The Marketplace Boom   //   May 23, 2023

Shein bets on third-party marketplace, pop-ups to grow its following in the U.S.

After building a rabid following online, Shein now aims to further build on its following in the U.S. with pop-ups and a new third-party marketplace.

The fast-fashion giant first launched a third-party marketplace in Brazil last month and now the company confirmed via email that the marketplace is live in the U.S. Last month, Shein had posted job openings for multiple positions in Los Angeles and California to execute business opportunities in the U.S.

So far, the platform appears to be working with smaller U.S. sellers like L.A.-based fashion footwear brand called Cape Robbin and aims to get people to buy more than just clothes from Shein. That, combined with a steady stream of pop-ups — the company said it hosted more than 40 pop-ups globally last year, including about a dozen in the U.S — appear to be two of the biggest areas of focus for the company as it aims to grow its following in the U.S. Shein reportedly did $23 billion in revenue last year, and is targeting 40% revenue growth this year according to The Wall Street Journal. But, competition is also growing — namely from rival Temu.

“We’re still in the early stages of our global marketplace platform rollout, and we’re currently active in Brazil and the United States,” a spokesperson wrote in an emailed statement. According to Shein, its marketplace will introduce new categories that go beyond fashion, beauty and lifestyle — areas Shein has seen success with selling online. “In addition to featuring a wider selection of fashion, beauty and lifestyle products, the marketplace also introduces new categories as a way to offer our customers an even more convenient and seamless shopping experience,” the company wrote. Shein also claimed it “currently has hundreds of sellers” on its U.S. platform.

Industry analysts described the launch of the marketplace as slow and modest.

“It’s a slow start, it’s a small start. And I think it will be a while to see what it goes up into becoming. But I think it’s going to be quite an uphill battle to onboard American sellers,” Juozas Kaziukėnas, founder and CEO of Marketplace Pulse said. He added that reports of TikTok facing a similar issue with U.S. merchants is testimony that Shein will struggle to onboard sellers in the US.

Shein’s U.S. offering does include products from Chinese electronics giant Lenovo, among others. Shein’s home page is currently flashing an 80% Memorial Day discount sale for fashion items and a 70% discount on home goods.

“Shein is firing on many cylinders right now to expand what it is and upgrade its brand and turn into a marketplace,” said Sky Canaves, senior analyst, retail and e-commerce at Insider Intelligence. “I think long term it wants to be far more than just a source of cheap and disposable fashion,” she added.

Kaziukenas described the Shein marketplace as “pretty opaque” when it comes to identifying details about sellers including if they’re based in the U.S. or not. “So it’s really hard to know which of them are American sellers, which of them are Chinese sellers. But they’ve obviously added a bunch since they’ve rolled out this marketplace and they’re going to be adding a lot more,” he said. He identified home goods brand Costway as another example of a U.S. based company selling on Shein.

While the new marketplace brings with it the promise of a new revenue stream, Kaziukėnas said it dilutes the consumer proposition a little bit because “the marketplace adds items which are already available elsewhere.”

Canaves echoed that Shein is going to have to work hard to draw brands and sellers, “but what they do have is a huge audience of young Gen Z consumers and a lot of traffic still.”

Still, “in its core category of ultra-cheap, ultra-fast-fashion, we’ve seen that their growth has been slowing quite a bit. And that’s been in tandem with slowing growth for the fast-fashion sector as a whole — because budget-conscious consumers are cutting back on their discretionary spending, and they’re also facing a lot more competition,” Canaves said.

For example, Temu, which is a subsidiary of Chinese-based PDD Holdings Inc, has been expanding quickly by spending heavily on marketing and offering deep discounts. In turn, Temu — which launched in the U.S. in September — reportedly overtook Shein in November by mobile app downloads, according to Sensor Tower data cited by the Journal.

To drive brand awareness, Shein is also moving offline. In the U.S., it is hosting pop-ups across different cities so shoppers can touch and feel its products. Its latest pop-up will be in Las Vegas this week. According to Shein, it “remains digital-first, with no plans to open permanent stores, and will continue to deliver an omnichannel shopping experience through our pop-ups as a way for our customers to touch and feel our products and interact and engage directly with Shein’s local brand ambassadors.”

Canaves, for her part, walked by the store where Shein will hold its pop-up in Las Vegas next week, in the shopping area of The Venetian Resort. “What first struck me was Shein is in a real luxury mall, a very high-end premium shopping center that is full of all the big luxury brands and premium dining and a very high end hotel as well.”

She said that Shein is using this pop-up strategy to “drive their business and build their brand a little more by capitalizing on the consumer interest in returning to stores where they can discover new products in-person. And I think so far they’ve seen huge success with the pop-ups that they’ve done.” At a Shein pop-up in Dallas last year, people lined up hours before the store officially opened, according to the New York Times. Shein is said to be offering reservation access by email to some of their VIP customers, according to comments on its Instagram post.

Ultimately, Canaves said, “[if Shein] can drive results for the brands that are on there and show that to other brands and also price it competitively,” it might be able to elevate its marketplace.