Late this spring–just a week after the Clotheshorse 200 Episode Live Extravaganza–I traveled to Tempe, Arizona to join FABRIC for its Eco Fashion Week. FABRIC is a “phygital fashion incubator, business accelerator, design studio, academy, and micro-factory right in the heart of the Arizona State campus. And if you’re curious about all of that, the founders of FABRIC will be joining me for an upcoming episode.
I was in Tempe to speak at an Eco Fashion Week event, and then to moderate a panel conversation about the Eco Park Summit, a gathering of people throughout the textile supply chain–and waste chain–working together to brainstorm a new business model focused on circularity, living wages, and domestic manufacturing. One of the individuals joining me for that panel conversation was Bill McRaith, a man who has worked in the apparel industry for decades and decades, as former CSO of PVH, SVP Sourcing at Wal-Mart, and CSO of Victoria’s Secret. And btw CSO is all about sourcing and supply chain: where stuff is made, how it is made, and who is making it. Bill is retired now and he has made a circular fashion industry his entire focus right now. He told the audience stories about moving apparel production to China 20+ years ago and how everyone thought that was a wild decision that would surely never work out. Yeah, ironic now, I know. But that WAS a major change for the industry. And even in the early years of my career, we weren’t making a lot of clothes in China yet. Accessories? Sometimes, as long as they weren’t real leather. We made a lot of t-shirts here in the United States. Other apparel items came from India (especially if they were cotton and/or embellished), Bangladesh, or Vietnam.
Moving to China was a massive change for the apparel industry.
Anyway, I asked Bill something that I have pondered here on Clotheshorse more and more often these days: “It seems as if brands are at a crossroads: they can either compete with SHEIN (and fail with their current infrastructure/supply chain) or shift into a more ethical, sustainable direction and sort of become more “premium” in the eyes of their customers and the consumer landscape as a whole. Why are the CEOs of these companies so short-sighted about the future?”
And he said something, that at first, well it felt shocking.
He said, “I believe that we are at the beginning of an extinction event.”
I asked “Do you mean the extinction of humanity?” There was a noticeable heavy, sad collective sigh from the audience.
He laughed. “No, extinction of a business model. We saw that happen 15 years ago as brands adopted the fast fashion model. Those that couldn’t keep up, went out of business. Department stores, some mall brands, etc. Now we are going to see those who shifted to the fast fashion model go out of business over the next few years because they cannot compete with SHEIN, and most will try. These businesses can only continue if they stop, reflect, and make a pivot in strategy and their supply chains.”
Now obviously I’m paraphrasing what he said, but it really stuck with me. That many of the brands we know right now will be gone in a few years, a decade at most. I see it when I read their quarterly earnings reports: declining revenue, high return rates that are costing them a fortune, no clear point of differentiation on the competitive landscape. Urban Outfitters is a great example of this: their target customer is in their teens and early 20s. Well, those customers have split into two main shopping groups: those that shop secondhand, whether they are at thrift stores or buying from online platforms. And then there are those that are looking for low prices and vast product offerings…and they get that from SHEIN, Cider, Temu, AliExpress, even Amazon shopping.
Urban Outfitters is a lot more expensive than SHEIN, etc. And the quality is not good.
The product offering is so much more narrow: the brand focuses on 2-3 trend concepts at a time, while SHEIN offers every TikTok microtrend and then some. And Urban Outfitters is notoriously not size inclusive (this is an intentional and antiquated decision on the part of company leadership). The ultra fast fashion brands like SHEIN offer a lot more sizes. Sure the fit might not be great, but at least they offer something.
So what should Urban Outfitters do? Well it seems like so far they really don’t know. If I were running that place (lol) I would tell them to return to their late 90s/early 00s roots: bring back the bestseller styles of that era, but do better: better fabrics, better fit, extended sizes, with a focus on sustainable and ethical values. I would tell them to go back to sponsoring bands and shows, fund art pop ups and design incubators in different cities. Do more events with schools and non-profit organizations. Put together a huge “get out the vote” effort for this year’s election. Actually buy from small brands and artists–not copy them. Become a brand that means something AND is cool. Adapt to what it means to live in 2024, not this stale old take on selling clothing.
Because that’s the thing: any brand that is going to survive this “extinction event” is going to have to make some major changes. That’s because SHEIN has–and is– changing what it means to buy and sell clothing on planet Earth. And it’s not a change for the better. It’s a change we should all care about, no matter where WE buy our clothing. Because SHEIN and what it means for the future of making and selling just about any category of stuff WILL impact every one of us: no matter what we wear, where we live, the kind of job we have, or how much money we have.
In fact, the SHEIN-ification is such a big deal, so impactful for every one of us, that this episode is part 1 in a short series about SHEIN: where it’s been, where it’s going, and how it is changing everything.
Welcome to Clotheshorse, the podcast that is once again, talking about SHEIN. I’m your host, Amanda, and this is episode 204, part one in a small series I am calling “The SHEIN-sodes.” In this series we will be dissecting
AND SO MUCH MORE! Yeah, there’s so much to discuss when it comes to SHEIN, that I knew I could never cover it all in one episode.
In this part of the series, we will be tackling:
Okay, before we get started…I am once again reminding you of the Clotheshorse Jamboree. It is happening August 16-17 here in Lancaster, PA. Tickets are $200, but they will be going up to $300 on July 1. So buy your ticket now! And guess what? I have introduced a payment plan option:
Here is how the payment plan works:
Have questions? Reach out to me via email. Otherwise, get your ticket now. That payment plan option will disappear on July 1.
If you are planning to come but you’re still trying to figure out details, drop me an email and I will honor the $200 price through July for you.
Next, I wanted to give you an update on the Fashion Act. Things really came down to the wire, with the bill beginning to be drafted the night before the session ended. We picked up some more sponsors, including some Republicans, making the Fashion Act a bipartisan bill! But unfortunately, there just wasn’t enough time. The Legislature took an extra two weeks to approve the budget this year, and they just kinda ran out of time to accomplish other legislation. But we are not giving up! We will be there again, working, lobbying, and getting it passed next year. Unfortunately the Legislature doesn’t meet again until next year, but that gives the coalition of people, organizations, and companies working to pass the Fashion Act more time to rally even more people to our cause.
This was kind of a weird few weeks to receive that kind of disappointing (but not altogether surprising) news. I had been feeling kind of frustrated (maybe I’m just a little overworked) with Clotheshorse, the very slow Jamboree ticket sales, people ghosting me for meetings they set up to be potential guests on the show…all of it has been making me feel like I’m bad at this. Like I make a crappy podcast that no one likes, no one respects me, and I’m just a ding dong who is (as a dude on TikTok told me) “making shitty sustainability memes.” And it can be hard to see the impact of one’s work when you’re facing the behemoth that is fast fashion, right? It’s hard sometimes to keep things in perspective. It’s even more difficult because many of us have so many different “jobs” in our day to day lives: there are the jobs that pay the bills, the housework, caring for children or other loved ones, the emotional labor of running a household and family…and then we have this job of slow fashion? It’s hard! It’s a lot! And it’s normal to feel tired.
I’m telling you all of this because if you’re feeling tired or frustrated with the work you are doing to make the world a better place, well, know that is normal and I feel it, too. In fact, I had a weird conversation (that I might be viewing through a particularly dismal lens) where I thought a friend was trying to tell me to stop making Clotheshorse because it just wasn’t that good and it wasn’t financially sustainable. I reflected on that for a while and decided, “hey, I’ll just do it for the rest of this year and then reassess. Maybe I can do a better job of doing this and people will notice.”
But the Fashion Act not passing, moving into next year, requiring more work from all of us involved…that reminded me that this fight, this movement to dismantle slow fashion, to protect our planet and its people, it’s still in the early stages, even if it feels like we’ve been doing it for a long time already. It would be like taking your laundry out of the washing machine halfway through the wash part of the cycle and calling it done. My friends, that laundry is still full of soap, it’s dripping wet, it needs to be rinsed, and it needs to spun and dried. The laundry has just begun. And so has this fight against fast fashion.
So I’m going to keep doing this as long as I can, or until everyone stops listening. Maybe I’ll get better at it (no, I’m not looking for feedback or advice, so please don’t send it). I already feel as if I have grown so much over the past few years as a speaker, researcher, thinker, writer, and person who has to deal with difficult people on the internet.
We’re all getting better at doing this, even if sometimes it’s hard to see that. But if we give ourselves the treat of looking back, at assessing where we were then, and where we are now…we’ve all made some major progress. And we’ll keep doing that, even if it’s just teeny tiny steps forward sometimes.
Yes, the Fashion Act didn’t pass. But it showed that people want it. That legislators are starting to wise up to that. In our early conversations, a lot of the legislative staff was kinda like “eh, it’s just clothes, who cares?” But over time, with the persistence of the coalition, they began to see that “omg it’s not just clothes…it’s the planet, it’s climate change, it’s plastic pollution, it’s a human rights issue!” So we’ll keep doing what we’re doing…all of us working on the Fashion Act, and you, me, everyone involved in the slow fashion community…and we’ll get this legislation passed in more and more states.
Maxine–who you all met in the Fashion Act episode–wrote a statement that she shared on Linkedin (I’ll share it in the show notes) and she said, “While disappointed, we remain steadfast. Numerous other states continue to reach out for the language of the bill and we 100% intend to be back in the NY Legislature when the next session opens. Our kids and conscience demand nothing less….You can choose to be a part of this future with us, or move even further from an authentic sustainable future.”
Every conversation we had while working on the Fashion Act–whether it was with one another or with legislative staff–included SHEIN. And one thing that kinda blew my mind–or at least reinforced how niche the topic of slow fashion still is–was that many of the people we met at the NY State Capitol had no idea what SHEIN was, some had heard it in passing, but most had never heard of it at all!
Anyway…before we proceed, it’s time for the SHEIN disclaimer here:
SHEIN’s growth is a bad thing for everyone on this planet.
We are not picking on SHEIN when we talk about the ethical and environmental issues related to its business model. We are all aware that the fast fashion industry as a whole has many ethical and environmental issues, so we aren’t ignoring those by talking about SHEIN. You know I have no love for any of these fast fashion companies and TBH there are some that I kinda hate on a personal level. But SHEIN is specifically of importance, worthy of extensive conversation, because its massive growth has changed and IS changing how clothing is made and sold in this world. It’s changing what we get when we buy clothing. It’s changing what it means to be a worker globally. And it’s all very bad.
The environmental implications are real. In 2022, SHEIN’s use of virgin polyester (which is made from oil) churned out the same amount of CO2 as about 180 coal-fired power plants. That’s according to the Changing Markets Foundation report “Synthetics Anonymous 2.0: Fashion’s persistent plastic problem.” That data point is from 2022, and I can only assume that the CO2 emissions from SHEIN’s polyester clothing production has only tripled at this point, as its sales have grown. This is some scary shit!
Next, we are not being xenophobic when we talk about SHEIN. This has nothing to do with SHEIN being based in China. It could be a US based company and I would have the same concerns. It’s not the country, it’s the business model.
We are not shaming people for shopping from SHEIN. There are many reasons people shop from SHEIN: affordability, ease of shopping/access, size availability, even aesthetic. But these people don’t love slave labor or think it’s hilarious that the world is burning thanks to all of the polyester. I am sure they themselves are unhappy with the stuff they are being sold, too. I know that because I see SO MUCH SHEIN stuff at the thrift stores, often with the original tags still attached. And when I try this stuff on–because I WOULD buy a secondhand SHEIN item if I knew I would wear it a lot–there are always major fit and sewing issues that make me know that the original buyer never got to wear it once because it was so defective. SHEIN isn’t doing a great job of serving the people who shop from them, but somehow it’s doing a better job than most of the fashion industry is right now.
As I try to remind everyone as often as possible: everything is complicated, especially when humans are involved. There is rarely a black and white/simple answer. We could say to people who buy things from SHEIN “stop buying stuff from SHEIN,” and that’s probably not going to work. Because if they can’t find clothes in their size that they can afford elsewhere…well, they are going back to SHEIN. And not only are they going back to SHEIN, they are completely dipping out of any conversations about slow fashion (or criticism of SHEIN) because it makes them feel terrible or judged.
What we can do is talk about SHEIN in straight forward, not judgemental, non-shamey terms. And let people make their own decisions to move away from SHEIN…and buy less new clothing in general. We also can’t throw alternatives to them as if they are easy fixes. Because they may not be. Lots of people don’t have time to thrift or have access to thrift stores (and getting to them). Lots of people just can’t find their sizes in thrift stores in things they want to wear. Lots of people don’t have time to sew their own clothing (including me, that would mean giving up Clotheshorse TBH). Skipping SHEIN in 2024 has a lot of privilege attached to it. I have never shopped from SHEIN ever, not even once years ago, yet you’ll never see me announcing that on social media. Why? What does it really mean? Who does that help? It’s not a flex. I am a straight sized person who already owns a lot of clothing and I can find new clothing in my size just about anywhere. I have a job (working for myself) where I can wear whatever I want. My ability to skip SHEIN only shows how easy it has been for me to find clothing elsewhere. It’s not an indicator of moral superiority. And overall, we could all work harder to be kinder and better listeners everywhere, especially on social media…where I literally see people being horrible to one another every day. Even a statement as simple as “I’ve never bought anything from SHEIN” sounds like an announcement of judgment, blame, and superiority. That’s now how community building works.
We are talking about SHEIN because its success is pushing the fashion industry to make clothing a lot faster and more quasi-disposable. It is making the problem of fast fashion much, much worse. As the rest of the fashion industry tries to keep up with SHEIN, customers, workers, and our planet will suffer the consequences. So yeah, we have to talk about SHEIN! And there’s a lot to say!
Since last year, there has been a lot of conversation in the worlds of fashion, finance, and business as a whole about SHEIN’s planned IPO.
For those of you who don’t spend as much time listening to Marketplace as I do, let’s take a minute to explain what an IPO is.
First things first: IPO stands for “Initial Public Offering,” and it means that shares in a company are being made available to the public (for buying and trading) for the first time ever. Before launching an IPO, a company is privately owned. It may still have received investment money from private equity or angel investors, but it is largely owned and controlled by its original founder. SHEIN is a billion dollar company, but it is still owned by by entrepreneur and search engine optimization (SEO) marketing specialist Chris Xu. This private ownership allows SHEIN to operate largely under a shroud of secrecy. Like, even people reporting on this potential IPO don’t know exactly how much revenue the company is driving every year, but they think it will be around $50 billion this year. Should SHEIN become a publicly traded company, data like revenue, expenses, and profit will become public knowledge. Furthermore, becoming a publicly traded company–meaning shares will be bought and sold on an exchange (like the New York Stock Exchange) and stock prices will move up and down regularly. It’s also expensive: publicly traded companies have a lot more overhead expenses for accounting, legal support, and the more complex, rigid reporting requirements. This also means that the original owners/investors will lose some of their control of the company, now being forced to negotiate with a board and please shareholders.
Why would a company opt to be publicly traded? Especially one like SHEIN that is maybe going to make $50 billion in sales this year? One that has already made a billionaire of its founder? Because going public means just an epic level of investment capital coming in all at once, rather than bit by bit from an assortment of private investors. And this can guarantee fast, exponential growth. So while SHEIN is already massive, this will allow it to basically dominate the apparel industry around the world once and for all. And expand in to other categories beyond clothing and accessories. So this is a big deal!
Now, an IPO is a complex process. And it requires a lot of steps to get there, including approval from government regulators. Here in the US, that’s the SEC (Securities and Exchange Commission). Last year (and for a chunk of this year), SHEIN was trying to launch its IPO here in the US on the New York Stock Exchange. It filed for its US IPO in late November last year. It was ultimately derailed for a few key reasons:
It doesn’t help that the National Retail Federation also rejected SHEIN’s application to join. The NRF is the retail industry’s largest and most powerful trade association. Ordinarily not being a member probably wouldn’t be the biggest problem a brand has, but for SHEIN, who is trying very, very hard to make this IPO happen, a rejection from the NRF is not a good look. And it’s not hard to see why the NRF would reject SHEIN: the brand’s business practices (as well as an amazing customs loophole) give SHEIN a huge and unfair advantage against every company that is a member of the NRF. We will talk about those advantages many times in this series.
So SHEIN has shifted gears, and is now trying to file its IPO on the London Stock Exchange. And on one hand, some investors and politicians in the UK are excited about this prospect. With SHEIN’s £50 billion valuation, it could be the biggest IPO in UK history. But it’s also a tough sell to UK regulators for all of the same reasons it was in the US.
Florida Republican Marco Rubio actually wrote to UK Chancellor Jeremy Hunt (he is the government’s chief financial minister) saying, “SHEIN previously sought to list in New York City but failed due to concerns about its unethical and irresponsible business practices. At the time, I warned U.S. securities regulators about SHEIN’s alleged exploitation of slave labor and trade loopholes. I now feel a duty of friendship to repeat these warnings and urge caution before the United Kingdom allows SHEIN to list in London.”
But beyond Marco Rubio or the Clotheshorse podcast, even UK fund managers are not really on board with a SHEIN IPO in the UK. I read a great Financial Times piece where some fund managers got down to brass tacks and it felt like reading the finance version of Us Weekly:
One fund manager said, ”I don’t think anyone with an ESG [environmental, social and governance] team will be able to buy it. It smacks of desperation for the London Stock Exchange — they’ll take anything.”
Another said, “The notion that certain companies with particularly poor human rights practices and sustainability credentials could choose London as a listings destination will not help to make us more competitive in the long run.”
In general, the sentiment was kinda like “allow SHEIN to do its IPO here is a very bad look.”
To be honest, it feels really promising that even the finance world is like, “eh, this ultra fast fashion stuff might be a problem.” That is a big step forward. And to be clear, many fast fashion brands are publicly traded, from Zara to Nike to Urban Outfitters. But all of those companies went public far before we were talking about slave labor being used to make clothing. And the endless churn of new cheap clothes becoming an environmental crisis.
One last thing regarding SHEIN’s IPO: According to data from London-based research firm EDITED, SHEIN has been increasing its average prices pretty substantially this year versus last year, as of June 1st In fact, these price increases are outpacing any other price increases from the other fast fashion retailers. In the US (which is SHEIN’s biggest market in terms of sales, accounting for 28% of SHEIN sales), SHEIN raised the average price for a women’s dress by 28% this year, increasing from about $20.50 to $28.51. SHEIN’s UK prices increased by about 15%, and the prices it offered in European countries increased by 36%.
Some retail analysts believe that SHEIN increased its prices to show future investors that it can sell items at a higher price point. It may also be trying to drive even more sales volume, to increase its valuation. It could also be preparing for the much higher internal expenses associated with running a publicly traded company. One of the many, many reasons SHEIN can offer such unnaturally low prices is that it isn’t burdened with the accounting, reporting, and legal expenses of its other fast fashion competitors.
So how did SHEIN become this massive force that is changing the global apparel industry? And really, the global EVERYTHING industry…because much as we have seen the fast fashion model adopted by companies that sell furniture or throw pillows or even food, every consumer goods company will be watching and imitating what SHEIN does within their own businesses.
Last year, I did a whole series tracing the evolution (or de-evolution, you decide) of fashion in a series called “from 1.0 to 3.0,” where I explained that the traditional fast fashion model was fast fashion 1.0. The sped up version adopted by Fashion Nova and Boohoo was fast fashion 2.0 . And SHEIN, Temu, Cider, etc were fast fashion 3.0. I recommend listening to that series to better understand how we got to SHEIN world domination.
SHEIN was founded by Chris Xu (apparently he is an SEO genius, who knew) back in October 2008, when it was called ZZKKO, selling wedding dresses. But soon it rebranded as SHEINside and it began selling more women’s clothing and accessories. Back then, it primarily sold product from the wholesale clothing market in Guangzhou. In 2012, it began to establish its own supply chain, asserting control over the types of product it was selling. And in 2014, it bought another Chinese online retailer, Romwe.
Now through the late 2010s, SHEIN was kinda comedy fodder for blogs and social media accounts. Sort of the “I ordered this from SHEIN and what I really got was this heinous pale imitation of the photo.” And that’s because SHEIN was pretty blatantly stealing brand photography and creating copies of styles from photos….which is kinda like designing something via a game of telephone. Of course the final product will be different than the original inspiration. It’s funny–well, not funny haha, but interesting—that it’s impossible to find any of this older hilarious SHEIN content online. No doubt the brand has pressured platforms to pull that content.
And then around 2020, SHEIN began to get it together, investing money in better photography, influencer partnerships, and while it was still stealing designs right and left, it wasn’t literally stealing photos from other brands’ sites (unlike a lot of sellers on Temu).
If you read as many think pieces about the pandemic’s impact on fashion at the height of the pandemic as I did, well, I’m sorry that you did. Because most of them ended up being complete nonsense in hindsight. We were told:
I didn’t believe any of that. And not just because I don’t own sweatpants. Or that I, despite losing my job and never leaving the house, still got dressed up every day (including makeup), because it made my mental health a little better.
The pandemic still isn’t over and I also know that people aren’t only wearing sweatpants or utilitarian unisex futuristic jumpsuits.
So by now, you all know that I lost my job at the beginning of the pandemic. The last thing I had done before being furloughed was cancel every single order we had placed, even if the product was already made and on the way to the warehouse. It was terrible. Sales reps cried (and lost their jobs). Vendors begged me to reconsider (because this would mean bankruptcy for them). Brands went out of business. And the whole thing struck me as fundamentally immoral because my employer was just one small brand under a larger fast fashion parent company that owned several large brands. All of those brands were canceling their orders, too. The company always bragged about having $100 million in the bank, but here we were canceling everything and ensuring that the people making those clothes would starve and lose their homes. It was disgusting, but I also knew that I had no say in the matter.
Every other retailer out there did the same thing, not wanting to be stuck with even more inventory that they could not sell. And everyone was convinced that fashion was over. That people would never buy new outfits again. Seriously, so silly. People are people and they are always going to want to wear something special.
But what happened as the result of all of those product cancellations was that none of those brands had anything to sell, other than sweatpants. Seriously, even Nuuly (my now former employer) started renting out sweatpants after I was furloughed.
And it turned out that, even though people were sitting at home feeling terrified. And even though lots of people lost their jobs and their sense of financial stability, lots of other people were still working and had nowhere to spend their money now that they couldn’t travel or eat out. So…time to do some online shopping! But there was nothing to buy from the brands they usually shopped.
And SHEIN was like “we’re going to launch 6,000 new styles every day.”
“We’re going to use technology to ensure that we are offering product that aligns with every new microtrend and aesthetic that people are talking about on social media…especially this new app TikTok.”
“And we’ll leverage social media to get people to come to us to buy new clothes to cheer themselves up.”
Now lots of people were weirded out by SHEIN at first. After all, it’s a weird name? It ships directly from China? How long will that take? Everything is so ludicrously cheap? And maybe they had heard negative things about SHEIN in the past, the knockoffs, the disappointing orders, the inability to return everything.
But dang, they really wanted to buy something. And here was SHEIN with hundreds of thousands of new styles on the site at any given moment. You could simply download the app and scroll all day. Even if you have misgivings at first, when you start seeing people posting their SHEIN hauls on Instagram or TikTok, suddenly you feel a lot less nervous about giving it a chance. And that’s what happened. Lots of people (especially Americans) began to shop from SHEIN.
And SHEIN does $10 billion in sales in 2020. It becomes the largest online retailer of clothing in the WORLD by October, while every other brand out there is on the verge of failure.
How was SHEIN just killing it when we were supposed to be wearing sweatpants for the rest of our lives?
Once again, the retailers (aka every brand) who canceled all of their orders did the most foolish thing by doing that. So short sighted. Not offering new stuff was a mistake, because when your model involves getting people to shop from you as often as possible, well, they won’t do that when you’re not giving them a reason to come back. These brands basically opened the door for SHEIN…no, they actually gave them the keys to the house and said “don’t worry about paying any rent, stay as long as you want.” I do believe that if these brands had NOT canceled all of their orders and then spent the next six months slinging sweatpants, SHEIN would not have gained a foothold as fast as it did. And I do wonder if we would be talking about it in the same way years later.
The thing is…not only did these brands and their very short sighted business decisions set the stage for SHEIN, they also cannot compete with SHEIN on pricing or just about anything else. And we’ll be talking about that more next week, but let’s just get started with how it all works.
So we know by now that fast fashion is faster than any version of fashion and retail that came before it. Before fast fashion (should we start calling that BFF?)brands needed about 3-6 months to take a product from concept to in the stores for customers to buy. Fast fashion turned that up a notch, moving so fast that product could start as a concept and be in stores/on the website within six weeks. All of that product shipped overseas from the factories (often via airplane), where it was trucked from the airport to the brand warehouse. From there, it was shipped off to stores or customers. I don’t know why I’m using the past tense here, because this is still happening this way, whether it’s Anthropologie or Zara or American Eagle. Even Target!
In the late 2010s/and even 2020-21, brands like Fashion Nova and Boohoo were able to speed up this process by manufacturing locally, often under shady, exploitative conditions. But the product still shipped to the warehouse in one big shipment, where it was stored until it shipped off to the customer. And furthermore, after being caught engaging in all kinds of wage theft and human exploitation in both the US (Fashion Nova) and the UK (Boohoo) both companies began to shift their production overseas, falling more into the standard fast fashion turnaround time.
So the path was always and remains (no matter how fast it was) factory—>airplane—>truck—>warehouse—>store or customer
But guess what? That’s expensive! You have to build warehouses. You need staffing for the warehouse. You pay customs and duties on all of those big cargo shipments. You pay to have the shipments trucked to your warehouse. You’ve paid to ship into the country and now you pay to ship it to the stores or customers. And all the way, you’re paying people to handle this product.
SHEIN cuts that process down to factory—>airplane—>customer.
There is no warehouse. There is no big cargo cost. There are no customs and duties. There are very few people to pay along the way.
SHEIN and all of its copycats/peers ship directly from the factory to the customer. This model is already profitable by cutting out those middle steps, but there is another part of it that makes it so much more profitable: not paying customs and duties. And shopping factory direct from China isn’t exactly new–all of us in the Lolita community have been doing it for years–but it was also difficult. SHEIN made it seamless, including free shipping. And it’s super profitable, because they get to ship everything duty free.
That’s thanks to the “de minimis” rule, which allows any package shipping into the United States with a value under $800 to be exempt from duties and customs inspection. Until 2016, that threshold was $200. Raising it 400% opened the door for SHEIN and its peers like Temu and Cider to very profitably ship into the United States. In 2016, the de minimis rule applied to about 220 million packages making their way into the US, directly to consumers. By 2021, it was 771 million, with 60% of those packages coming from China.
According to US Customs and Border Protection, last year the U.S. processed more than 1 billion de minimis shipments worth more than $50 billion. And it’s continuing to grow…by the end of January–the first month of this year–half a billion de minimis packages had entered the United States.
So any regular fast fashion brand (or any other company shipping stuff into the US) might be selling less units/doing less sales than SHEIN, but they are paying duties on everything they import. And that’s because rather than shipping one parcel at a time, they are importing their products in one big cargo shipment. When the shipment arrives in the port (whether that’s via airplane or boat) the shipment is inspected by customs, and duties are charged. And yes, these duties can add up. They definitely impact the prices we pay for things here in the US. Some items–like sneakers–can have duties as high as 35% of the product’s value. And synthetic fabrics-=like polyester, which SHEIN uses a lot of–have a higher duty rate. So SHEIN is saving a ton of money thanks to the de minimis loophole. Meanwhile, it allows SHEIN to offer prices that no US brand ever could thanks to not having to cover the cost of duties.
How much money are we talking about here? I found this little nugget on a law review blog: “According to the companies themselves, SHEIN and Temu paid a grand total of $0 in import taxes in 2022. For reference, during the same year, GAP paid $700 million in import duty while H&M paid $205 million.”
So of course the regular fast fashion brands can’t compete in terms of pricing, right? But they sure are trying, by making even worse stuff. And by cutting staff in stores, warehouses, and corporate offices, suppressing wages, reducing employee benefits, and negotiating for lower shipping rates with UPS, USPS, and FedEx, which then leads those companies to cut staff, suppress wages, and reduce employee benefits. Cool, right?
This year, labor unions, US manufacturers, and trade groups have formed a bipartisan coalition working to get rid of the de minimis loophole. In March, Kim Glas, president and CEO of the National Council of Textile Organizations told reporters,” Our industry has lost astonishingly 10 plants in five months as a result of the de minimis loophole. De minimis is not just a textile issue, de minimis is a wildfire out of control, killing our manufacturing sector and jobs, destroying local communities and facilitating illegal, illicit and dangerous products into the U.S.”
And it’s true…if we ever want a more sustainable, ethical retail and fashion industry…SHEIN, Temu, etc need to stop having this unfair advantage. Because the problem is that customers are getting addicted to the unnaturally low prices that these brands offer. And SHEIN, which doesn’t have to pay for warehouses, customs, or really much of anything ensures that SHEIN and its competitors can offer prices that no one else can compete with. This still might seem like a good story, like SHEIN is making fashion more affordable for people. What a hero! But it’s way more complicated than that, right? And that means that any other company that wants to stay in business has to somehow figure out how to offer those prices, too, while still paying duties. And it is the workers and customers who will suffer the repercussions of these low, low prices.
Furthermore, the de minimis loophole means that none of these packages are being inspected, which means they could contain knockoffs/counterfeits, dangerous products, or items made with slave labor. In fact…SHEIN has such little visibility into its supply chain, that despite claiming that there is no forced labor within its supply chain, a report issued last June by the U.S. House Select Committee on the Chinese Communist Party indicates that there is probably a lot of forced labor happening in the factories making its products. I’m primarily referring to the forced labor of the Uyghur Muslims, but political dissidents and other religious groups (like Tibetan buddhists) have also been forced into work camps.
The de minimis rule actually makes it easier for SHEIN to ship product made with forced labor into the United States. The sheer volume of packages ensures that customs agents will never be able to inspect them all, or even a few of them. And in general, de minimis packages kinda fly through the system, without any stop to check them. The UFLPA is the Uyghur Forced Labor Prevention Act, passed in 2021 to prevent products manufactured using the forced labor of Uyghur Muslims from shipping in to the United States. And there is concern that SHEIN, Temu, and their peers are using this de minimis loophole to skirt compliance with the UFLPA.
If you really want to get riled up, I recommend reading a Forbes article from last month called “You’re Buying So Much From Temu And SHEIN The Air Cargo Industry Can’t Keep Up.” According to the article, “Temu and SHEIN ship the equivalent of 88 Boeing 777 freighters of cargo worldwide every day.” That’s 9,000 tons of cargo. EVERY. DAY.
And SHEIN and Temu’s demand for air freight has driven up pricing across the board. So even the regular fast fashion brands–who already ship via air, too–are paying that upcharge and passing that cost on to customers…or just cutting the quality of the stuff they are selling in order to make the math math. We know that story well by now: swapping into cheaper fabrics, trims, cutting corners…you know how it goes. And so here is one way we see SHEIN already having this larger halo effect on the industry, by making it harder to compete by doing anything other than making crappier clothes.
But even worse…are you ready for it, because this is what’s going to really get your goat: all of those planes that were full of cargo coming from China to the US? They fly back to China right away, right? Because there’s a ton more stuff to ship to the US. And they fly back to China…empty.
From the Forbes piece:
Air freight’s high costs come in part from largely empty planes that must make the return trip back from the U.S. to China: shipping in that direction costs maybe a fifth of the price to ship from China to the U.S., van de Wouw said.
“You get a full plane to the U.S. and a deadhead on the way back,” he said, using an aviation industry term for a near-empty or fully empty plane. “The backhaul becomes a bloodbath.”
Yep, just empty airplanes flying back across the ocean to bring us more packages from Temu and SHEIN. The next time you feel bad about going on vacation or visiting your family (and taking a flight), I want you to remember this. Because I can assure you that you taking an occasional airplane ride somewhere is nothing compared to the frequent flyer miles SHEIN and Temu are racking up every day.
That’s where we are going to leave this installment of the series. I’ll be back next week with part 2, where we will talk about SHEIN’s byzantine corporate structure (which btw is another issue with the IPO), safety issues, and lots of knockoffs.
In the meantime, remember this:
I recently spent two weeks having the theme song from 80s sitcom Mama’s Family stuck in my head on a nonstop loop. No wonder I have been tired!
But really: All of us–no matter where we live, what we wear, or what we do for a living–are already experiencing the repercussions of fast fashion: microplastics in the water, soil, and food supply, water scarcity, the impact of carbon emissions, the suppression of wages, and even the emotionally corrosive nature of a steady stream of low quality/poor fitting clothing.
It will get worse as SHEIN becomes the standard for making and selling clothing. Everyone I know working in the environmental and workers rights space is super freaked out about even more growth from SHEIN. So we have to talk about SHEIN (often, to everyone we know).
If you want to share your opinion/additional thoughts on the subjects we cover in each episode, feel free to email, whether it’s a typed out message or an audio recording: [email protected]
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