Shein, known for its $10 tops and $5 biker shorts, has a global audience of GenZ shoppers who flock to its low-priced goods. Until recently, those American purchasers faced wait times of up to two weeks or more to receive their items as the company shipped the clothes directly from its factories in China. That process, experts say, has put the company at a disadvantage against retailers that offer faster shipping.
Shein imports high-demand products in bulk by sea on container ships to cut costs. It then sends the items by air to shoppers in individually addressed packages, which enter the United States under a trade provision that exempts them from tariffs. That helps the e-tailer avoid piles of unsold inventory that would add to the company’s shipping costs, according to Juozas Kaziukenas, founder of e-commerce analytics firm Marketplace Pulse.
The bulk shipments have allowed Shein to increase its U.S. storage space with an expansion of its facility in Indiana and a new warehouse in Cherry Valley, California, that is expected to open soon. The company also launched QuickShip last year, which speeds up delivery times for customers who buy Shein items at its stores and online.
That move has helped Shein narrow its delivery gap with Amazon, which has pushed to provide next-day or two-day shipping to its Prime members, who pay $139 a year for the privilege. Analysts expect Shein to continue increasing its shipments to the United States as it prepares for an initial public offering in 2022.
A Shein spokesman declined to comment on the firm’s shipping options. Still, he said Shein had invested in warehouses across the United States to ensure its goods were available to customers as quickly as possible. He also said the company is working to reduce production and shipping costs through supply chain efficiencies.
Shein has gained traction stateside partly by commissioning clothing manufacturers to produce an ever-expanding range of trendy goods at ultra-low prices. Then, the company markets the clothes on social media, targeting various demographics. That model, experts say, is akin to online apparel retail giants like Zara and H&M (HNNMY) but with a much bigger budget and access to a broader pool of influencers.
But as Shein and Temu have exploded in popularity, they’ve also drawn questions about how they can sell so much at such low prices, how transparent they are with consumers, and how much environmental waste their businesses generate. And, at the heart of it all, how are the Chinese workers who make Shein’s clothes paid? And will we all eventually pay for the plastic they use to make them? That’s a question that’s harder to answer. Reuters delved into the complex world of Shein’s supply chain to find out.