This is an episode of the Glossy Fashion Podcast, which features candid conversations about how today’s trends are shaping the future of the fashion industry. More from the series →
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After several years of ups and downs, the Chinese fast-fashion brand Shein finally went public this week. But the IPO wasn’t what Shein hoped for.
For one, it came four years late. The company first started attempting to go public in 2022, but a series of political hurdles in New York and then London led to long delays. Finally, Shein went public in Hong Kong this week at a valuation of around $25 billion, down from $100 billion in 2022.
On this week’s Glossy Podcast, senior fashion reporter Danny Parisi and international reporter Zofia Zwieglisnka break down the three big reasons Shein has struggled to maintain the valuation it held in recent years.
Bad press
A series of PR disasters has hurt Shein’s business. From the infamous influencer trip, widely mocked, to the protests outside Shein’s first physical store in Paris, people have made their opposition to the company’s business model clear.
“Shein really became the poster child for all the things people don’t like about fast fashion,” Parisi said. “The ultra-low-cost, ultra-cheap, terrible working conditions, terrible environmental impact. They are not the only or worst offender, but their name became a byword for all of those issues.”
Loss of Gen Z shoppers
That first point led to a much more dire one: Shein began losing popularity with the all-important Gen Z audience. While it still has a large Gen Z audience, Shein saw months when Gen Z support dropped by as much as 20%, thanks to some of those bad press moments and young people’s growing distaste for polyester.
“Gen Z also has more options for super low-cost clothing now, like Temu or Amazon or TikTok Shop, and they can shop resale,” Zwieglinska said.
The end of de minimis
Perhaps the biggest single factor in Shein’s slipping dominance was the end of the de minimis exemption, which brought back fees for imports under $800. Shein had relied heavily on the exemption to get high volumes of low-cost goods into the U.S.
The end of the de minimis exemption immediately swung Shein from a profit to a nearly $100 million loss. The company has spent the recent months assuring investors that it is looking for ways to mitigate the losses incurred from the change.
“And the U.S. is obviously not the only country that has made a de minimis-like change,” Zwieglinska said. “Europe has also introduced a temporary duty on low-value parcels starting on July 1. So that’s a double whammy. If more countries start to do it, the chances of Shein being able to maintain its previous level of growth are essentially zero.”
