Shein– The Most Downloaded Shopping App in the US
Read time: 3 minutes
Good morning! It's Friday, September 1st. To kick off the month, we’re looking at the Chinese company that’s revolutionized American fast fashion and is quickly taking over the online clothing market.
Shein— The Most Downloaded Shopping App in the US
Most believe that Amazon is still the biggest name in American online shopping. However, if you ask women between the ages of 16 and 35, they’ll likely tell you that the title belongs to Shein.
Shein is a Chinese fast-fashion retailer that’s seen explosive growth, increasing sales tenfold within two years from $10B in 2020 to $100B in 2022.
They pulled it off with an ingenious combination of addictive apps, social media marketing, and lightning-fast manufacturing– let’s dig in.
So, What’s the Business?
After working as a marketing and search engine optimization (SEO) consultant, Chris Xu founded Shein to sell affordable wedding dresses in Western markets. The company found its niche when it turned to everyday female apparel and sold it by using viral TikTok hashtags and an army of influencers.
Shein’s enterprise value currently sits at $66B, making it the largest Chinese fashion company. Despite this, the company has 0% brand recognition in China. Shein strategically avoids its home market and sells almost exclusively to Westerners. This is because Shein clothing products seem extremely affordable to Americans, but not to Chinese shoppers who are loyal to their longtime industry leader Alibaba.
In 2022, Shein’s fashion app reached 195.8M downloads with the majority of downloads coming from US consumers. Over the past year, Shein and Amazon have dueled over the #1 spot for US shopping app downloads, but the Chinese retailer currently has the lead.
Xu’s background in marketing and SEO has fueled much of the company’s success. When the pandemic began, Xu took full advantage of TikTok’s rise and Gen Z’s obsession with it. At the center of Shein’s marketing strategy are its influencers and their #SHEINhaul videos. Their influencer marketing campaigns are global, even expanding into India by recruiting 2,000 of the nation’s social media sensations.
While social media marketing is essential to the business model, there are two other key factors that have led to Shein’s rise to the top.
How They Win: Extreme Consumer Data Analysis
Shein’s app tracks so much consumer data that it has been referred to as “China’s fast-fashion spy machine.” Data points from where you were when you downloaded the app to how long you looked at a fashion item are collected so the company can accurately predict where consumer demand is.
However, an advanced data collection system is useless if it doesn’t have a pool of active consumers to analyze. So, Xu turned the Shein app into a massively addicting dopamine machine that’s used by approximately 5M daily users.
The Shein app rewards users with points they can use to save on future purchases. But unlike other retailers that award points for purchases alone, Shein users can win points for just opening the app or watching influencer live streams.
With this incentive structure in place, Shein shoppers feel a need to check in on the platform every day in fear of missing out on savings. In return, Shein has an accurate read on where exactly consumer interest lies.
Economists who specialize in retail and tech agree that Shein is “making fast fashion look slow.” This claim is undeniable considering that Shein’s $66B valuation is twice the combined value of Zara and H&M– America’s former top fast fashion brands.
To put Shein’s production capacity into perspective, the company can design and release 2,000 new fashion products in a single day– its competitors can barely pull this off in a month’s time.
Shein has 6,000 clothing factories, but the quick production speed is mostly due to Xu’s SEO expertise. Xu designed an in-house algorithm that trawls the web and Shein application data to identify which fashion items are trending.
All this information is integrated into their factory systems, allowing manufacturers to evaluate consumer interest data points and produce clothing lines to meet real-time demand.
It’s this smart manufacturing process that’s truly shaken up the US fashion industry and caused Shein to surpass all its competitors.