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Why Is Shein So Cheap?

Efficient production at Shein results in low prices for dresses, T-shirts, sweaters, and jeans. Some garments are even priced as low as a few bucks or $1. The low prices for clothing at Shein are astonishing when considering the labor, transport, operating costs, and other expenses involved in making each piece.

According to Molly Miao, one of Shein's founders, the company orders 100 garments from producers. Of these, they keep 98 for sale.

Very little of our merchandise is unsold. This is how we manage to be so cost-effective. (Miao's statement to The Wall Street Journal)

The retailer's high sell-through rate is due to its proprietary logistics software. This, along with a network of NUM0 suppliers, contributes to its success. Using consumer demand, browsing behavior, and other data, Shein's algorithm helps determine what and when to order. Until a product takes off, Shein orders as few as NUM0 garments to minimize supply chain waste.

When there's production that cannot be sold, waste occurs. The costs of unsold inventory are passed on to customers. (Miao explained this.)

A Shein spokesperson told Cheapism that the on-demand business model enables the company to reduce waste and overproduction in the fashion industry. But, even if Shein orders garments in small batches, its suppliers still produce tens of thousands of garments a day to meet consumer demand.Given that the fashion industry produces between 80 and 100 billion new garments a year, nearly 60 percent of which ends up in incinerators or landfills within a few years, Shein's business model remains an environmental problem.

Low Overhead The company, such as H & M, has fewer overhead costs. Unlike fast fashion brands with brick-and-mortar stores, H & M has over NUM0 locations worldwide. Shein sells its products directly to consumers online. Shein's marketing strategy is dominated by mid-tier influencers, many of whom are members of Gen Z. This approach is more cost-effective compared to producing advertisements. Instead of sending out bags and bags of clothes to young influencers, Shein uses a cheaper method.

Hein has been accused of controversial cost-saving measures, such as tax evasion and intellectual property theft. Thanks to a U.S. rule, shipments valued at $Num1 or less are exempt from import taxes, allowing Shein to avoid paying import taxes in the U.S.

Fast fashion brands, including Shein, borrow ideas from other fashion designers. This practice is permissible under outdated U.S. copyright laws. When designers make copyright claims, a Shein spokesperson responds seriously. They add that suppliers must ensure their products do not infringe on intellectual property.

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