What do we know about the Shein IPO?
Shein has halted its IPO plans due to market volatility caused by the ongoing Russian invasion of Ukraine. Prior to being shelved, the Chinese retailer was planning to list in the US in 2022 and had been looking at the New York Stock Exchange specifically.
The listing was so serious that the company’s founder was considering getting US citizenship in order to bypass the offshore listing regulations in China.
Shein is still likely to proceed with its IPO plans once the market conditions are move favourable.
Take a look at other upcoming IPOs.
How much is Shein worth?
Shein has been valued at as much as $100 billion in an investment round in April 2022, which would put it among the 150 largest companies in the world by market capitalisation. The new valuation means Shein is now worth more than Zara’s owner Inditex and H&M combined.
The private funding round is thought to have raised the company between $1 billion and $2 billion.
How to trade Shein stock
When it lists, you’ll be able to trade Shein shares in the same way you would any other company on the stock market.
In the meantime, you can trade hundreds of global shares with FOREX.com in just four steps:
- Open an account, or log in if you’re already a customer
- Search for the company you want to trade in our award-winning platform
- Choose your position and size, and your stop and limit levels
- Place the trade
Alternatively, you can practise trading with a free demo account ahead of Shein’s IPO.
What does Shein do?
Shein is an ‘international B2C fast fashion e-commerce platform’. It primarily sells women’s clothing, accessories and shoes, but does also cater to children and men. The company was founded in 2008 by Chris Xu.
Originally, the company was a wholesaler for wedding dresses in China, called SheInside, which just shipped clothes to other third parties with no influence over design and production. But in 2013, it established itself as a fully integrated retailer with its own supply chain – that year its order volume exceeded 5 million and it was successfully renamed SHEIN.
Shein is now one of the most visited e-commerce fashion sites by net sales and even overtook Amazon as the most downloaded shipping site in the US in 2021.
The company is still based in China, but mainly targets customers in the US, Europe and Australia. Shein’s largest target consumer group is GenZ, who have become known for consuming large quantities of trend-led clothing at cheap price points (the average price of a garment is £7.90)
Shein is the definition of fast fashion, with over 10,000 new products being put on the website per day – yes, per day.
Is Shein profitable?
As a private company, Shein doesn’t disclose financial figures. However, data provider CB Insights has estimated that its sales topped £7.4 billion as the Covid-19 crisis saw a boost in sales as consumers spent more time browsing online. It’s estimated the firm generates £86 billion in revenue.
The company has stated that due to its strong financial position, it wouldn’t be rushing into an IPO that would damage its reputation.
What is Shein's business model?
Shein’s business model is what’s known as ‘test and repeat’, which was made famous by rivals Inditex and H&M. The idea is that they produce small batches of clothes – only 50-100 per item – and if it does well, they create more and if not, it’s discontinued. According to the BBC, just 6% of Shein's inventory remains in stock for more than 90 days.
Shien has taken fast fashion to the extreme and can turn around garment manufacture in just 25 days – it takes most companies months. This enables it to leverage fashion trends quickly.
As GenZ are its target audience, the firm largely brings consumers through social media, especially TikTok. It uses influencer culture and celebrities who have high numbers of followers to entice younger users to buy their products. Searching ‘Shein haul’ on most platforms will bring up countless videos of shoppers showing off their goods. Even Shein’s website showcases consumers’ styles via its Style Gallery.
However, Shein has faced various controversies. Criticisms are largely based on its ‘throw away’ business model, which encourages users to buy now and never wear the same outfit twice. The website also uses countdowns for how long product mark-downs will continue, to really get those quick ‘impulse’ buys.
A staggering amount of Shein returns end up in landfill because it costs more to put them back in circulation. As issues of sustainability come to the forefront of public discussion, fast fashion retailers are likely going to have a lot to answer for, but in the meantime, Shein users don’t seem to mind.
Shein has now become one of the many fast fashion companies to attempt to rebrand its image by releasing a ‘sustainably sourced’ line of clothing called evoluSHEIN. Critics have been quick to brand it as greenwashing.
The company has also come under fire for allegedly ripping off designs from smaller businesses and designers.
Who are Shein’s competitors?
Shein’s competitors are other fast fashion brands such as Zara, H&M, FashionNova, Boohoo.com, ASOS, PrettyLittleThing and Zaful. As of 2021, Shein comprised 28% of all US fast fashion sales, surpassing H&M (20%), Zara (11%), Forever 21 (10%) and Fashion Nova (8%).
Shein has acquired a few smaller competitors already, such as Romwe, another Chinese e-commerce retailer.
Who owns Shein?
Shein is owned by parent company Nanjing Lingtian Information Technology, although the company’s ownership is frequently branded a mystery. It remains a private company, with four major shareholders so far: JAFCO Asia, IDG Capital, Sequoia Capital China and Tiger Global Management.