China-founded Shein has built a bargain fashion empire with a pioneering small-batch manufacturing model, reports The Wall Street Journal (March 21, 2024). Now it is planning to open that up to global brands and designers. It is calling the new initiative “supply chain as a service.”
The move represents a shift in business strategy as Shein faces challenges in the U.S., its biggest market. Under the plan, Shein would make its supply-chain infrastructure and technology available to outside brands and designers, allowing them to leverage Shein’s system for testing out new fashion items in small batches and track how popular they are with consumers.
Shein has rapidly expanded from a discount Chinese apparel seller to a global fashion brand with the help of its small-batch, on-demand manufacturing model, and now sells to more than 150 countries. It has revolutionized fashion manufacturing as it contracts with thousands of factories in China that churn out tens of thousands of new styles daily. It places orders to suppliers to be delivered in days, relies on real-time data to quickly analyze demand and replenishes orders as needed. That cuts down on the cost for storage and limits inventory waste, a primary reason for its ultralow prices.
By making its supply-chain ecosystem more widely available to brands, Shein is refocusing on its powerful capabilities to manufacture and distribute fashion products efficiently.
Shein’s popularity in the U.S. has drawn the attention of lawmakers, who have pressed Shein to address whether it sources cotton from China’s Xinjiang region, where the U.S. has accused Chinese authorities of committing genocide and of using forced labor in its repression of mostly Muslim Uyghurs, allegations Beijing denies. Shein has said it has a “zero-tolerance policy” for forced labor.
Classroom discussion questions:
- What is “supply chain as a service”? Why is Shein offering this service?
- How has Shein revolutionized the apparel industry?