Shein IPO – Just How Fast Is Fast Fashion?

2021 has already seen a number of initial public offerings (IPOs) from the fashion industry, including Dr Martens, Poshmark, and thredUp.

Shein is expected to be the next one to go public in what Forbes reports to be a possible $47 billion valuation IPO. If this happens, it could make the Shein IPO the largest IPO in history to date, wiping the floor with the current titleholder, Alibaba, and its $25 billion IPO back in 2014.

Shein, the Chinese eCommerce company targeting Gen Z customers, is the fastest of fast fashion retailers, apparently adding over 5,000 new products to its site every single day!

By comparison, Inditex owned Zara, one of the best-known fast fashion names, produces 12,000 new designs each year. Not only that but while H&M and Zara are known for their cheap and cheerful prices, Shein beats them on that front as well, with prices as low as $3 for a miniskirt.

Like many fast fashion companies, there are concerns regarding Shein’s long-term sustainability profile. That said, the alternative data on Shein’s digital performance looks impressive.

Key takeaways:

• YoY growth to shein.com is stronger than eCommerce giant amazon.com
• Shein.com holds the largest traffic share vs. other fashion sites globally
• In the U.S. shein.com is enjoying improved reach and user engagement

A quick note on methodology: Unless stated otherwise this analysis focuses on traffic and engagement to shein.com from the U.S. which according to Forbes is the company’s largest market.

Outsh(e)ining giants

What is remarkable is that in May Shein reportedly overtook Amazon, yes, Amazon as the most downloaded shopping app on iOS.

While our data shows that in the U.S. amazon.com still sees a significantly larger number of monthly unique visitors (MUVs) than shein.com, Shein’s growth story is much stronger. YoY growth in MUVs to shein.com has been over 80% in both 1Q21 and 2Q21, up significantly from the growth levels of just under 50% seen in 4Q20. While MUV growth for amazon.com, albeit positive, has been decreasing in 2021.

Winning the fashion industry already

Looking at the rest of the fashion industry globally, shein.com has the largest traffic share to its site. In plain English, that means that Shein’s online reach is greater than any other one single player in the competitive set. This includes well-established global household names such as Nike, ASOS, and Gap.

Despite the large share of the online market (SoM), ASOS (ASC) has seen its stock price tumble YTD and investors continue to be bearish. This sentiment is due to continued uncertainty around the economic outlook for 20-somethings, despite the company reporting strong profits, an increasing number of customers, and impressive sales growth.

“As our strong results indicate, we are, 12 months on from the start of the pandemic, a more agile, flexible and resilient organisation, with strong operational grip and robust cost discipline,” stated the company in its interim results for the six months ending Feb. 28, 2021.

Could there be similar concerns around Shein? That remains to be seen.

Unlike ASOS, Nike’s (NKE) share price has skyrocketed YTD which investors credit to the brand’s implementation of a D2C strategy, coupled with strong digital performance.

Shein: The drill-down

Shein’s online performance is seeing exceptional growth.

Unbounced visits to shein.com are showing a strong and steady upward trend. Compared to other fast fashion retailers ASOS, H&M, and Zara, Shein receives significantly more visits to its site and has a bounce rate in line with industry standards.

This is indicative of not only Shein’s increasing reach, beyond the industry standard, but also improved engagement from visitors to the site.

Is impressive online performance good enough?

Sure, the Shein story looks strong, but it still leaves some questions:

1. How has Shein managed to expand its online presence so significantly?
2. Is Shein’s improved online presence translating into increased revenues?

Get more answers here.