Fast-fashion Giant Shein Shifts Strategy, Takes on Amazon with Marketplace Expansion

Online fashion retailer Shein is shifting from selling its own branded apparel to becoming a marketplace platform.

The marketplace allows third-party sellers to directly sell various products to consumers, expanding beyond fashion, beauty, and lifestyle categories, the Wall Street Journal reports.

Shein has launched its marketplace in Mexico, Brazil, and the U.S., with plans to expand into Europe.

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The company aims to incentivize 100,000 sellers to achieve annual sales of $100,000 and 10,000 sellers to reach $1 million in annual sales within three years.

Shein's marketplace introduces it to more direct competition with e-commerce giants like Amazon.Com, Inc AMZN and Temu, the international arm of Chinese company PDD Holdings Inc PDD.

Shein's success reflects its large and loyal following, strong social media presence, and efficient supply chain management.

The company's new marketplace strategy presents challenges in managing third-party sellers, logistics, and onboarding many new products.

Shein faces competition from Temu, which has a similar business model and focuses on niche items. Shein and Temu have faced scrutiny regarding their supply chains and sourcing practices, particularly concerning cotton from China's Xinjiang region.

Shein's marketplace shift is part of its localization strategy, including hiring globally and building supply chain infrastructure outside China.

The Alibaba Group Holding Limited BABA rival has confidentially filed for a U.S. listing.

Shein has been eyeing a U.S. IPO for at least three years. Still, U.S. scrutiny of Chinese accounting practices, market volatility fueled by the pandemic, and Russia's war in Ukraine resisted it.

Price Action: AMZN shares traded lower by 2.07% at $127.10 on the last check Monday.

Disclaimer: This content was partially produced with the help of AI tools and was reviewed and published by Benzinga editors.