Photo: Shein
Is Shein’s Marketplace Bad News For Amazon and Other Retailers’ Platforms?
Shein earlier this month announced the launch of its U.S. marketplace after successful rollouts in Mexico and Brazil.
The online retailer is opening its platform to third-party domestic and international sellers as it expands product offerings “to meet increasing demands for product variety.”
Third-party sellers on the Shein platform will gain access to the millions of Gen Z customers who use its apps to shop for low-price fashion merchandise. Shein’s app consistently ranks among the most downloaded from Apple and Google.
A Bloomberg Second Measure report from earlier this year showed Shein’s share of the U.S. fast fashion market going from 12 percent in January 2020 to 50 percent in November 2022. Shein today holds a greater share than H&M (16 percent), Zara (13 percent), Fashion Nova (11 percent), Forever 21 (six percent) and Asos (four percent).
Statista only puts Macy’s ahead of Shein for U.S. online apparel sales. Gap, Walmart and Kohl’s trail behind.
“Shein is committed to delivering the best shopping experience for customers and empowering the communities where we operate while doing so,” Sky Xu, Shein CEO, said in a statement. “By bringing new sellers onto Shein Marketplace that are aligned with our vision of making the beauty of fashion accessible to all, we are creating increased value for our customers while enabling local businesses to grow with us.”
Shein’s marketplace will compete with Amazon.com, Macy’s, Target and Walmart for more than just customers. The digital seller’s platform will also vie for sellers currently established on other marketplaces.
Market Pulse reports that Shein has added Anker, an Amazon aggregator with over $1 billion in annual sales. Anker, which started selling electronics on the Amazon platform in 2011, has expanded to other marketplaces. Sales on Amazon now represent about half of Anker’s total, down from 80 percent in 2016.
Some Anker products sold on Shein were less expensive than those on Amazon, according to Market Pulse. The article speculated that this could be a decision from Anker based on lower selling fees from Shein or a promotion funded by the platform. Shein is not charging a selling fee to sellers for the first three months. Its price after that is 10 percent lower than Amazon’s.
It’s unclear whether Shein will make its growing distribution center space available to third-party sellers. The company operates a 1.5 million square foot warehouse in Indiana and is building a similar facility in California, Peter Pernot-Day, global head of strategy and corporate affairs, told RetailWire in an interview last month.
Discussion Questions
DISCUSSION QUESTIONS: What will Shein’s online marketplace mean for other retailers that offer products from third-party sellers? What are the keys to successfully operating an online marketplace?
Poll
Loading …BrainTrust
Cathy Hotka
Principal, Cathy Hotka & Associates
Katie Thomas
Lead, Kearney Consumer Institute
Shein does not care about the competition. They know who they are and use that status to build a worldwide juggernaut. Their inexpensive, fast fashion offering has attracted a demographic that mainline marketplaces find hard to defend.
The sellers will populate multiple marketplaces and focus on those that deliver. The buyers will transition from marketplaces that offer everything to those that efficiently deliver what they are looking for. Imagine the marketplaces as malls and which mall(s) specific shoppers will gravitate to.
Great points, Gene. Shein has also debunked the notion that consumers want all things as fast as possible all the time – their shipping can also take weeks. On that note, it will be interesting to see what types of products they sell. Amazon and Big Box marketplaces do have efficient times for every day items that consumers need in a relatively efficient manner.
About 18% of China’s international commerce is with the U.S. That means that 82% is with the rest of the world. Ultimately, the 82% is Shein’s target.
The growth of Shein and Temu are unhelpful for Amazon and any other established marketplaces. Both platforms have grown their visibility and share of shoppers in the US. However, Amazon still has pretty strong loyalty and its Prime ecosystem is healthy. And Shein is not without its challenges: there is still some consumer skepticism and it potentially faces potential regulatory hurdles, particularly on clothing, as policymakers look more closely at imports.
Established US retailers should take Shein very seriously. It is siphoning off their potential new customer base with its fresh designs and affordable prices. Companies like Shein and Temu are creating new habits for younger shoppers, who are unlikely to turn to their parents’ and grandparents’ brands.
All variety beyond Amazon is good for the market and good for shoppers. Whether this will be profitable and a competitive strength for Shein, though, is unknown. Online stores of all varieties are important but not have not proven to be critical competitive dvantages.
If a shopper can be unwedged from the “buy it now” button on Amazon, through curated assortments on a marketplace, this bodes well for all other online sites to also compete effectively with Amazon, The Amazon stranglehold of all products all the time on the customer is bound to loosen as different offerings are available on a safe, substantial website.
Retailers should be concerned about the rapid growth of Shein. It is interesting to see that many Gen Z consumers appear to temporarily suspend some of their consumption values for the latest fast fashion and trends. According to McKinsey, “Nine in ten Generation Z consumers believe companies have a responsibility to address environmental and social issues.”
It would be interesting to really know how Shein compares to H&M and other fast fashion companies on sustainability and treatment of its workers today. There have been some investigations in the past about poor working conditions but that doesn’t have seemed to slow consumer demand for Shein.
Shein’s momentum continues to grow based on price/value and variety. The biggest potential risk for them and other fast fashion retailers is new reports on sustainability issues or poor worker treatment.
Peter Pernot-Day, global head of strategy and corporate affairs at Shein, told me, “I don’t know that I would describe us as fast fashion. I think that in the typical garment production industry, you’ll make, let’s say, 1,000 to 10,000 copies of a particular garment type or SKU, that you will then use to sell globally and you’ll expect a relatively high degree of inventory waste. Some have suggested that can be as high as 30 percent; 40 percent. We don’t have that problem because we’re on demand. When we make clothes, we’re really only making 100 to 200 copies of any given SKU unless there’s demonstrated demand for that product. And that’s allowed us to lower inventory waste and reduce things like having to sell dead stock or having to destroy dead stock or having to place it into a landfill of some type. And I think that’s what really sets us apart is that on-demand nature of our business model.”
I saw your interview with him George, it was terrific!
Thank you, DeAnn.
Peter Pernot-Day’s on inventory are what most retailers don’t understand and have no clue if you try to explain.
Shein has experienced 100% year over year growth for the past 7 years. I’d say they are a contender that Amazon needs to take seriously. Clearly they have the consumer’s attention. And since most consumers believe most Amazon products are Chinese made, they are already predisposed to accept Shein’s Chinese ownership.
Did Amazon or any other online (and brick and mortar) retailer think there wouldn’t be any viable competition in the NEAR future? (Rhetorical Question!)
Shein as a brand is a destination for cheap, fast fashion – not just price but the variety and timeliness of the styles they offer. There are many third-party sellers who would benefit from that brand association – other retailers should most definitely be concerned.
Shein’s appeal to young shoppers should ring alarm bells for established retailers, especially Amazon.
millions of Gen Z customers who use its apps to shop for low-price fashion merchandise
This is the same demo that in other discussions we are
relentlesslyfrequently told prioritizes equity and eco- concerns; so then I guess Shein must…er, shine there too….right?? Yeah right: https://www.glossy.co/fashion/sheins-100-billion-valuation-meaning/Perhaps this is the part of Gen Z that isn’t so into it.
In my opinion, the retail market in the U.S. is quite different, so it’s tough to say if the brand Shein can replicate its marketplace rollout successfully in the U.S. as it did in Mexico and Brazil. I am curious how they plan to compete with retail giants such as Amazon, Macy’s, Target, or Walmart who are well-established in the market of third-party sellers.
It’s good news for the industry. Amazon has had it too good for too long. The hegemony needs to end. Till now, we have seen omnichannel retailers using their physical footprint and experience-based proposition to fight Amazon with some degree of success. However, now, it would be a global giant (in the making) with a similar e-commerce dominant model locking horns with Amazon. In the end, it would be the consumer who would be benefited.