Investors don’t tend to look at apparel retail (or retail in general) as high-performing securities to bet on. In fact, with the recent COVID-19 pandemic, retail has taken a slump in terms of performance as new restrictions and supply chain issues throttle an already difficult to manage a system of suppliers and buyers.
But innovation and comprehensive business practices have surmounted challenges like this before, and one company taking the fast-fashion world by storm is poised to be valued at $15 to $30 billion once they go public. Shein, a once small e-commerce unit from Guangzhou, is now leagues ahead of competition such as H&M, Uniqlo, and Zara. If (or when) Shein goes public, will it stand to be 2022’s IPO of the year?
Shein’s History and Growth: Powerhouse Styles for Less
What seems to be the key to Shein’s almost rapid success? The secret may lie in their fully integrated business model, which Uniqlo’s Fast Retailing Group adopts as well. This approach allows Shein to fully own the entire value chain required by their products, from designers to suppliers.
Yet their business model doesn’t have any physical footprint like Uniqlo and Zara. Instead, Shein chose to move their entire commerce digitally. Since 2008, the company has been acquiring key suppliers and vendors to help fuel its growth. One of the biggest acquisitions was Chinese e-commerce group Romwe, which signalled their turn to not just sell branded items but to create their own home-line as well.
Since then, the company has flourished in its status as a fast-moving retail fashion e-commerce company. Employing roughly 800 different designers, Shein leveraged fast trend capturing strategies to keep up with the faster-moving digital space. The company utilizes various social media presences, from Google Advertising to TikTok Influencer seeding, in order to continue to be top-of-mind for consumers looking to get on the next clothing trend for a fraction of the cost of designer goods. As of late, the company had reported roughly $10 billion in revenue, making it the largest online-only fashion house.
The IPO Buzz: Will Shein Finally Go Public?
The big question, then, on investors’ minds is if Shein will finally pull the trigger for an IPO offering, and if so, when. As of April 2022, Shein is reportedly valued at almost $100 billion through its strong capture of the US fast fashion market. Reports have even come in that CEO Chris Xu had even considered applying for Singaporean citizenship in order to be able to have an easier process in their application for an IPO, something that has been on the market’s mind considering Xu’s Chinese citizenship.
Yet investors also need to temper their expectations as neither Chris Xu nor any other company spokesperson has corroborated this information. As of now, the company has no plans of going public, neither in China nor in the US. The current war erupting in Ukraine has also ensured that big market movements such as this are temporarily put on hold as players attempt to grapple with the different ramifications an unstable European market holds.
Final Thoughts on the Shein IPO
Shein remains a valuable company in the fashion retail industry with its fast understanding of market trends and utilization of the latest social media techniques to boost sales and market presence. If ever Shein does go public, be sure to keep an eye on the company’s final valuation as it is sure to be set to bring the market to a frenzy.
Note: Please do not invest money or assets in the financial markets that you cannot afford to lose. This article should not be construed to be investment advice and is for information purposes only