In search of growth beyond the ultra-competitive Chinese market, fast-fashion startups are looking at the rest of the world for expansion, and the potential to sharply undercut global leaders.

Why it matters: At around half the price of global leader Inditex’s Zara brand, companies like Shein are listing vast selections – 4000 new items added daily – at ultra-cheap prices that will be extremely tough to compete against in the battle for young consumers’ dollars.

Details:

  • According to Nikkei Asia, the company has already made significant in-roads, with over 20 million annual users in 2019.
  • It has a $15 billion valuation and nearly $10 billion in sales in 2020.

What makes it tick: Based in Guangzhou, the company’s speed comes from its proximity to and relationship with garment factories in the city, ranking these according to delivery time and quality then cutting the flab at the bottom and investing in those at the top of the list.

Data at the core: Like the upstart coffee company Luckin Coffee (accounting scandal aside), Shein’s game is really data analysis, which it deploys as much on its own operations as on competitors.

Risks: Racing to the bottom is risky, however, and with convenience and e-commerce immediacy becoming more and more important in the pandemic, such startups can be beaten on multiple fronts.

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Sourced from Nikkei Asia, Financial Times