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2023, Vol. 9, No. 3 10.15678/IER.2023.0903.03
Disrupting fast fashion: A case study of Shein’s
innovative business model
Anita Uchańska-Bieniusiewicz, Krzysztof Obłój
A B S T R A C T
Objective: The objective of this article is to explain an ultra-fast fashion business model and to distinguish it
from the fast fashion business model as a new, innovative concept in the fashion industry that was created
during turbulent times to cope with new challenges.
Research Design & Methods: The article is a single case study with an emphasis on undertaking an integra-
tive literature review.
Findings: This ultra-fast fashion business model changed the balance of power in the fashion industry. Taking
advantage of digital-only presence, extensive use of social media, AI and big data analyses, collaborative consump-
tion, quick response, frequent assortment changes, low prices, and an ambiguous approach to the principles of
corporate responsibility, the ultra-fast fashion model adapts very well to new technological and social develop-
ments, is difficult for competitors to imitate, and thus effectively creates value for price-sensitive consumers.
Implications & Recommendations: Our findings suggest that a proper combination of strategic choices and
innovations in this business model can lead to competitive advantages and remarkable market performance.
Indeed, right timing, the use of appropriate technologies, and favourable initial conditions all play crucial roles
in the process and make the ultra-fast fashion business model potentially transferable to other industries,
while at the same time difficult to imitate by established companies. Its social and economic consequences,
future applications, modifications as well as the positive conditions necessary for transferability to other in-
dustries should be the subject of further studies.
Contribution & Value Added: Our central contribution involves deciphering the complex interplay and fusion
of already established rules and new elements during the process of a new business model creation in the fast
fashion industry. Shein’s ultra-fast fashion business model offers a new strategic configuration of a business
model that is very difficult to imitate and yet extends the competitive order in the industry at the same time.
This article provides a framework for analysis of this model and enhances the understanding of the importance
of particular business model choices and their connections for a firm’s successful competitive strategy.
Article type: research article
Keywords: business model; fast fashion; ultra-fast fashion; business model innovation; compet-
itive advantage
JEL codes: D16, L21, L22
Received: 13 January 2023 Revised: 30 May 2023 Accepted: 22 June 2023
Suggested citation:
Uchańska-Bieniusiewicz, A., & Obłój, K. (2023). Disrupting fast fashion: A case study of Shein’s innovative busi-
ness model. International Entrepreneurship Review, 9(3), 47-59. https://doi.org/10.15678/IER.2023.0903.03
INTRODUCTION
This article establishes the characteristics of a new business model – ultra-fast fashion – based on
the choices and activities of Shein. The ultra-fast fashion business model has not yet been studied
to the same extent as the fast fashion strategy and has rather been a subject of press articles and
reports until now (Cao, 2022; Ciment, 2022; Fashion Revolution, 2022; Jones, 2021; Nguyen, 2021;
Olcott & Eley, 2021). However, its inclusion as a separate topic of academic analysis is now neces-
International Entrepreneur ship Review
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sary, because the ultra-fast fashion business model is an important extension of the fashion indus-
try’s competitive order (Gavetti & Porac, 2018). In this article, we explore the origins of this phe-
nomenon that has created favourable asymmetries (Brandenburger & Stuart, 1996) that are advan-
tageous to one company, Shein, over others in the industry.
Shein has achieved remarkable success and is currently the most popular garment retailer
worldwide because of its scale, scope, and speed. However, there are visible differences between
the business models and development paths of Shein and its biggest competitors, namely Zara and
H&M. Shein was born digital and it focuses primarily on an online presence and extensively uses
large databases and artificial intelligence (AI) algorithms. At the same time, it offers only limited
transparency of its internal operations and is a subject of heated discussion regarding human rights
violations and sustainability hazards despite its declared pro-environmental attitudes. For these
reasons, it is important to understand better the logic of its business model better and more clearly.
Therefore, we seek to extend that understanding by asking the following research question:
RQ:
What innovations in the business model led to Shein’s remarkable market performance and
competitive advantage?
By drawing on the strategy and business model literature and an analysis of Shein’s operations,
we aim to contribute to the empirical research on the current disruptions in the fast fashion indus-
try and gain a more precise understanding of how Shein’s new business model differs from the
existing fast fashion models.
A common definition of competitive advantage in strategic management relates to a company’s
attribute that satisfies simultaneously two conditions: (a) it is important to its customers and (b) it
is difficult for competitors to imitate (Obłój, 2010; Obłój et al., 2010). As Porter (1980) notes, each
advantage has two dimensions, namely cost and differentiation. According to the resource-based
view, at their roots are a company’s specific resources or skills (Lee et al., 2021). The theory also
uses the very practical business model concept (Massa et al., 2017), which has become extremely
popular given the prevalence of the Internet and the ongoing trend towards the digitalisation of
organisational activities (Zott et al., 2011). It helps explain in a fairly holistic way the key organisa-
tional choices, solutions, and activities (Osterwalder et al., 2010). Moreover, it highlights how those
key activities are interrelated, creating create value for the recipient (Massa et al., 2017). It also
helps to understand how certain models of company activities generate new quality and change the
market (Zott et al., 2011). It is also consistent with the hypothesis of Gavetti and Porac (2018) stating
that great strategies extend a market order during a time of turbulence.
We illustrate this development using the global fashion industry, which had revenues of approx-
imately USD 0.99 Trillion in 2022. Most of it (USD 312.20 Billion) was generated in China (Statista,
2022). The recent changes in this industry were triggered mainly by the Covid-19 pandemic. Supply
chain problems due to a shortage of materials, transportation bottlenecks, and rising transporta-
tion costs, the increase in the share of sales in the online channel (from 22.8% in 2019 to 33.8% in
2021) and the associated need to invest in digitalisation, rising inflation, and also periodic drops in
demand and shrinking margins created opportunities for new entrepreneurial players (Wach &
Głodowska, 2022). An example of such a player is Shein. The advantage of its business model is
underscored by the fact that Shein has captured the U.S. fast fashion market in just two years,
increasing its share from 18% in 2020 to 40% in 2022 and achieving a 568% sales growth (Bloom-
berg, 2022). In 2022, its estimated value was USD 100 Billion (Scott, 2022) and thus Shein has be-
come a new giant in that industry.
Hence, this article revolves around the case of Shein as an example of an innovative ultra-fast
fashion business model. Therefore, in the following sections, we will provide a literature review, an
analysis of Shein’s strategy, and its specific business model innovations. Finally, we will provide
conclusions on this model.
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LITERATURE REVIEW
Strategy and Business Model
In one of the first definitions of strategy, Chandler (1962) emphasised the importance of long-term
goals that were to be achieved through specific courses of action and proper allocation of necessary
resources. Then, Mintzberg (1987) focused on the pattern of decision-making and a company’s activi-
ties. Porter (1997) defined strategy as a position of a company in the industry that allows it to act
successfully to the impact of five environmental forces and achieve a higher return on investment as a
consequence. Conversely, Barney (1991) puts effective competition at the centre of strategic manage-
ment and ties it to satisfactory company performance.
Although the strategy literature has been characterised by conceptual proliferation, most of the ap-
proaches converge on the definition of strategy as a coherent concept of action based on a few key and
complementary choices, the overall goal of which is to take advantage of opportunities, build a compet-
itive advantage, and achieve above-average results (Obłój, 2009; Rumelt, 2022). There is also general
agreement that economic success is the ultimate goal of any particular strategy. A major group of re-
searchers associate successful economic performance with the adoption of one of three generic strate-
gies: cost leadership, differentiation, and focus (Porter, 1980). Porter argues that companies should pur-
sue only one strategy, otherwise, they become stuck in the middle and this conclusion was further con-
firmed in later studies (Adner et al., 2016; Crook et al., 2008; Lee et al., 2021; Porter, 1985).
Definitional diversity also applies to business models. Magretta (2002) defines a business model
as a story that explains how businesses work, while Amit and Zott (2010) take a narrower view and
focus on the content, structure, and governance of transactions that are constructed to create value
by taking advantage of business opportunities. Finally, in their review of business model definitions,
Saebi, Lien, and Foss (2017) argue that many contributions stress certain necessary elements of a
business model, namely, the firm’s value proposition, the crucial market segment, the architecture
of the value chain, and the mechanisms of value capture. In these, as well as in many other attempts
to define the concept of a business model, there are frequent references to the idea of value creation
and capture (Obłój & Zemsky, 2015), wherein value can be seen as the user’s assessment of the
novelty and relevance and appropriateness of the product or service it offers (Lepak et al., 2007),
which eventually leads to organisational high performance.
While improved performance may originate from improved value creation, value capture, or the
combination of both, a novelty in business model design may not be enough to secure a competitive
advantage over already established companies in the industry. That advantage is more about the con-
figuration of business model activities, and indeed, research shows the importance of making com-
pound decisions rather than discrete ones (Leppänen et al., 2023). Hence, the interdependences be-
tween activities are equally crucial for maintaining a competitive advantage as making strategic choices
regarding superior interdependent activities (Lanzolla & Markides, 2021).
The link between a business model and company strategy is still neither evident nor simple
(Casadesus-Masanell & Ricart, 2010; Magretta, 2002; Teece, 2010; Zott et al., 2011; Zott & Amit,
2010). As Teece argues, even if a good business model provides the customer with value and at the
same time ensures that its creator captures a portion of it, it is insufficient to guarantee a sustain-
able competitive advantage. A business model must be complemented by the right strategy to
guard against any imitation by competitors or to protect against the emergence of other, more
innovative business models. Therefore, the business model should be linked to the strategy and the
basic structure of the company (Teece, 2010; 2018).
Another approach that simultaneously links and delineates strategy and business model states that
a business model should be viewed as (1) the company’s theory of value creation, (2) the implemen-
tation of that strategy, (3) the monetisation of economic consequences of the strategy, (4) the organ-
isation of the company, and a combination of the four elements, while taking into account value crea-
tion opportunities and the process of managerial decision-making (Bigelow & Barney, 2021).
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In their scheme of the competitive process, Casadesus-Masanell and Ricart (2010) place the busi-
ness model, especially the choice of the logic of value creation and capture, at the first level of strat-
egy. The second level is tactical and consists of implementation choices and actions as determined
by the original choice of business model. In their view, every company has a business model, because
it must make certain choices and performs particular activities. However, not every organisation has
a strategy understood as a definite plan of action for the various contingencies that may occur. From
this perspective, which we adopt here, strategy is the creation of a system of actions that will allow
the company to compete successfully and the chosen business model is its reflection (Casadesus-
Masanell & Ricart, 2010; Massa et al., 2017).
To sum up, strategy and business model choices play a substantial role in a company’s success.
They should become a comprehensive combination, because a good strategy without a proper busi-
ness model may not be enough to create long-term customer value (Braun et al., 2019). As presented
in the following sections, the case of Shein is a complex and novel example of such a combination.
Fast Fashion
As defined by Merriam-Webster Dictionary, fast fashion is ‘an approach to fashion design, creation
and marketing that emphasises making products that are in line with current trends available to con-
sumers quickly and cheaply.’ (Fast Fashion, 2022). On the other hand, Barnes and Lea-Greenwood
define fast fashion as ‘a business strategy which aims to reduce the processes involved in the buying
cycle and lead times for getting new fashion product into stores, to satisfy consumer demand at its
peak’ (Barnes & Lea-Greenwood, 2006, p. 2). Caro and Martınez-de-Albeniz (2015) indicated an inter-
esting aspect when defining fast fashion. They refer to the concept of lean retailing. Many researchers
described fast fashion by focusing on its negative social impacts, including environmental impact and
overuse of resources at various stages of the production cycle (Allwood et al., 2006; Bick et al., 2018).
Hence, numerous studies emphasised the need for fast fashion companies to act more consciously
and responsibly and have a greater orientation towards a sustainable business model, production,
and supply chain (Oliveira et al., 2022; Pedersen et al., 2018; Todeschini et al., 2020). In the context
of fast fashion, the ‘throwaway culture’ concept is mentioned and analysed in terms of consumer
attitudes and consumer behaviour (Cline, 2012; Pedersen et al., 2018).
What distinguishes fast from traditional fashion is the way the clothes are produced and how
the value chain is shaped (Camargo et al., 2020; McNeill & Moore, 2015). The supply chain in this
sector is analysed, e.g., through (1) JIT (just in time), which focuses on current deliveries and reduc-
ing warehousing, (2) agile supply chains, emphasising the importance of shorter and more flexible
supply chains, responding to current demand, facilitated by the close location of production and an
analysis of sales data, (3) quick response (QR) systems, the rapid replenishment of a customer’s in-
ventory by the supplier through direct supplier access to data from the customer’s point of sale
(Collins English Dictionary, 2018). They increase cooperation and integration and – just like demand
chains – improve the efficiency of physical supplies (Barnes & Lea-Greenwood, 2010; Camargo et al.,
2020). Consequently, fast fashion is distinguished from traditional fashion by shorter runs, smaller
quantities, and the constant change of seasons (even up to 24), and even artificially induced out-of-
stocks creating a feeling of scarcity and uniqueness in consumers (fear of missing out, FOMO), and
thus the need to buy immediately (Bayley & Nancarrow, 1998).
Ultimately, according to Caro and Martınez-de-Albeniz (2015), three elements determine
whether a company belongs to the fast fashion sector, namely, (1) quick response (2) frequent
assortment changes, and (3) fashionable clothes at affordable prices. Control of the entire value
chain allows garments to be delivered almost on demand, as the production is focused on individual
products rather than entire collections.
A typical fast fashion assortment can be divided into three categories, using the so-called fashion
triangle (Abernathy et al., 1999; Caro & Martínez-de-Albéniz, 2015): basic (40-70% of the assortment)
produced in larger quantities in countries with low labour costs, fashion-basic with a more fashionable
cut, and products that are produced in smaller quantities, in a closer location, using quick response sys-
tems. Decisions and authorisations are made so quickly that these products can go on sale within just six
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weeks. They are products that generate quick customer interest, although basic clothing is the primary
source of recurring revenue. This division of the assortment requires the maintenance of dual supply
chains and provides for a balance in terms of cost and production time. It also allows for frequent intro-
duction of new products, up to 20-24 times a year. Key companies in the sector defined in this way are
H&M, Zara/Inditex, Gap, Uniqlo/Fast Retailing, and Topshop (Caro & Martínez-de-Albéniz, 2015).
Technological developments, digitalisation, the changing expectations of new generations of con-
sumers, and, finally, the consequences first of the 2008 economic crisis and then the Covid-19 pan-
demic have contributed to further transformations in this market segment (Monroe, 2021). Now, the
segment has split into two parts: ‘traditional’ fast fashion and ultra-fast fashion represented by new
companies like BooHoo, ASOS, MissGuided, and Shein. Their business models extended the market
organisation because they focus primarily on an online presence. The ultra-fast model is based on a
‘test and repeat’ approach (Olcott & Eley, 2021), i.e., producing very short runs (about 300-500 items),
releasing them, and if the testing proves to be successful, repeating the procedure. It is also supported
by very aggressive online marketing and celebrities/influencers’ support. The entire production cycle
has been shortened to the maximum, even to as short as two or three weeks, so consumers will have
a sense of new things materialising ceaselessly and thus the need to buy them (Camargo et al., 2020;
Research, 2017). The prime example of this new business model is Shein.
RESEARCH METHODOLOGY
While Shein’s immediate competitors have been studied extensively as key players in the fast fashion
industry (Caro & Martínez-de-Albéniz, 2015; Drake & Marley, 2010; Jin & Shin, 2020; López et al., 2022),
mentions of Shein have only been appearing predominantly in press releases, blog posts, articles, and
reports. Academic publications concerning the company are scarce. Thus, an interesting research gap
has appeared and we decided to approach the phenomenon from the perspective of the strategic choices
that shape Shein’s strategy and business model. Following Ghauri’s (2004, p. 109) suggestion that the
‘case study is a useful method when the area of research is relatively less known’ and also in accordance
with the process-based tradition (Langley, 1999), we adopted an exploratory single-case study as the
research method. Such an approach allowed us to better understand how this new business model de-
velops and matures and compare it with those models that are currently dominant in the fast fashion
industry (Yin, 2014). An emphasis was put on literature analysis as we did not have direct access to the
company and the company does not disclose specific information on its operations and strategy.
Thus, our data collection began by gathering all the primary literature sources we could access,
including the company’s website, archival and current web news, press articles, social media sites, and
the scarce reports and records published online. Our secondary literature analysis consisted of an ex-
tensive review of articles in academic and non-academic journals, industry reports and books, also
accessed mainly online, using the Web of Science and Google Scholar databases. For statistical data,
we consulted the Statista database. We used an integrative literature review (Torraco, 2005), recog-
nising the key themes, and indicating and conceptualising the emerging ones to offer a thick descrip-
tion (Ponterotto, 2015) and a specification of the analysed business model. Taking into account that
this article tackles a quite new phenomenon and potentially will encourage other researchers to fur-
ther investigate it from different vantage points, a single case study based on all available, including
non-academic sources, seemed to be sufficient and effective at this point.
RESULTS AND DISCUSSION
Shein sparingly manages information about itself, though its sites are the most visited in the fashion
industry worldwide. With the right choice of content and marketing tools, Generation Z organises
shows of purchased clothes on their social media (‘Shein hauls’) without the company having to finance
these activities but taking advantage of impulsive shopping (Camargo et al., 2020; Morgan & Birtwistle,
2009). Up to 6000 new products are added to the online store every day and the trend analysis is
handled by AI, which is applied to the entire process of clothing production and distribution. Trends
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are captured on social media within 48 hours and it can take just two weeks to deliver the final product
to customers (Cargo et al., 2020)
Strategic Choices of the Ultra-Fast Fashion Business Model
Several choices and activities distinguish ultra-fast fashion from fast fashion, but the most im-
portant aspects seem to be: the greater power of consumers whose needs and expectations matter
for both design and production (demand-driven supply chain) (Drake & Marley, 2010), an online-
only presence, vertically-integrated e-commerce platforms, local production that is shortened even
to days, minimal inventory, and flexible, lean, reactive supply chains (Camargo et al., 2020). Shein
has managed to develop a considerable competitive advantage over companies by using a fast fash-
ion business model, reinforced by the use of AI and operational efficiency, specifically focused re-
lationships, and a networked structure of suppliers.
The results presented in Table 1 summarise the similarities and differences between strategic
choices that have been used by fast fashion companies and the ultra-fast fashion Shein’s model
(Camargo et al., 2020; Caro & Martínez-de-Albéniz, 2015; Drake & Marley, 2010; Jin & Shin, 2020)
supplemented by an additional element of responsible business. We will elaborate on all the ele-
ments in the following paragraphs.
Table 1. The differences between fast fashion and ultra-fast fashion business models
Strategic choices Fast fashion Ultra-fast fashion
Born digital
No
Stationary stores: Zara 3.000, H&M 5000
Website
Indirect (cost) and direct sales
Investment in offline and online integra-
tion, online development
Yes
Website
Mobile app
Direct sales – savings
Artificial intelligence and
big data Yes/No. In selected areas Yes, at every level of the value chain
Shared consumption
Yes, the tendency to throw away clothes
that are no longer wanted
Yes, the tendency to throw away already
unwanted clothes + very aggressive mar-
keting and influencers
Quick response
Yes
Local production, also
in Asian and African
countries
Cooperation with large factories
Author celebrity collections
Transportation costs, storage, bottlenecks
Yes
Locally produced in China
Matrix structure of suppliers
Cloud-based management
Small and medium-sized companies
Individual designers
Wide range Yes/No
Approximately 500 new items per week
Yes
Approximately 1000 new items per day
Plus size fashion
Low prices Yes Yes, up to 50% lower than co
mpetitors’
prices
Responsible business Yes/No. Individual initiatives, reports No. No transparency, no information, ra-
ther a declaration
Source: own elaboration based on Camargo et al. (2020); Caro and Martínez-de-Albéniz (2015); Drake and Marley
(2010); Jin and Shin (2020).
Jin and Shin (2020) have listed three disruptive innovations of an ultra-fast fashion business model.
The first is the online-only business (born digital), which involves the direct sale of relatively high-qual-
ity, complementary products at competitive prices, with a free offline trial. Shein operates primarily
online, selling a wide range of products via its website and extremely popular app (177.49 billion down-
loads in 2021, 80.48 million by May 2022 (Thomala, 2022)). Since Shein does not have brick-and-mortar
stores, there is no need for regular delivery and replenishment of the assortment, producing savings
in transportation and storage. In this way, Shein also avoids additional postage and customs fees for
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transporting larger quantities of goods to international locations. The lack of physical stores also
proved to be beneficial during the lockdown of many economies during the Covid-19 pandemic. Unlike
e.g. Zara and H&M, Shein did not experience losses from stores closures and border-stopped deliver-
ies. Orders were shipped directly from China warehouses and because the country has attained ‘de-
veloping’ status under the World Postal Union, Shein benefited from significant delivery discounts.
Furthermore, individual shipments of less than USD 800 in the USA, GBP 135 in the UK, and EUR 150
in the EU are not subject to import duties. Low prices and a huge selection compensate shoppers for
a slightly longer shipping time. Shein also establishes ad-hoc stationary stores in various locations that
operate temporarily to reinforce the power of the brand. Customers can bring their no longer needed
Shein clothes to exchange them for coupons and promotional points.
The second business model innovation is the use of AI and big data for design, trend analysis,
sales forecasts, marketing, and product presentation (Jin & Shin, 2020). The data comes from cus-
tomers’ website profiles, apps, and social media, and its analysis allows Shein not only to predict
and create trends, but also to plan production volumes and select suppliers (Li, 2021). With the
help of advanced AI algorithms, Shein makes realistic demand forecasts, adapts and personalises
products and styles, and also captures and creates new fashion trends. Moreover, AI enables fur-
ther savings due to more flexible production and fewer errors when forecasting supply. Shein’s lead
in applying algorithms and relying on an extensive big data system corresponds with the custom-
made tool coupled with Google Trends Finder (Li, 2021).
The third element is the development of collaborative consumption, such as flexible offerings that
include renting, exchanging, and reusing a given product, usually based on consumer platforms (Jin &
Shin, 2020). Shein is not yet active on a large scale in this area, although a program to exchange used
items for discounts and coupons may be the first sign (Ciment, 2022). Furthermore, the use of gamifi-
cation, i.e., likening shopping to a virtual game with rewards in the form of more promotions, encour-
aging customers to organise Shein hauls, and stoking interest online, has made this brand one of the
most popular on social media (Ahmed, 2021).
Shein’s Business Model Specifics
The presence of Jin and Shin’s (2020) generic choices in Shein’s business model might be sufficient to
explain the company’s key competitive advantage. However, its business model also includes new,
innovative elements that make its low-cost strategy difficult to imitate and more sustainable.
Firstly, Shein’s response speed has been reinforced by the specific structure of its supply chain. The
vast majority of production occurs in the industrial region of Guangdong in South-eastern China. Shein
carefully builds and nurtures relationships with clothing manufacturers – smaller factories that work
with Shein on an exclusive basis, and designers. Collaboration with small and medium-sized companies
allows Shein to receive orders daily and reduce the size of those orders down to approximately 100
pieces. To reinforce suppliers’ loyalty, Shein uses short payment terms – 30 days instead of 90 days,
the standard in the industry. Communication occurs using a mobile app similar to the one used by Uber
(Nguyen, 2021). Hence, supply chain management is done in the Cloud, which allows for fast and au-
tomatic ordering of even more of the products that are currently selling well (Olcott & Eley, 2021).
Shein’s matrix structure of suppliers and cloud management of the supply chain have created new
dimensions of competitive advantage, because it has enabled the company to process information
more efficiently and develop key product innovation capabilities that translate into cost and time re-
duction versus its competitors (Camargo et al., 2020; Peterson et al., 2010). In total, Shein works with
a team of more than 1000 designers and 3000 garment factories in China (Cao, 2022).
The effectiveness of the QR system in the ultra-fast fashion sector is primarily evidenced by vertical
integration, real-time communication, the introduction of technological and process innovations, effi-
cient logistics, and flexibility and cooperation at every level of the value chain – design, production,
and distribution (Camargo et al., 2020; MacCarthy & Jayarathne, 2010). Favourable production condi-
tions resulting from the 2004 regulatory liberalisation, extensive infrastructure including delivery by
passenger cars, low labour and material production costs, vertical integration of the supply chain, the
introduction of innovative management and communication methods, and innovations, such as solar-
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powered cars are an important and successful combination of factors that can hardly be replicated
(Drake & Marley, 2010; Li, 2021; Peterson et al., 2010).
Secondly, Shein adapts to market trends and manages frequent assortment changes better and
faster than its competitors, which may be directly related to the effectiveness of QR. On average, 1000
new items appear on Shein’s website per day, which was most evident during the pandemic and ship-
ping bottlenecks – the number of new items offered by Shein outperformed Boohoo by 1385%, H&M
by 6584%, and Zara by 4259% (Cao, 2022; Marci, 2022). Thus, its customers feel that Shein can meet
their expectations better than other competitors, also with reference to plus-size clothing, which ac-
counts for 19% of the assortment and outperforms Boohoo’s 15% and Forever 21’s 14% (Marci, 2022).
Thirdly, Shein excels in offering fashionable clothes at affordable prices. Shein’s prices are lower
than those of its competitors (up to 30%-50% lower than those of Zara or H&M (Cao, 2022)) and also
attributable to the structure and operation of the supply chain. Cost reductions throughout the pro-
duction process, even in terms of wages, may be among the plausible explanations (Jackson, 2022).
The lower prices are also linked to savings in distribution, warehousing, transportation, customs, and
postage. These prices, aggressive marketing, contextual advertising, the activities of influencers, and
ordinary social media users, as well as discounts, coupons, and promotions, make customers add more
products to their shopping carts and often even repeat purchases.
Finally, Shein’s advantage over its rivals derives from the initial conditions of doing business. The
Chinese giant is subject to different laws and is not burdened with the obligation to publish detailed
reports. Therefore, there is no certainty about how it addresses principles related to environmental
protection, sustainability, corporate social responsibility, and ensuring decent working conditions. The
rather specific treatment of intellectual property rights and principles of political correctness manifests
itself in products that are almost identical to those offered by rivals, or that contain sometimes reli-
giously, socially or politically controversial symbols (Olcott & Eley, 2021).
To summarise, our description of the ultra-fast fashion business model is based on research on the
fast fashion industry. As this is a new phenomenon that can be compared with the long-established
one, we took recourse to the findings of Jin and Shin (2020), Caro and Martınez-de-Albeniz (2015),
Camargo et al. (2020), Drake and Marley (2010) related to strategic choices in this industry, with an
additional element referring to sustainability. Such a configuration of strategic choices may be per-
ceived as a starting point for the analysis of the ultra-fast fashion business model.
CONCLUSIONS
This study enhanced our understanding of the importance of business model choices and the links
between strategy and innovative elements of the business model. We used Shein as an example, be-
cause despite a relatively short history of development, it exhibits extraordinary performance in both
financial and market terms. Our main contribution relates to the explanation of how Shein’s strategic
choices and innovations in the business model led to its low-cost and speed-related competitive ad-
vantages, which in turn produced remarkable market performance.
Summarising these results, we would like to point to three elements that in our view are important,
both theoretically and in terms of managerial recommendations. The first is the value of timing a strat-
egy. Much has been written about the first-mover advantage (Suarez & Lanzolla, 2007), but Shein’s
case study underscores very well how important are the timing of strategic choices and their imple-
mentation. While existing competitors in the fast fashion industry have tried to add an online dimen-
sion to the traditional operations that constituted the core of their business model and develop omni-
channel capabilities, as a new player, Shein was able to focus entirely on the fastest growing online
market segment, thereby making online domination the essence of its business model. The second
significant element is the use of multiple modern technologies, which allows Shein to maintain low-
cost operations despite their growing scale and scope. Thirdly, Shein’s example confirms once again
the importance of initial conditions for a company’s success (Chandler & Hikino, 1994). As a Chinese
company, Shein benefited initially from several explicit and tacit market advantages ranging from the
Disrupting fast fashion: A case study of Shein’s innovative business model
|
55
huge scale of the Chinese market, the wide acceptance of mobile telecommunications and online mar-
kets, to low-cost suppliers and less restrictive legal conditions when they were doing business.
The managerial implications of our analysis are indeed profound. Shein’s new business model con-
tains not only crucial new choices and activities, but overall, it also represents a new strategic config-
uration that fits into the trends emerging in the business and social environment today. Shein’s present
success, growing market share, goodwill, and unflagging consumer interest lets us believe that ultra-
fast fashion is not a temporary phenomenon, but rather an important business model that has become
one of the standards in the fashion industry and may migrate to other industries in which online pres-
ence and the use of mobile apps can become a key competitive advantage. Further, it can be difficult
for existing companies to emulate such business models as a basis of their low-cost strategy, because
that would demand a change in organisational architecture (Henderson & Clark, 1990).
While the nature of a single-case study method like the one we have presented here has obvious
limitations typical of qualitative studies – because it has limited external validity and does not allow
generalisations – the critical case of Shein seems to demonstrate the value of mixing old principles
with a new approach to business strategy in turbulent times.
Therefore, further study of this model, especially regarding its organisation and supply chain
management, responsible business, marketing and communication, and the psychological issues re-
lated to impulsive buying, FOMO, the tendency to throw away and replace unwanted products with
new ones may be of particular interest to understand fully the social and economic principles and
consequences of its application. However, taking note of Shein’s approach to managing information
about their business, future research in this area could be hampered by limited access to empirical
data and thus be forced to rely on second-hand analysis of the literature and web sources, which
were both the limitations of this article.
Nonetheless, the ultra-fast business model noted here seems to be extending and replacing the
market order in the sense expressed by Gavetti and Porac (2018). Given the possible transferability of
its elements to other industries, the ultra-fast fashion business model may find its true followers and
become a new standard that should be further investigated in greater detail. Whether this change will
last and to what extent it allows for imitation is the question of the future, which must take into account
changing market circumstances and especially the customers’ growing environmental awareness and
potential shift towards sustainability, less consumption, and a slower pace of life (Guillén, 2020).
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Authors
The authors contribution was 60% for Anita Uchańska-Bieniusiewicz and 40% for Krzysztof Obłój.
Anita Uchańska-Bieniusiewicz
PhD in Media Management and Economics (2011, University of Warsaw, Poland); Assistant Professor at
Strategic Management Department, Kozminski University, Poland. Her research interests include strategy
and entrepreneurship.
Correspondence to: Anita Uchańska-Bieniusiewicz, PhD, Kozminski University, Strategic Management Depart-
ment, ul. Jagielonska 57/59, 03-301 Warszawa, Poland, e-mail: auchanska@kozminski.edu.pl
ORCID http://orcid.org/0000-0002-4445-0420
Krzysztof Obłój
Full Professor, Chair of Strategic Management Department, Kozminski University, Poland. Also, a part-time
professor at the University of Warsaw, Poland. Former President of the European International Business Acad-
emy, Fellow of EIBA, and member of the SMS and AIB. His research interests include strategy, entrepreneur-
ship and international business.
Correspondence to: Prof. Krzysztof Obłój, Kozminski University, Strategic Management Department,
ul. Jagielonska 57/59, 03-301 Warszawa, Poland, e-mail: kobloj@kozminski.edu.pl
ORCID http://orcid.org/0000-0002-5786-4921
Acknowledgements
and Financial Disclosure
This article came into being without any project funding.
Conflict of Interest
The authors declare that the research was conducted in the absence of any commercial or financial relation-
ships that could be construed as a potential conflict of interest.
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Published by Krakow University of Economics – Krakow, Poland
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