As Chinese fast-fashion platform Shein continues to see rising sales in the US, the company plans to build three large distribution centers in the country, which could reduce shipping times to its customers by three or four days, The Wall Street Journal reported on Thursday.
Why it matters: The plan to build more large-scale distribution centers in America highlights the importance of the US market to Shein, as well as the firm’s phenomenal growth in the region. A flexible supply chain has been a key factor in Shein’s success to date, and the brand needs shipping services to keep pace with its soaring sales. The expansion will also allow Shein to retain and build up its competitive advantage as it faces more competition.
- While rivals such as Asos, Boohoo, and OhPolly offer next-day delivery services, Shein’s consumers have to wait at least a week for their orders to be delivered.
Details: Shein is planning to open a new 1.8 million square foot distribution center in southern California by the spring of 2023, along with a third distribution center being planned in the Northeast, according to a report by The Wall Street Journal.
- This new facility would join Shein’s current distribution center, located in Whitestown, Indiana, where the company plans to expand its space from 1 million square feet to 1.5 million square feet, the US media outlet reported.
- The company released a study on Thursday on its economic impact in Whitestown, predicting that its newly expanded warehouse would generate $175 million annually for the Indianapolis economy and create more than 1,000 jobs by the end of 2022 when Shein hopes the facility will be fully operational.
- The Wall Street Journal also cited George Chiao, Shein’s US operation president, as saying that the company is planning a hiring spree in the country over the next few years. Shein currently has more than 400 employees in the United States, 25 times the number it employed in 2019.
Context: Known for its ultra-low prices and fashionable clothing and accessories, Shein’s focus on the overseas e-commerce market has seen it become one of the hottest retail companies in the world, but it is also now facing unprecedented competition.
- Shein has completed seven rounds of funding since 2013. In its Series F funding in April, the company reportedly raised $1 billion to $2 billion at a valuation of $100 billion.
- Shanghai-based Pinduoduo officially launched its e-commerce platform Temu in the US earlier this month, with a model that appears to closely follow the Shein approach with low prices and discounts of up to 30%.
Correction: an earlier version of this article misspelled George Chiao.