Shein to add ‘supply chain-as-a-service’ offering amid regulatory challenges in US

Photo credit: Melissa Goh / Tech in Asia

As it faces regulatory challenges in its primary market of the US, fashion giant Shein is modifying its business strategy to lend its small-scale, made-to-order system to third-party brands and suppliers, The Wall Street Journal reported.

Tagged as “supply chain-as-a-service,” this offering is set to enable external labels to use Shein’s platform for launching and testing new clothing items in small amounts.

This is a notable change for Shein, which gained its popularity by offering a wide range of its own affordable products.

It works with factories in China to produce and ship a range of styles daily. Suppliers fulfill orders within days, using real-time data to match demand and control inventory. This approach cuts storage costs and waste, consequently lowering Shein’s per-item price.

This development comes as the company’s attempts to file for an IPO in the US have been halted.

After applying privately for a US listing in November, Shein is now waiting for a response from the Securities and Exchange Commission. The delay has prompted the firm to explore other options, including a possible UK listing.

Shein is also facing Western scrutiny over forced labor concerns, and it’s competing against another Chinese company, Temu.

Despite these barriers, Shein announced record profits last year.

In 2023, Shein also expanded to the US, Mexico, Europe, and Brazil and broadened its product line. It announced key partnerships, acquired British brand Missguided, and took a significant stake in Forever 21 owner Sparc Group.

See also: Shein’s rapid rise in Southeast Asia could topple ecommerce giants