After a month of sales of $100 billion, Shein is suffering from slowing sales. According to a report from Bloomberg News, the online retailer saw its annual sales growth slow to about 60%, which was around 250% last year.
Shein is one of the world’s most valuable startups, selling inexpensive clothes, lifestyle, and beauty products. It is primarily meant for teens and tweens in the West. They have made its app one of the most downloaded on the planet.
The sources told Bloomberg that Shein’s annual revenue rose to at least $16 billion in 2021. This was up from $10 billion the previous year.
This figure was in line with company projections. However, sources said executives at Shein worry that expansion slowed at a worse place in the second half of 2021. This got continued to slow this year.
Bloomberg stated that the trend gets mirrored by Shein’s transaction data in the U.S. The first-quarter sales growth dropped to 57% from a quarterly range of 105% to 264% in 2021.
Wang Xin, head of the Shenzhen Cross-Border E-Commerce Association, stated, “As one of the top online exporters in China, Shein’s slower growth shows the increasing challenges suffered by the entire sector.”
Wang Xin is representative of about 3,000 exporters. She highlighted the weakening yuan and rising geopolitical tension with the U.S. as other sources of tension. PYMNTS noted last month that Shein’s success is due to a variety of factors.
These factors include supply-chain savvy, data-driven clothing design, and tax loopholes both in the U.S. and China. Unfortunately, this got developed during a trade war.
The company got bigger than Amazon in terms of downloads of shopping apps in U.S. stores in 2021. Shein reportedly took in $10 billion last year. It capitalized on endorsements from celebrities such as Katy Perry and Lil Nas X. They were also debuting an online fashion competition in the tradition of “Project Runway.”
The company also began offering buy now, pay later (BNPL) services with Klarna in 2020. This made products more accessible to younger consumers.