SHEIN's Supply Chain: How it Works

Much has been written about Shein’s rapid growth: its $20bn in sales, the $100bn valuation, its mysterious founders, the daily launch of thousands of SKUs at rock bottom prices, and, of course, the sustainability issues. But there isn’t much explaining how the business really works. 

How does Shein place orders and receive goods from Chinese suppliers? How does sampling work? How and where does it source fabric? Quality control processes? Order economics? 

We’ve spent hours with Former Shein Managers and current suppliers to walk through the process of yarn to finished goods to understand how Shein’s supply chain really works. 

We get into detail on the sustainability issues across its fabric and garment supply base. We share the unit economics of a pair of Shein denim jeans from cotton to manufacturing to retail price. We also explore what it's like to use Shein’s proprietary supply chain software and how it can afford to pay suppliers within four days. 

This piece of research is interesting for anyone studying or operating in e-commerce and retail. The core tenets of Shein’s supply chain philosophy can be deployed in a sustainable manner.

This also isn’t just about fashion; it’s insight into a new type of supply chain. Shein has redesigned the retail supply chain to be demand-focused, not supply focused like traditional retail. Its core principles are category agnostic. Temu and others are replicating Shein’s philosophy across general merchandise, furniture and higher-end fashion. This will potentially have significant implications for Amazon and other Western retailers.

This analysis lays out each step in Shein’s supply chain and is  best read in parallel to Zara’s Supply Chain as a reference to Shein’s efficiency .