What Does Shein's Drop in Valuation Mean for Fast Fashion?

Welcome to my new newsletter “The (Mis)Fit”, where we dive into the topics around fashion, beauty, and entrepreneurship and how they “fit” into larger topics (See what I did there?). If you have a topic you’d love for me to chime in on, or you want to send in a reader question (or anything, I love to hear from you all!), email me at [email protected] .

Last week, Shein, the Chinese brand that’s been one of the most dominating voices in the fast fashion space, raised $2 billion at a $66 billion valuation. According to The Wall Street Journal , that was down one-third from its last funding round.

Even if you’re not a self-described fashionista, you’ve definitely heard of (or seen) Shein somewhere on your algorithmic feeds.

There are many factors that could weigh into why Shein’s numbers have dropped. On the one hand, more social activism in the fashion space has called for better sustainability practices that serve as the complete antithesis of fast fashion. Back in May, Congress even sent a letter to Shein (as well as other international retailers) to learn if their supply chains were in compliance with US legislation that bans cotton sourced from China’s Xinjiang region.

In that same vein, prestige brands have frequently spoken out against Shein and the various challenges of copyright infringement. Of course, there are many other reasons why people across the Internet are calling for the takedown of the brands.

On the other hand, a theme that has continued to surface since 2019 is the recession-proof nature of luxury items. In fact, Louis Vuitton just had its highest valuation this year at $500 billion , which is a number I can’t even comprehend in my head.

?So, is fast fashion becoming a thing of the past? While I wouldn’t go that far, I do believe there are a few lessons emerging:

• According to BoF , Shein’s new investments will go towards the very thing that makes it stand out from its competitors: Speediness. In markets of constant volatility, it’s imperative for fashion brands to move quickly and beat out the competition (Case in point: One of the biggest reasons why people stand by Amazon is because of its guaranteed two-day shipping for Prime members).
• There may be a return to brick-and-mortar expectations for fashion brands to succeed. We saw a lot of fashion houses shutter their physical retail stores during the pandemic, opting to dive fill in to the e-retail space. However, there’s still value in physical stores. It cultivates community and also allows brands to uptick pricing on premium offerings. Currently Shein doesn’t have a physical retail store, but who is to say they wouldn’t benefit from one?
• Even with a huge market share, Shein (and other retailers) must continue to prioritize the current needs of their consumers. With sustainability, environmental impact, and human rights under scrutiny in fashion, brands are not going to be able to skirt around these priorities for much longer. Otherwise, they risk losing consumers longterm.

What do you think of fast fashion’s future? Let me know in the comments!