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What should SHEIN focus on if it manages its US$1bn in funding?

What should SHEIN focus on if it manages its US$1bn in funding?

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Online fashion e-tailer SHEIN is reportedly mulling a funding valued at about US$1 billion, according to Bloomberg. Quoting people familiar with the matter, the article said that SHEIN is in talks with potential investors such as General Atlantic to raise about US$1 billion, which would bring its value to US$100 billion. Multiple sources, such as Bloomberg and the South China Morning Post said that, if successful, its valuation would also be more that H&M and Zara combined. According to SHEIN, it experienced positive growth with a community of about 100 million members and approximately 230 million app downloads globally, as of February 2022, since its launch more than a decade ago in 2008. 

Last year, a SHEIN spokesperson told MARKETING-INTERACTIVE then that it would focus on its niche, digital and influencer marketing as part of its marketing strategies in Southeast Asia. The SHEIN spokesperson said the platform focuses on social media as a channel to reach its target audience given today, social media is the main source of where most consumers get their information from, which helps to shape their purchasing decisions. 

Meanwhile, the e-tailer also planned pop up events for consumers to physically see, touch and feel its products and learn more about the brand. It was also leveraging its SHEIN X designer programme to work with local design talents in Singapore and Southeast Asia for collections. Aside from social media, user generated content such as SHEIN hauls was also another key channel that SHEIN has tapped on to effectively raise awareness among consumers. SHEIN hauls, integrated within its platform, allows consumers to give feedback on its products and the buyers hail from different backgrounds and markets. Their reviews are also made available on SHEIN's website and social media channels, making it accessible for all. "This has formed a community globally where conversations about their hauls are naturally generated, increasing brand awareness," a spokesperson previously explained. 

However, the brand hasn't been free from criticism. SHEIN has at times been in the thick of criticism by the fashion industry for ripping off designs. For instance, Mariama Diallo, who runs her own apparel line called Sincerely RIA, called out the marketplace for copying the design of one of her dresses. Elexiay's owner, who sells crotchet apparel, also took to Twitter to vent her frustrations.

Meanwhile, many fast-fashion brands have also copped flak for its environmental impacts. According to The Straits Times (ST),  an Agence France-Presse (AFP) report on the mountains of discarded clothing ending up in Chile’s Atacama Desert saw a total of 59,000 tons of second-hand clothing arriving in Chile for resale each year from Asia, Europe and the US. However, about 39,000 tons of clothing are unable to be sold and end up dumped in the desert. Furthermore, polyester, the synthetic fiber derived predominantly from petroleum has overtaken cotton as the main textile fiber of the 21st century, Bloomberg reported. In addition to requiring a large amount of energy to produce, synthetic textiles like polyester shed tiny pieces of plastic, known as microplastics, which then pollute the oceans, freshwater and land.

According to Bloomberg, 95.2% of the SHEIN's apparel contain new plastics, based on over 15,000 pieces of apparel that were added to SHEIN between 1 to 25 November last year. On the production and supply end of things, SHEIN's Sustainability and Social Impact Report for 2021 revealed that 83% of its 700 suppliers had at least one major risk and 12% had major violations that threatened closure.

violations suppliers shein

Industry professionals MARKETING-INTERACTIVE spoke also said that, should the brand go ahead with the funding, one immediate area to take note would be to fix the brand to become an ethical fast fashion brand. 

Neil Cotton, brand consultant and founder of Campus, and former chief strategy officer at Grey Group, said that SHEIN should fix its "serious credibility issues in the marketplace" by putting a major focus on trying to build trust with its consumers in the short term to stand for something more than "fast and cheap". He added that while selling throw away quality products at super cheap prices may result in more revenue, it should not be the foundation upon which a global fashion powerhouse worth US$100 billion should be built on.

"SHEIN is on the wrong side of fashion history right now. If it was my business, I would plot the fastest route out of the bottom of the bottom end of the market as soon as humanely possible and go from there," he said. 

Belynda Sim, head of strategy, APAC at VCCP also pointed out that the funding alone will not elevate its brand image given how the world is moving towards anti-consumerism and responsible fashion. For example, influencer Venetia La Manna called out SHEIN for its unsustainable output for the planet, lack of transparency around fair wages, and of course design plagiarism. "Honesty and transparency will be key in how they go about this, especially when we’re living in a new reality that celebrates authenticity and brands walking the talk," she said.

Sim also added that environmental issues is another key area that SHEIN could funnel its funding towards, in a bid to offset emissions across its entire business. She cited how ASOS talked about improving the “circularity” of its products, including using more sustainable or recycled materials in its own-brand products and packaging, designing clothing that can easily be recycled, and making it easier for customers to recycle clothes. She said, "SHEIN could look at how it can reduce its environmental footprint especially when it drops close to 1,000 new items each day, with promises around 'quick turnaround times'." 

Meanwhile, Freda Kwok, head of strategy and social at Germs Digital, said that SHEIN has its share of advocates and detractors, with the former loving its extensive range and price points, making fashion and style accessible for many, while the latter is generally against the brand being a purveyor of fast fashion that encourages a throwaway culture. As such, SHEIN should work towards elevating the brand and creating a stronger identity that is closer aligned to the shifting concerns and changing expectations of fashion consumers, particularly with the increasing concerns about responsible fashion and design integrity.

She said, "This may come in the form of developing more original creations, expanding its existing designer collaboration programme, or redefining its production processes. This of course cannot be limited to just a branding exercise but followed through with a commitment to making real change." 

Also, given its extensive reach globally, Kwok said that SHEIN could utilise the base it has built to springboard other designers and reshape the overall fashion industry towards these objectives, in a bid to uphold design integrity, sealing its position as an established fashion force to be reckoned with rather than simply a mass producer of clothes. 

Related articles:
SHEIN reportedly mulling new funding round worth US$1bn
SHEIN goes on marketing talent hunt in SG across a slew of verticals
SHEIN ceases Indonesia operations
SHEIN shares SEA marketing plans, explains importance of social and UGC
Fast fashion brand SHEIN enters SEA with new SG hub

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