Shein could drastically change how Americans shop online, and Big Tech is watching.

If you keep up with TikTok trends, you’ve probably come across a Shein haul. A woman, usually young, often white, showcases the massive amount of cheap clothing she got from the Chinese online retailer Shein.

Shein’s clothes are incredibly affordable. And if you’re in their core demographic—young women—it’s almost impossible to escape Shein’s marketing. If you imagine a Venn diagram of social media, fashion, and software, SHEIN is right in the middle. Its approach to business is in many ways more similar to Amazon’s than it is to other fast-fashion brands, and this approach might soon change the way Americans shop for all kinds of products, not just clothes.

On Sunday’s episode of What Next: TBD, I spoke with Louise Matsakis, who spent six months investigating Shein’s explosive popularity for the tech news site Rest of World. Our conversation has been edited and condensed for clarity.

Lizzie O’Leary: I think if people are familiar with fast fashion, it’s because of Zara or H&M or maybe Topshop. How is Shein different?

Louise Matsakis: There are a couple of ways that they’re different. There’s the obvious stuff: They don’t have physical stores in malls, they’re not hiring thousands of retail workers around the world, and they’re not driven by runway trends. The normal model that I think we’re all familiar with is Zara will go to fashion week in Milan or New York and they’ll see what’s trending on the runways, and then they’ll come up with a season based on those trends. Shein is not driven by any of that. Instead, they’re listening to what people are looking at on social media, and it’s all data-driven.

Another thing that makes Shein really different is that they have thousands of suppliers in China. Whereas Zara might work with a couple of trusted factories, Shein has this vast network that it can tap into, and they connect all those suppliers together in an app.

On their website, you can buy suggested outfits, put together a specific look, or see what’s trending. Then you can click over into the “Gals” section and see Shein clothes not on models, but on real people sharing what they wore and how they styled it. How is the website experience related to the brand’s approach to marketing?

A lot of fashion companies, their entire ethos is about exclusivity. I think about the Telfar bag, for example, which is one of the hottest bags in the fashion world right now and it’s purposefully scarce. It’s really hard to get a Telfar bag, whereas Shein is like, “No, we want you to be able to get whatever you want.” And they’ve done a lot of things to cultivate that image. One of the biggest ones that comes to mind is Shein has one of the most extensive plus-size lines on the internet right now. They’re capturing this consumer base that a lot of other fashion companies are ignoring. They’re basically saying, “We just want to fill every niche possible.”

I mean, it just sounds like a tech company.

It is a tech company. So this is how Shein works: Every day, they add anywhere from five to 10,000 different items on their site, and then they wait. And they see how customers respond. Lizzie, if you and I decide that we love the camo print leggings that were released today and a bunch of our friends buy them too, Shein will look at that data and say, “OK, we’re now going to ramp up production of the camo print leggings.” And what they’ll do is that they’ll tell their suppliers to up the ante.

They usually start with these really small orders, as few as like a hundred pieces, and then they ramp up production, in contrast to Zara, which says: “We’re going to take a risk and we’re going to send 10,000 dresses to stores. And if they don’t sell, we’re going to mark them down.”

Shein feels, to a lot of people, like it came out of nowhere. And yet suddenly, this company is valued at a rumored $47 billion. Where did it come from?

We kept hearing from people, “Oh, my God, I’ve never heard of this company, and it came out of nowhere,” and that’s definitely true in some ways. They’re really targeting a very specific demographic. But I also think this element of surprise is a result of the fact that often, the tech industry sees the interests of young girls as frivolous or not very interesting. Often, young women and their concerns and their consumer habits and what they’re thinking about are very divorced from the tech industry, which is very male-dominated. But also, the company is very, very secretive, so I want to give those people some credit. It’s not like Shein was putting out press releases left and right or trying to talk to people in the tech world.

It was founded a few years ago in China by this entrepreneur named Chris—that’s his American name, and he’s very secretive. Around the last two years, Shein really exploded in popularity, and I think there are a couple of reasons for that. But the No. 1 reason, of course, is the pandemic.

Pandemic restrictions meant that Shein’s competitors, like Zara and H&M, had to close many physical stores. Whatever advantage they might’ve had from foot traffic vanished. Shoppers spent their money online and shared their Shein hauls on social media, creating even more buzz. Last year, Shein sales rose to a staggering $10 billion.

It’s easy—and I do it all the time—to compare Shein to Zara, but in a lot of ways it’s actually much more like Amazon. Like Amazon, what Shein has done is they have cultivated relationships with thousands of factories across China. Starting in the early 2010s, Amazon did that too. It’s often the case that you’re not actually buying from Amazon, you’re buying from one of these third-party sellers, many of whom are based in China. But recently, a lot of consumers started complaining about fake reviews, and Amazon’s reputation started to tumble. In response, Amazon kicked off all of these third-party sellers. In other words, the relationship between Amazon and Chinese factories and Chinese manufacturers started to sour.

And at the same time, Shein was on the rise. They were able to come in and say, “Hey, you guys already know how to cater to American consumers because you’ve been doing it on Amazon for a while. Come work with us.” Amazon taught American consumers to buy from these Chinese companies with maybe strange names or jumbles of letters on Amazon, and I think that that made a lot of Shein customers feel more comfortable.

I don’t feel like I can have a conversation with you about fast fashion without asking about pay and labor conditions. What do we know about how Shein works with these suppliers?

This is a really important question, and something that comes up from Shein customers all the time. For every Shein haul video, there’s a video from a sustainable fashion influencer who is telling all the reasons why you shouldn’t shop there, and one of them is often concerns about labor conditions. There have been reports that Shein is working with suppliers who don’t necessarily have the best labor conditions, but I think it’s also important to note that the fashion industry in general is known for having poor labor conditions. And just because you’re buying from a more expensive brand doesn’t mean that it was made by someone who was being treated fairly.

The scale of what you are describing is staggering. And when you combine that with the very low prices, it can feel almost shockingly wasteful. I wonder if this business model pushes consumers to something that is even more of a throwaway than previous generations of fast fashion?

That is something that I’ve thought a lot about and is really concerning. Even if you do really like the crop top that you got from Shein two years ago, is it going to make it in the wash again? What incentive do you have to take care of that garment when it costs maybe a little bit more than a latte, if not the same price? And all of the incentives that companies like Shein have are to encourage you to buy more and more.

I think a point that you have made very clearly, both in our conversation and in your reporting, is that Westerners, and particularly the tech industry, underestimate the desires and the market power of young women. And I still think that some people might listen to this conversation and say, “Why should I care? Why should I care about what a bunch of 20-year-olds are ordering online?” What would you say to that?

Whether or not you like it, for the rest of your life that demographic is going to be influencing what you wear and where you buy those clothes. It is such an important consumer demographic that is going to change the market. It’s changing the internet. It’s changing consumption habits already. So even if you’re not part of that demographic, teens shopping on Shein are going to have ripple effects for the clothes that you buy.

So how this model works, how this kind of consuming works, that could be something that people who have never heard of Shein are doing a year from now, five years from now?

Absolutely, and it also is going to have impacts on labor conditions. It’s going to have impacts on the environment. One other thing I keep thinking about, too, is that it’s not just that the desires of young women are seen as frivolous or not interesting, but it’s also that they’re often seen as one-dimensional. So you would see these tech guys be like, “Oh, young women love Shein and they don’t care about the software model. They don’t care about the impact on the environment. They don’t necessarily care about the labor standards.” But what we found is that often, the same girls who are posting a haul video or talking about how excited they about the outfit that they got on Shein—maybe in the same video, even—they will talk about how they feel ambivalent about the future of this sort of model.

What do you think happens when you combine social media and its sometimes-addictive nature with something like fast fashion?

I’m interested about what happens when a design that was basically created by an algorithm ends up influencing trends. What does it mean for the future of fashion if it is data-driven like this and everyone is spending all this time in an app that is trying to respond to their interests? It brings up a lot of the same questions that we’ve been asking the last few years about the Facebook algorithm or the YouTube recommendation algorithm. Does it lead to more purchases? Does it change the types of clothes that people are interested in wearing? I think those are still open questions.

Listen to the complete episode below:

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