss the China’s turbo-charged online fashion takes on Zara and H&M.

MADRID / BEIJING (Reuters) – Shein in China could be the biggest shopping site You’ve never heard of it.

The fast fashion player is encroaching on the territory of more established rivals like Zara and H&M. According to Euromonitor, it has grown to become the world’s largest purely online fashion company, measured by sales of own-brand products.

Nanjing-based Shein, founded in 2008, is squarely targeting the ‘Gen Z’ social media generation, using influencers on Instagram and TikTok, and discount codes, to lure younger shoppers into a fashion market of more and more crowded.

He offers styles at low prices, uploading hundreds of new designs to his app every week. The price of a dress is about half that of Zara, according to a recent Societe Generale price survey.

“You can save money, which is important when shopping for clothes because fashions change so quickly,” said Rebeca Rondon, a 23-year-old student in Valencia, Spain, whose Instagram page compares dozens of styles from Shein and Zara. -head.

The COVID-19 pandemic has boosted online sales at retailers, giving exclusively online players like Shein, Britain’s Asos and Germany’s Zalando an edge over Zara and H&M, owned by Inditex, which have department stores in the center. -city.

In September, the Shein app recorded 10.3 million downloads worldwide from the App Store and Google Play, according to data from Sensor Tower. By comparison, H & M’s mobile app reached around 2.5 million and Zara, 2 million.

To date, Shein has reached 229.4 million downloads, up from 123.5 million H&M and 90.6 million Zara, according to the data.

In the week of Sept. 27 to Oct. 3, Shein was the world’s most downloaded shopping app for iPhones, according to analytics platform App Annie. It made it to the top 10 in the United States, Brazil, Australia, Great Britain and Saudi Arabia.

Private company Shein, which also sells on Amazon, does not publicly disclose its sales or other financial figures. The company did not respond to emails or phone calls.

It is backed by investors including IDG Capital and Sequoia Capital China, according to PitchBook capital market data. The funds did not respond to interview requests.

Inditex and H&M declined to comment for this story.

UNKNOWN QUANTITY?

Although Shein is gaining more followers, his visibility is limited compared to Zara and H&M. It does not have a national presence in China, where online shoppers head to Alibaba’s Taobao and Pinduoduo for clothing at bargain prices.

Meanwhile, some consumers say that the quality of items can be variable and delivery times irregular.

Unlike Zara and H&M, who have detailed information on sourcing their clothing and working conditions for employees on their sites Web and their annual reports, Shein does not give any details about the manufacture of its products.

Inditex revolutionized the fashion industry in the 1990s by responding quickly to trends and speeding up designs in stores using factories close to its headquarters in Spain.

Shein also works with hundreds of factories near its Nanjing headquarters, according to a China-based industry source with knowledge of the company’s business practices.

The Chinese company aims to have the designs ready for shipment within three days, according to the source who wanted to remain anonymous due to sensitive business practices.

Three days is a significant squeeze in Inditex’s turnaround time from the drawing board to the store, which is around 3 weeks according to the Spanish company.

AMBASSADOR’S CODE

Nonetheless, Shein faces a difficult task in making forays into a crowded online marketplace where Asos and Zalando have reported increased sales this year.

One way Shein seeks attention is through a network of influencers and “brand ambassadors.”

“I have to promote the outfits on my social media platforms,” says Laura Illanes, a 22-year-old student at the University of South Carolina Upstate.

“They provide me with a 15% off code – I have to share it with my followers,” said Illanes, a college athlete with 36,000 Instagram followers, who receives six free Shein items per month in exchange for promoting the clothes on she. Account.

Inditex and H&M have also reported big jumps in online sales, but that’s a minority proportion of their overall sales. Shares of both have fallen more than 20% since early February, which analysts have attributed in part to their large store networks.

Hong Kong-based fund Anatole Investment Management pitched the idea of ​​a short sale on Inditex due to the rise of the ‘new breed’ of online players from China at the investor conference by Sohn aired from Hong Kong on September 9.

“Zara is a historic player who is going to be crushed by fast fashion 2.0,” George Yang, Anatole’s chief investment officer, said to attendees, who declined to be interviewed.

(1 USD = 0.8485 euros)

Report by Sonya Dowsett in Madrid and Sophie Yu in Beijing; Additional reporting by Alun John in Hong Kong and Anna Ringstrom in Stockholm; Editing by Pravin Char

Original © Thomson Reuters

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