CASE STUDY: SHEIN’S BUSSINESS

STRAGERGY AND ENHANCE

DEVELOPMENT IN FAST FASHION
INTRODUCTION

The apparel industry uses a business strategy known as "fast fashion," in which current
runway trends and high-end designs are imitated, produced in large quantities inexpensively,
and delivered to retail locations promptly. Fast fashion expanded in the latter half of the last
century as the cost of producing garments decreased. This was made possible by the
introduction of new materials like polyester and nylon, improved supply chains and quick
response production methods, and a dependence on cheap labour in Asia's garment
industry. Shein, now the biggest rapid fashion international online retailer in China, is
projected to be worth $30 billion(Bloomberg news). Thanks to its size, reach, and quickly,
Shein has had incredible accomplishments and is presently the most well-known clothing
shop globally. But there's clear distinctions within the company's evolutionary path and
commercial strategy and that of its two largest rivals, Zara and H&M. Based on Shein's
decisions and actions, this article defines the features of an innovative company model:
ultra-fast fashion. Until date, the ultra-quick design company scheme remains the focus of
news articles and publications rather than being examined to the identical sum as the rapid
fashion approach (Cao, 2022; Ciment, 2022; Fashion Revolution, 2022; Jones, 2021;
Nguyen, 2021; Olcott & Eley, 2021).

We hope to add to the actual studies on recent modifications in the rapidly evolving fashion
sector and obtain an improved comprehension of how Shein's novel company structure
stands out from current approaches by utilising a scrutiny of Shein's activity and the
approach and company model literary works. In business strategy, an enterprise's
characteristic that concurrently fulfils two conditions—that is, that it is valuable to its
consumers yet it is challenging for rivals to imitate—is commonly defined as its unique
selling point(Obłój, 2010; Obłój et al., 2010 ).

As a result, the focus of this essay is Shein as an example of a cutting-edge, ultra-fast

clothing company strategy. As a result, we will discuss Shein's individual business model
developments, approach evaluation, and literary evaluation in the parts that follow. Lastly,
we will offer our opinions on this framework.
THE COMPANY STRUCTURE AND TACTICS

Chandler (1962) underlined the significance of objectives for the future able to be attained by
particular paths of steps and appropriate deployment of vital funds in among the initial
sketches of technique. Then, Mintzberg (1987) concentrated on deciding what to do and
business operations. According to Porter (1997), an organization's standing in the market
that enables it to effectively respond to the influence of five external factors and, as a result,
generate a greater return on investment is its strategy. On the other hand, Barney (1991)
links strategic management to good firm performance and places successful competition at
its core.

A company's business plan can be understood as (1) an organization's concept regarding

value creation, (2) its execution of that tactics, (3) the commercialization of the financial
implications of the tactics, (4) the organisation of the firm, and an amalgamation of all four
aspects, taken into consideration the generation of value possibilities and the method of
leadership choices (Bigelow & Barney, 2021). This approach simultaneously links and
distinguishes strategy and the firm's model.

In summary, a company's performance is greatly influenced by its approach and operational

decisions. They have to be combined thoroughly as, in order to provide long-term customer
value, a sound strategy alone may not be sufficient in the absence of an appropriate
business model (Braun et al., 2019). The case of Shein is an intricate and unique illustration
of this conjunction, as it is discussed in the parts that come.

FAST FASHION

"An approach to fashion design, creation, and marketing that emphasises making products
that are in line with current trends available to consumers quickly and cheaply" is how the
Merriam-Webster Dictionary defines fast fashion. (Fast Fashion, 2022).

Manage over every step of the process enables clothing to be sent practically on request, as
manufacturing concentrates on specific items as opposed to whole groups. In the final
analysis, Caro and Martınez-de-Albeniz (2015) state that three factors decide how well an
organization relates within the fast fashion sector: (1) swift reaction; (2) prevalent selections
modifications; and (3) trendy clothing at reasonable costs.

SHEIN’S BUSINESS MODEL SPECIFICS

The main benefit of Shein's business strategy may be well explained by the inclusion of Jin
and Shin's (2020) basic options. But the company's plan also incorporates fresh, creative
ideas which render its cheap approach harder to replicate while remaining long-lasting.
First off, Shein's unique supply chain structure has strengthened its ability to respond
quickly. The manufacturing sector of Guangdong in southeast China is where almost all of
manufacturing takes place. Shein diligently cultivates her partnerships between creators and
startups who produce apparel exclusively for Shein. Shein's cloud-based supply chain
administration and the vendor matrices have opened up fresh possibilities for
competitiveness as they have made it possible for the business to innovate its products
while handling knowledge more effectively, which reduces costs and saves time when
compared to rivals (Camargo et al., 2020; Peterson et al., 2010). Shein collaborates with
around three thousand Chinese clothing firms and a staff of over a thousand designers
overall (Cao, 2022).

Second, and perhaps most importantly given the efficacy of QR, Shein responds to
competitive developments and handles regular variety adjustments more rapidly and
effectively than its rivals. Shein's website adds 1000 new goods per day on average. This
was especially noticeable during the pandemic and shipping delays; Shein's fresh product
count surpassed that of Boohoo by 1385%, H&M by 6584%, and Zara by 4259% (Cao,
2022; Marci, 2022).

Third, Shein does a great job of providing stylish clothing at reasonable costs. Shein's
pricing are cheaper compared to many of its rivals, with some of them being as much as
30%–50% less than Zara or H&M (Cao, 2022). This is also due to the way the supply chain
is set up and runs. A decrease in costs at every stage of production—including salary costs
—might be one of the likely causes. (Jackson, 2022).

Lastly, Shein's early economic circumstances are what give it an edge above its competitors.
The massive Chinese company is not required to publish in-depth reports and is not bound
by the same restrictions. As a result, it is unclear how it will handle the concepts of long-term
viability social accountability, protecting the planet, and providing acceptable labor
conditions.

In summary, the quick clothing sector study serves as the foundation for our explanation of
the ultra-rapid clothing company structure. We referred to the research on tactical choices in
this sector, with a focus on long-term viability from Jin and Shin (2020), Caro and Martınez-
de-Albeniz (2015), Camargo et al. (2020), Drake and Marley (2010), as a being an
innovative trend who can be contrasted to the well-established one. An examination of the
ultra-fast clothing company structure may begin with this arrangement of tactical choices.
IMPROVEMENTS NEEDED TO PROMOTE DEVELOPMENT OF THE
FAST FASHION INDUSTRY

1. Lack of sensitivity

But last year, a brand-new initiative called Shein X was unveiled in an effort to support
collaboration with entrepreneurs and present emerging talent to the globe. Following the
work done by additional creators, they take care of all post-design tasks such as production,
advertising, and sales. This initiative establishes a standard for additional rapid-fashion
rivals in the area of trademark protection.

2. Corporate social responsibility

Through the apparel sector contributing over $350 billion to the US GDP annually, the
nation's largest corporations ought to act swiftly and decisively to reverse the present state
of affairs. They ought to put a stronger focus on ethical behavior to encourage growth, since
abuse controversies damage their reputations.(Lieber,2018)

3. Harming the Environment

The industry generates 92 million tons of garbage annually as a result of low-cost

production, disposable goods, and frequent purchasing. Nevertheless, garbage is not the
only thing endangering the planet. Furthermore, 1.7 billion tons of CO2 emissions, 79 trillion
liters of water, and hazardous chemicals are used in the production of our clothes. In the
end, companies ought to switch to a more circular business strategy that recycles their
resources. By reducing waste and using these assets more effectively, pollution might be
controlled and sustainability enhanced. They should also be more open about their
production process so that customers may verify if they are indeed "environmentally friendly"
according to their advertise.(Niinimäk, Peter, Dahlbo, 2020)
CONCLUSION

Our knowledge of the significance of strategic decisions and the connections among plan
and innovative company models has improved as a result of this study. We picked Shein as
an example since, despite having only been in business for a short time, it performs very
well both financially and commercially. Our primary contribution is to elucidate how Shein's
business model improvements and strategic decisions resulted in its inexpensive and speed-
related differentiation, that have in return led to outstanding market success.

However, in the meaning articulated by Gavetti and Porac (2018), the ultra-fast company
structure mentioned here appears to be both expanding and changing the existing norm.
Owing to the components' potential adaptability in various sectors, the ultra-fast fashion
business model could find its genuine adherents and establish a new benchmark that merits
further thorough investigation. Future developments will depend on a number of factors,
including shifting consumer preferences toward conservation, less waste, and an increased
quality of life, as well as how long this transformation lasts and how much it makes room for
resemblance (Guillén, 2020).

In order to gain a complete grasp of the socioeconomic fundamentals and effects of this
algorithm's implementation, more research into it will be necessary. This research should
focus on the organization and execution of the method, accountable enterprise, advertising,
and interaction, as well as mental health problems connected with rash purchases, fear of
missing out, and the propensity to toss out useless goods and substitute them with beneficial
new ones.
REFERENCE

Barney, J. (1991). Firm resources and sustained competitive advantage. Journal of

Management, 17(1), 99-120. https://doi.org/10.1177/014920639101700108

Bigelow, L.S., & Barney, J.B. (2021). What can strategy learn from the business model
approach?. Journal of Management Studies, 58(2), 528-539.

https://doi.org/10.1111/joms.12579

Bloomberg. (2022). Shein holds largest U.S. fast fashion market share. Bloomberg Second
Measure. Retrieved from https://secondmeasure.com/datapoints/fast-fashion-market-share-
us-consumer-spending-data-shein-hm-zara

Bloomberg News, How Trump's Trade War Built Shein, China's First Global Fashion Giant,
2021.

Online: https://www.bloomberg.com/news/articles/2021-06-14/online-fashion-giant-shein-
emerged-from_china-thanks-to-Donald-trump-s-trade war?sref=QYWxDQ1o

Braun, M., Latham, S., & Cannatelli, B. (2019). Strategy and business models: Why winning
companies need both. Journal of Business Strategy, 40(5), 39-45.
https://doi.org/10.1108/JBS-01-2019-0005

Camargo, L.R., Farias Pereira, S.C., Scarpin, & M.R.S. (2020). Fast and ultra-fast fashion
supply chain management: An exploratory research. International Journal of Retail &
Distribution Management, 48(6), 537-553. https://doi.org/10.1108/IJRDM-04-2019-0133

Cao, S. (2022). Why Shein, a fast fashion company, is now worth $100 billion. Observer.
Retrieved from https://observer.com/2022/04/shein-fast-fashion-value-100b-fundraising

Caro, F., & Martínez-de-Albéniz, V. (2015). Fast fashion: Business model overview and
research opportunities. In:N. Agrawal, & S. Smith (Eds), Retail supply chain management.
International Series in Operations Research & Management Science, 223, (pp. 237-264).
Springer. https://doi.org/10.1007/978-1-4899-7562-1_9

Chandler, A.D. (1962). Strategy and structure: Chapters in the history of the industrial
enterprise. Cambridge: M.I.T. Press. http://archive.org/details/strategystructur00chan

Chavie Lieber, Fashion brands steal design ideas all the time. And it's completely legal,
2018. Online: https://www.vox.com/2018/4/27/17281022/fashion-brands-knockoffs-copyright-
stolen-designs-oldnavy-zara-h-and-m
Ciment, S. (2022). How Shein balances fast-fashion with sustainability goals. Footwear
News. Retrieved from https://footwearnews.com/2022/business/sustainability/shein-
balances-fast-fashion-and-sustainability

Drake, M., & Marley, K. (2010). The evolution of Quick Response programs. In T. Cheng &
T.M. Choi (EdsInnovative Quick Response programs in logistics and supply chain
management. International Handbooks on Information Systems (pp. 3-22). Springer.
https://doi.org/10.1007/978-3-642-04313-0_1

FASHION TRANSPARENCY INDEX 2022: Fashion Revolution. (2022). Retrieved from

https://www.fashionrevolution.org/about/transparency

Fashion—Worldwide | Statista Market Forecast. (n.d.). Statista. Retrieved from

https://www.statista.com/outlook/dmo/ecommerce/fashion/worldwide

Fast fashion. (2022). Merriam-Webster Dictionary. Retrieved from https://www.merriam-

webster.com/dictionary/fast+fashion

Gavetti, G., & Porac, J. (2018). On the origin of great strategies. Strategy Science, 3(1), 352-
365. https://doi.org/10.1287/stsc.2018.0054

Ghauri, P. (2004). Designing and conducting case studies in international business research.
[In] R. Piekkari & C. Welch, Handbook of qualitative research methods for international
business (pp. 109-124). Edward Elgar Publishing.
https://doi.org/10.4337/9781781954331.00019

Guillén, M.F. (2020). 2030: How today’s biggest trends will collide and reshape the future of
everything (First Edition). St. Martin’s Press.

Jackson, S. (2022). Shein factory employees are working 18-hour days for pennies per
garment and washing their hair on lunch breaks because they have so little time off, new
report finds. Business Insider. Retrieved from https://www.businessinsider.com/shein-
factory-workers-18-hour-shifts-paid-low-wages-report-2022-10

Jin, B.E., & Shin, D.C. (2020). Changing the game to compete: Innovations in the fashion
retail industry from the disruptive business model. Business Horizons, 63(3), 301-311
https://doi.org/10.1016/j.bushor.2020.01.004

Jones, L. Shein: The secretive Chinese brand dressing Gen Z. BBC News. Retrieved from
https://www.bbc.com/news/business-59163278

Marci, K. (2022). Decoding the ultra-fast SHEIN business model. EDITED | Retail
Intelligence. Retrieved from https://blog.edited.com/blog/shein-business-model
Mintzberg, H. (1987). The strategy concept I: Five Ps for strategy. California Management
Review, 30(1), 11-24. https://doi.org/10.2307/4116526

Nguyen, T. (2021). Shein is the future of fast fashion. Is that a good thing? Vox. Retrieved
from https://www.vox.com/the-goods/22573682/shein-future-of-fast-fashion

Niinimäki. K., Peters. G., Dahlbo. H. et al., The environmental price of fast fashion. Nat Rev
Earth Environ, vol. 1, pp. 189–200, 2020

Obłój, K. (2010). Pasja i dyscyplina strategii: Jak z marzeń i decyzji zbudować sukces firmy.
Wydawnictwo Poltext. (English translation: Passion and discipline of strategy: How to build
company success from dreams and decisions)

Olcott, E., & Eley, J. (2021). Shein: The Chinese company storming the world of fast fashion.
Financial Times. Retrieved from https://www.ft.com/content/ed0c9a35-7616-4b02-ac59-
aac0ac154324

Peterson, J., Chang, J., Wong, Y.-H., & Lawrence, C. (2010). The emergence of the fast
fashion business model and imposed Quick Response challenges for Chinese fabric
manufacturers. In T. Cheng, & T.M. Choi (Eds.), Innovative Quick Response programs in
logistics and supply chain management. International Handbooks on Information Systems
(pp. 387-422). Springer. https://doi.org/10.1007/978-3-642-04313-0_20

Porter, M.E. (1980). Competitive strategy: Techniques for analyzing industries and
competitors: With a new introduction (1st Free Press ed). Free Press.

Similarweb, Online: https://www.similarweb.com/zh/website/shein.com/#overview

Seersite, Shein Now Leads Fast Fashion, 2021.

Online: https://www.earnestresearch.com/databites/shein-leads-fast-fashion/

Shein Group, 2021 Sustainability and Social Impact Report, 2021. Online:
https://www.shein.co.uk/2021-Sustainability-and-Social-Impact-Report-a-1267.html

APPENDICES
APPENDIX I: Strategic Choices of the Ultra-Fast Fashion Business Model

The differences between fast fashion and ultra-fast fashion business models

Strategic choices Fast fashion Ultra-fast fashion

Born digital No Yes
Stationary stores: Zara 3.000, Website
H&M 5000 Mobile app
Website Direct sales – savings
Indirect (cost) and direct sales
Investment in offline and online
integration, online development

Artificial intelligence Yes/No. In selected areas Yes, at every level of the value
and big data chain
Shared consumption Yes, the tendency to throw Yes, the tendency to throw away
away clothes that are no longer already unwanted clothes + very
wanted aggressive marketing and
influencers
Quick response Yes Yes
Local production, also in Asian Locally produced in China
and African countries Matrix structure of suppliers
Cooperation with large factories Cloud-based management
Author celebrity collections Small and medium-sized
Transportation costs, storage, companies
bottlenecks Individual designers
Wide range Yes/No Yes
Approximately 500 new items Approximately 1000 new items
per week per day
Plus size fashion
Low prices Yes Yes, up to 50% lower than
competitor
prices
Responsible Yes/No. Individual initiatives, No. No transparency, no
business reports information, rather a declaration
elaboration based on Camargo et al. (2020); Caro and Martínez-de-Albéniz (2015); Drake
and Marley (2010); Jin and Shin (2020).
APPENDIX II :Market share of fast fashion in the US Seersite (2021) (Source: earnest,
Shein Now Leads Fast Fashion, 2021, Not for commercial use)

APPENDIX III : Shein's monthly year-over-year sales growth during the pandemic (Source:
Bloomberg News, How Trump's Trade War Built Shein, China's First Global Fashion Giant,
2021, Not for commercial use)

APPENDIX IV : App traffic VS website traffic for Shein and its competitors (Source:
Similarweb, Not for commercial use)
APPENDIX V: Markets channels distribution for Shein (Source: Similarweb, Not for
commercial use)

APPENDIX VI: Percentage of violations detected in the supply chain (Source: Shein Group,
2021 Sustainability and Social Impact Report, 2021, Not for commercial use)