Carving into the market shares of the clothing industry has become business as usual at Shein. Below, we, the team behind Tradervoice, present to you a way of analyzing a company which up until today has not been available. We hope you enjoy the reading!
Table of Contents
Briefly on Shein
Shein, the fast-fashion giant originally from China, headquarter now located in Singapore, is preparing for a U.S. IPO (likely to be one of the largest US listings of the past decade), targeting a valuation above $66 billion. Known for their affordable apparel, Shein and the rapid growth of the company now challenges industry leaders, while expanding into a diverse marketplace, encountering hard competition alongside geopolitical risks.
Key Facts on Shein
- Filing for U.S. IPO, potentially one of the largest market debuts in years.
- Company seeks valuation above $66 billion, higher than H&M, lower than Zara’s parent Inditex.
- Revenue of $23 billion last year, surpassing H&M.
- Expanding beyond clothing, competing in broader marketplace including kitchenware and gadgets.
- 1,800 partnerships with designers and artists.
The Story of Shein
From Humble Beginnings to Retail Revolution: The Evolution of Shein
Initially launched as ZZKKO in Nanjing, China, in 2008, ZZKKO was the brainchild of entrepreneur Chris Xu. The business initially functioned as a drop shipping entity, sourcing its merchandise from the wholesale clothing market in Guangzhou, without involving itself in the design or manufacturing processes. By 2012, having rebranded to Shein, the enterprise had successfully developed its proprietary supply chain system, thereby evolving into a comprehensive retailer supported by a network of more than 3,000 suppliers.
Capturing Generation Z: Expansion into a Lifestyle Brand
Shein rapidly gained favor with Generation Z customers due to its affordably priced clothing, leading to an expansion in its product offerings, which came to encompass cosmetics, footwear, handbags, and jewelry. The brand’s skillful engagement with social media channels and partnerships with fashion bloggers markedly amplified its digital footprint. By 2016, the company had assembled a strong cadre of designers and creators of prototypes, concentrating on both quality and swift manufacturing to stay abreast of emerging fashion trends.
Strategic Shift: Moving to Singapore for Global Advancement
In 2022, the company shifted its corporate base from China to Singapore. This strategic relocation was aimed at enhancing regulatory adherence, fostering global growth, and improving financial administration, all while retaining its supply chains and storage facilities within China. This transition represented a major strategic pivot for the company, focusing on extending its global presence and optimizing operational efficiency.
Rapid Growth Amidst Challenges: Shein’s Financial Milestones and Controversies
In 2022, earnings soared to a remarkable $24 billion, bringing it in line with industry heavyweights such as Zara and H&M. However, the company encountered several challenges, including issues with trademarks, allegations of tax evasion, breaches of human rights, and health and safety worries. Despite these obstacles, Shein’s market valuation surged to $100 billion following a funding round in April 2022, underscoring its significant expansion and impact within the worldwide fashion sector.
Scaling New Heights: The Journey to IPO and Dominance in Fast Fashion
As of 2023, Shein has continued to broaden its influence. The company’s current valuation stands at $66 billion, and it is preparing for an initial public offering on the New York Stock Exchange. Facing various hurdles, the evolution from a modest beginning to a dominant player in the fast fashion industry demonstrates flexibility, clever marketing strategies, and deep insight into consumer preferences, especially among the younger demographic.
Tradervoice on Shein
Before we get started, be aware that sentiment is positive when above zero, and negative when below zero. So even though sentiment is dropping, but still above zero, it means that what is written is simply less positive.
If you look at the below chart showing sentiment on “Shein fast-fashion” and you zoom in to see the period March 2022 – Present day, you will see a significant increase in the sentiment of what has been and is being written about Shein in the worldwide financial news. Before zooming in, notice the significant downturn on sentiment starting in December 2022, which is proof that the company managed to survive a tough period. One of the incidents the company incurred was actually in December 2022, where working conditions of the employees were questioned (Shein investigation finds two factories breached local labor law | Fortune).
Given the newly announced goal, a US IPO, sentiment is more critical than ever to follow. If you are an investor looking for potential, Shein might be one to keep an eye on. The Journey might have just begun.
Sentiment increase/decrease
12 months: 45,74%
6 months: -1,75%
3 months: -1,01%
Popularity increase/decrease
12 months: 1,83%
6 months: -0,75%
3 months: -0,31%
Understanding the chart:
The below “Shein fast-fashion” line is based on advanced text analysis of more than 5 million financial news articles from more than 200 of the biggest financial news platforms worldwide. The circles (clusters) contains actual news articles links, which are the most representative articles in relation to your search, on the exact time they are located on the line. Green = positive tone in content of the article, red = negative tone in content of the article. Zoom in on a cluster to “open” it. Our Sentiment score goes from -1 to 1. If the line is above zero, but decreasing it means it is still a positive sentiment, but going less positive. If the line crosses below zero, sentiment turns into being negative. Go to Tradervoice.io to be able to add financial assets prices enabling you to compare the topic line with different assets to look for investment trends.
Tradervoice Expectations
We expect the interest to increase at least up until and shortly after the expected U.S. IPO. The news about Shein are currently positive, and less critical than seen earlier. The dominant revenues tell a story of success and the ability to grow the company globally. Consumer interest is increasing, and backed by a consistent sustainability strategy the company seems well on its way to a successful IPO. The current x-factor is regulatory issues that might lie ahead in the further expansion of the company into the global markets.
Shein Investors
- Mubadala (Abu Dhabi sovereign wealth fund)
- Sequoia China (venture capital group)
- General Atlantic (private equity group)
Other related topics to search on Tradervoice.io
- Shein fashion
- Shein IPO
- Shein investors
- Zara fashion
- Inditex
- H&M clothing
- Temu
Competitors
If you have any specific requests, questions, or feedback, please don’t hesitate to reach out to me: kristoffer@nordicanalytics.dk.
