How Shein, the Chinese e-commerce giant, deployed TikTok influencers to lure teens Margi Murphy
‘They are incredibly secretive about what is happening behind the scenes’
You might not have heard of Shein, but it has become one of the most popular retailers in the UK after deploying an army of TikTok influencers to capture the hearts – and purses – of Generation Z. Take a quick scroll through TikTok and you will come across numerous young women sharing their “Shein haul”. This new trend, with half a million views already, sees young women sharing videos with piles of Shein packages, and trying each piece on with some clever editing and chart music. Addison Rae, who has more than two billion likes and 46m followers on TikTok, making her the second most followed person on the platform, is just one of the TikTok cadets promoting their clothes.
“TikTok and Shein is the perfect marriage because Shein offers an attainable price, and it is much more fun to watch people trying on their ‘haul’ than it is to scroll through pictures of people wearing clothes on Instagram or long videos on YouTube,” says Mae Karwowski, chief executive of Obviously, an influencer agency.
Karwowski estimates Rae was given a “five figure” fee for promoting the company. But Shein’s eyes are on much smaller fish. It offers anyone who has an account, no matter how small their following, a 10pc to 20pc cut of sales, something unheard of in the current market. It reposts its customers’ videos on its official channel as marketing, which is not only cost effective but inspires more TikTok users to try on outfits and tag themselves, in the hope they will be selected and gain followers and “likes”. This has created an organic viral effect across the app, helping Shein rank consistently in the top five shopping apps across Apple and Android in both the UK and the US. The model appears to be taken from the Silicon Valley playbook, in the early days of Uber and Airbnb, which offered unprofitable rates in order to achieve massive growth.
Shein’s clothes and accessories are undeniably appealing to a younger audience with a monumental catalogue of the latest trends at suspiciously low prices. Hundreds of items including bikinis, trousers and even sandals go for under £5, and it offers incentives like 80pc off discounts and free shipping.
Yet very little is known about the company: where it came from, who owns it, and how it can sell clothes so cheaply. Customers have complained about items failing to appear, and others about long wait times.
Enter its name into Google and results like “Is Shein real”,
“Can I trust Shein” and
“Who owns Shein” automatically pop up.
Suspicions have risen over its strange designs, including 5G logos and cell phone towers hidden on the soles of sandals and slippers.
Last month, there was controversy over its sale of Swastika necklaces and prayer book rugs. It was impossible to find a representative from head offices or a public relations agency, as is the norm. After several news articles, Shein shared an apology post on Instagram.
What is particularly striking about the retailer is that it does not sell to customers in its home country, but the rest of the world.
Shein is a Chinese company, headquartered in Shenzhen and founded by Yangtian, or Chris Xu in 2008. It has raised $50m (£39m) from backers like Beijing’s IDG Capital and Greenwoods Assets Management, Japan’s Jafco and Sequoia Capital China. Documents from a settlement between the state of California over its alleged shipping of toxic materials in a handbag, which the company denied, suggests it is owned by a parent group named Zoetop. Zoetop also owns popular fast fashion brand Romwe (which has similarly struck a chord on TikTok). Shein has an office listed in Eastleigh, but all emails and requests for interviews failed to elicit a response.
“They are incredibly secretive about what is happening behind the scenes,” says Juozas Kaziukenas, chief executive of e-commerce research firm Marketplace Pulse. “There is barely any coverage about the company’s story so far given how successful it is.”
Kaziukenas guesses that Shein only sells outside of China because an international postal treaty has made it a lucrative business model. He says Shein is probably shipping products on demand straight from factories in China, which would explain the long wait time and how it can offer a large catalogue at such a low price.
Doing this allows Shein, and other Chinese retailers like Alibaba’s Aliexpress and Wish, to avoid costs associated with storing items in Europe or the US.
By shipping small items separately, it avoids import duties into most Western countries.
China was granted cheaper international shipping under the Universal Postal Union, a 146-year-old organsisation now run by the United Nations, of which the UK is a member. The subsidy was offered as part of an agreement that it was a developing country, and members were happy to help its economy thrive.
This gesture has become a thorny political issue of late and retailers in the UK say they cannot compete with Chinese sellers who benefit from subsidies.
They argue that it is wrong for it to be cheaper to send an item from Shenzhen to Manchester, than London to Sheffield, and that British companies are being priced out of the market as a result.
The subsidies have irked US president Donald Trump, who threatened to pull the US out last year, claiming China now had an unfair advantage.
There are other political narratives at play which might impact Shein’s longevity. Shein was banned in India last month, along with TikTok. Xu will be watching closely to see if the White House’s assault on all Chinese businesses will impact its ability to sell in the US.
At the very least, its business model will have a lasting effect and Shein’s ability to capture TikTokers is a lesson for many flailing retailers in the West.
“Shopping here is incredibly stale and has been the same for the past couple of decades,” says Kaziukenas.
China has had the video shopping market nailed down for years with live streaming and short videos of shoppers discussing what they are going to buy and unboxing their goods a longtime hit.
For now, Shein’s hype looks set to continue. Despite knowing little about how Shein works, what factories it uses and how much it pays its employees (Shein says it complies with all “local” laws on its website), it seems TikTokers will continue to share their hauls, for now.
“Fast fashion is in line with TikTok because the app itself is so consumable and fast paced,” says Karwowski. But TikTok has become a hive for political and social commentary. “A lot of the influencers we work with ask very specific questions around sustainability and ask us if we know about the supply chain and whether employees are treated well,” she says. Shein has some questions to answer if it wants to keep its environmentallyminded TikTokers sharing their hauls.