The Marketplace Boom   //   January 24, 2024

Shein’s marketplace is littered with gray-market products from top brands like Hoka

On Shein Marketplace, hundreds of name-brand fashion goods are up for sale. Among them: a cream-colored Carhartt sweatshirt, red Comme Des Garcons Converse high-tops and flared black Juicy Couture trousers. It’s unclear, however, whether these brands want their merchandise on Shein — or know that it’s there in the first place.

For instance, dozens of pairs of Hoka One One sneakers pop up on Marketplace. The brand is advertised as being “100% authentic” on Shein. However, when contacted by Modern Retail, a spokesperson for Hoka said, “Shein is not an authorized Hoka retailer. The best way to ensure you’re getting authentic Hoka product is to shop on, at a Hoka store or [at] an authorized Hoka retailer.”

Similarly, British fashion designer Paul Smith has clothing listed on Shein Marketplace. Like Hoka, Paul Smith is advertised as being “100% authentic” on the platform. And yet, when contacted by Modern Retail, a spokesperson said, “Paul Smith is not in partnership with Shein. We do not supply them with stock nor sell directly via them as a marketplace.”

Visitors to Shein may assume that all name-brand goods are sold by authorized retailers. But, in the case of Hoka and Paul Smith, they are sold by third-party sellers that do not have a relationship with the brands or manufacturers themselves. As such, they are being sold via the gray market, a term used to describe the import and sale of items outside authorized distribution channels.

Unlike counterfeit goods, gray-market goods are legitimate. But, the fact that they are being sold on marketplaces without a brand’s authorization may rub that brand the wrong way. This could prove troubling for Shein, which, since establishing Marketplace in spring 2023, has worked to get global brands on its platform in an effort to better compete with Amazon.

At the same time, Shein is not bound to gray-market products, Jason Goldberg, chief commerce strategy officer at Publicis Groupe, told Modern Retail. When courting brands with gray-market products already on the site, “You can imagine an easy thing for Shein to say would be, ‘If you do [list with us], we will agree not to sell any of the gray market product that you don’t want,'” Goldberg said.

In an emailed statement to Modern Retail, a Shein spokesperson wrote, “Shein continues to recruit thousands of third-party sellers in order to offer a wide variety of affordable products to our customers around the world. Shein Marketplace sellers agree to and are bound by Shein’s Marketplace Services Agreement and that includes an Anti-Counterfeiting & Intellectual Property Infringement Policy.”

What are gray-market items?

Gray-market goods (also called parallel imports) are often bought in other countries and then sold for cheaper than the list price. Unofficial gray markets are not illegal, unless “material differences” exist between a gray-market good and its authorized counterpart, as Glossy reported. But, gray markets can interfere with brand equity, brand reputation and brand earnings. Their products, too, may not come with traditional warranties or guarantees, depending on where they are sold.

Crocs, for instance, recently said it took “corrective actions” to curtail a distributor it believed was selling goods via the gray market. It also stopped price matching gray-market sellers on Amazon, which subsequently hurt revenue expectations but increased profitability, Retail Dive reported. “We’re hoping that gray market inventory sells out quickly and we can reset the digital market,” Crocs’ CEO remarked on a call in November.

Gray markets are gaining steam, especially as more marketplaces pop up as avenues in which to sell goods. “When you have a new marketplace like Temu or Shein, gray marketers go, ‘Oh, great, here’s another place for me to sell my product,’ and they flock to that marketplace,” Publicis’s Goldberg said. “Especially if the product is not being legitimately sold on the marketplace.”

Today, many items on Shein Marketplace appear to be sold via the gray market. Some are listed under sellers that do not include the brand’s name in their title. Big-name brands are listed as “premium brands” and have brand pages on Shein Marketplace, but even these can be confusing to the user. Carhartt’s brand page on Shein Marketplace, for instance, spells “Carhartt” wrong.

Brands cannot force Shein, Temu or other platforms not to sell gray-market items, Goldberg explained. “What you have to do is you have to say, ‘Who sold this to the marketplace, even though I didn’t give them permission, and how do I stop them?'” he asked. “‘Maybe I have to stop selling product to them, or give customers some other incentive to buy from me and not from them.'”

Amazon, which has dealt with unauthorized resellers for years, has introduced programs to deal with these issues. For example, Brand Registry offers third-party sellers analytics data, counterfeit-fighting tools and other benefits.

Shein’s headway with brands

That being said, Shein is making inroads with some brands. Skechers and Lansinoh, among others, have signed up to list on Shein Marketplace, according to a press release. Shein also collaborates with boutiques that sell multiple brands. To join Shein, sellers must already have annual sales of $2 million on Amazon, The Wall Street Journal reported.

Dream Pairs, a shoe brand, sells on Shein under the name “topshoesUS.” It first listed products on Shein in the fourth quarter of 2023, Jimmy Lau, vice president of brand marketing at Dream Pairs, told Modern Retail. Dream Pairs’ shoes sell for about $40 to $50 on Shein, higher than the $20 price point of some competitors. But, Dream Pairs’ products have performed “really, really well” on Shein Marketplace, Lau said.

“Initially, our inventory stocking estimates were conservative, underestimating the rapid sales on Shein,” Lau said. “We have since improved our inventory control, and to meet the demand, we have designed and introduced 100 new styles exclusively for Shein.”

In addition, Dream Pairs found that the Shein customer is typically younger and more fashion-oriented than the typical Amazon customer. “So that’s challenged us from a product perspective to get better… [and have] a trendy, fashionable selection,” he said. “And, in turn, that’s going to help us in our brick-and-mortar retail stores, as well.”