In the last three decades, three technology shifts have propelled changes in the fashion landscape. First, in the early 2000s, advanced data analytics, RFID, and localized supply chains powered the emergence of “fast fashion.” In the following decade, the advent of internet-fueled e-commerce led to the rise of direct-to-consumer (DTC) brands.
Today, the fashion model is being disrupted yet again, this time by a combination of mobile commerce, artificial intelligence, live shopping, and real-time, real-cheap product creation — ushering in a period of what I call “instant fashion.”
Shein is the biggest and most well-known brand pursuing this model. When the company entered the U.S. less than six years ago, its sales totaled nearly $1.5 billion. It has since multiplied by more than 20 times and is now bigger than H&M and approaching the size of Zara. Its revenue target for 2025 exceeds $50 billion.
The negative social and environmental consequences of fashion are well documented. That said, the emergence of instant fashion represents the apotheosis of a model that prioritizes speed, affordability, and disposability. In light of Shein’s recent IPO filing, it’s crucial that consumers and policy makers appreciate the often-unseen negative externalities connected with instant fashion, especially as it continues to win market share.
Instant fashion, as practiced by Shein and increasingly by its competitors, is propelled by two big technological and behavioral shifts.
Mobile Attention
Global ownership of smartphones has almost doubled over the past seven years to more than six billion. Over the same period, e-commerce has shifted from desktop to mobile with nearly half of transactions now completed on a mobile device. With devices always nearby, connected and optimized with addictive entertainment and social media, the average American now spends more than five hours each day glued to their phones.
Discovery Buying
Having come of age during the rise of mobile devices, members of Gen Z spend more time than any other generation on their cell phones. They also spend the most money of any cohort on fashion.
How Gen Z consumes via mobile is changing. Live shopping, where creators and brands hawk products like on QVC, appeals to consumers with shorter attention spans. It is “so instantaneous” that it “encourages [a] buy now think later approach” where there is not “much time to consider what” one is buying, as one writer noted in Business Insider last year. It also has conversion rates up to 10 times higher than traditional e-commerce.
Unlike older consumers, many Gen Zers do not start their shopping journey with an end in mind. Instead, theirs is a process of social discovery with items often purchased impulsively. “An entire generation today do not choose from what they can find, but either discover things that they never knew they wanted or search for what they want without ever knowing how to explain it,” says Joanna Williams, CEO of the consultancy Moore Collective. As a result, she says, “demand is now unknown with unstable trends driven by individual interest and entertainment.”
How Does Instant Fashion Work?
The instant fashion industry continues to expand at a rapid pace. Just this month, Target announced a line called dealworthy featuring more than 400 everyday products, including apparel, priced starting at $1, with most items selling for less than $10.
Capitalizing on these changes in technology and shifts toward impulse and discovery buying requires a value chain that is optimized for speed and propelled by newness. Shein was the first to master this dynamic at scale, and its practices are the most well-documented. Today, other Asia-based brands including Temu, Urbanic, and Trendyol are well-funded imitators and competitors.
The essential building blocks of the instant fashion delivery model are:
Real-Time Product Creation
Zara was the first brand to optimize for speed and newness at scale, pioneering fast fashion. Starting in the early 2000s, the company built a localized supply chain with centralized data analytics powered by RFID to a create a responsive, agile system. Different from peers who forecast and purchased upwards of 80% of seasonal inventory months prior to a selling season, Zara’s data-and-analytics-enabled model allowed the company to design, produce, ship and sell the majority of inventory in season. This led to lower forecast error rates, improved service levels, and reduced markdowns, which enabled exceptional growth. Zara also accelerated the new product creation process and introduced orders-of-magnitude more products as compared to their less-fast peers.
Instant-fashion industry leader Shein makes Zara’s pace seem quaint. While Zara introduces approximately 35,000 new styles per year, Shein will launch that many new products in a few weeks. In fact, a recent study catalogued 1.3 million new products launched by Shein in just one year. Using algorithms to “trawl social media sites and online shopping sites,” Shein’s 250 in-house designers and pool of independent factories develop new ideas for designs “based on trending items.” At the same time, more than 90 different designers and brands, including Uniqlo and Zara, have filed lawsuits in U.S. federal court accusing Shein of copyright or trademark infringement since 2018.
Shein’s designs are then shared electronically via a digital production center with more than 5,000 small-to-mid-sized factories, mostly in Guangzhou, to produce runs of 100 to 200 units to test sell through. Factories share real-time capacity updates and report their category capabilities to Shein’s production allocation tools. Eligible materials are restricted to a library of master fabrics thereby allowing Shein to progress from design to production in only 10 days — one-twentieth the time of traditional competitors.
Real-Cheap Product Offering
The perfect way to address consumers with short attention spans is to develop products with fleeting lifespans that are disposable and inexpensive. This ensures product obsolescence and affordability thereby creating space for consumers to react to their next impulse.
According to a recent study, Shein’s pricing of jeans, dresses, tops, outerwear, footwear, and accessories averaged 50% below H&M (and even further from Zara). Part of what enables Shein to sell $8 blouses and $9 dresses is their reliance on polyester. Almost two thirds of Shein’s garments are made of polyester, as compared to just 27% at Zara and 21% at H&M. Given that polyester can sell for considerably less than the price of cotton, this results in lower costs and prices.
Real-Time Marketing
To promote its fire hose of new products, Shein and its competitors spend lavishly on Facebook and Google ads (so much so that Shein and Temu ad spending is partially responsible for Meta’s recent revenue increase).
In addition, the company has built a powerful distributed, influencer-led marketing engine that takes advantage of the spectacular growth of mobile video content (up by almost 10 times over the past five years). According to one influencer: “I pick out my pieces, they ship them over, I make a video, I get paid, and repeat the cycle.” Unlike more traditional competitors who advertise in fashion magazines, Shein relies heavily (more so than most other modern brands) on an army of influencers who post their Shein “haul” videos to TikTok (where Shein was the number one brand worldwide last year with more than 13,000 influencers posting about it). On Instagram (where the brand has more than 30 million followers) Shein buyers tag invitations to their followers to visit the company’s site and get discounts on their orders.
The Dangers of Instant Fashion
For undifferentiated lower-end fashion brands, Shein, Temu, and their ilk represent an existential threat. Fast-fashion brands are also at risk. Amidst declining profit margins, H&M just replaced its CEO. Since 2020, several fashion retailers including Forever 21, Missguided, and J. Crew have declared bankruptcy. (Shein has subsequently invested in the first two brands.) Brands including Gap have taken note of Shein in the recent quarterly conference calls as they shed market share to purveyors of instant fashion.
Such disruption and a re-sorting of winners and losers is a feature of our economic system. Companies that invent a better mousetrap and provide more value to consumers typically win out. There’s clearly consumer demand for these products, but consumers also need to be aware that the business model comes with side effects — particularly the privatization of profit and the socialization of costs, including social and environmental harm.
Social Harm
A three pack of “solid cami top and shorts PJ sets” retailing for $10.84 raises the question: How is Shein able to produce and sell three items for less than the cost (not the price) of one item produced by its competitors? Because Shein is private (for now) and does not share financial statements or detailed information about its inputs or suppliers, it’s hard to determine how much of the company’s ultra-low pricing results from margin compression, efficiency, or externalizing costs.
Questions have been raised about labor practices within the instant fashion industry, particularly at outsourced partner factories in China. UK reporters last year found employees working up to 18 hours per day and being paid less than four cents per garment at a Shein contract factory. In response, Shein said that wages at its partner factories were “significantly higher” than the local minimum wage. A Bloomberg investigation found that some garments shipped to the U.S. by Shein were made with cotton from China’s Xinjiang region — a violation of the U.S.’s UFLPA (Uyghur Forced Labor Prevention Act) law. Shein didn’t dispute Bloomberg’s test results, but said it was “taking steps to ensure we comply with local laws and regulations.” In a statement Shein also told Bloomberg it was working with a lab to “support them in ensuring a robust and traceable supply chain.” A U.S. congressional committee is investigating whether Shein and its competitor Temu use forced labor in their supply chains.
A congressional Select Committee on China is also examining Shein and Temu’s use of a tax loophole, known as the de minimus shipping loophole. This allows them to make duty-free shipments valued at less than $800 to the U.S. According to the committee’s bipartisan report, in 2022, Shein and Temu paid $0 in tariffs while H&M paid $205 million and Gap paid $700 million.
Fashion companies who have previously faced questions about their supply chains, like Nike and Zara, have built out more robust sustainability and audit protocols in which they audit all of their finished goods suppliers, and often engage third parties to perform some of their audits. Though Shein has recently increased its audit activity, the company told CNBC that it audited less than half of its contract manufacturers in 2022, and among those audited, 11% received a failing grade requiring immediate corrective action or a cessation of orders.
Environmental Damage
Surveys indicate that a majority of consumers seek more sustainable brands. However, absent straightforward and reliable information, it is very hard to appreciate the environmental impact of purchasing decisions. As a result, there is a chasm between intention, and action and most consumers default to other purchase criteria including brand and price. This benefits purveyors of instant fashion.
Fashion waste manifests at three stages in the value chain: during the production process where surplus raw materials accumulate; in warehouses where excess buffer stocks settle; and in landfills where post-consumer waste mounts. While the instant fashion model does likely reduce buffer stocks (although the companies don’t share these data to validate their claims), it’s hyper-dependence on fossil fuel-based polyester summed with the short half-life of its cheap clothing causes consequential environmental damage at the other stages of the process.
Instant fashion’s popularity overlaps with the surge in plastic as a fashion input. Prior to 2000, natural fibers (such as cotton and wool) were the primary inputs to clothing. However, as fossil fuel producers have come under pressure from the growth of renewables, growth in plastic supply has proved a welcome offset with the fashion industry serving as a reliable customer. Cheaper, more readily available, and with some preferred properties (e.g. quick-drying, wrinkle-proof, durable, ability to “take” color, and more), synthetics have powered the growth of activewear and instant fashion.
While consumers have benefited from lower prices, the negative impacts of synthetics are an environmental scourge. Energy used to produce plastics is often fossil fuel-intensive leading to increases in carbon emissions. During a plastic garment’s useful life, it sheds microplastics into waterways that end up in the food supply, as do excess concentrations of hazardous chemicals. A recent Greenpeace investigation found that 15% of Shein’s products contain concentrations of hazardous chemicals that breach E.U. regulatory limits. Finally, it takes hundreds of years for cheap synthetic shoes and shirts to decompose, all the while emitting methane and further contributing to climate change. (It’s important to note that even producing clothing with natural, untreated fabrics impacts the environment; the most sustainable option is to produce and consume less.)
It’s likely that Shein alone now ships between two and three billion items annually. (This is based on revenues of $30 billion and average selling prices after discounts of just over $10. Here is a map of Shein’s list prices prior to discounts by product category.)
What Happens Next?
Shein’s confidential IPO filing in November has spurred a renewed focus on these consequences of instant fashion.
In response, Shein has become more engaged with the media. Peter Pernot-Day, Shein’s head of strategic communications, recently attributed the company’s success to its “test and learn … digital-first model” that delivers “on demand” fashion in batches of 100 items, ramping up production of the bestsellers.. Pernot-Day says Shein is not a fast fashion brand, but a “sustainable and accessible brand” that is not “involved with massive overproduction and destruction of garments.”
Shein has also increased its spending on lobbying in Washington (spending $3 million last year, more than 10 times the amount reported in 2022), published sustainability reports, and sought to establish credibility via partnerships with NGOs. The company has hired a former Bush administration Justice Department official for a six-month consulting assignment and made a $15 million three-year commitment to the Or Foundation to advance ecological and economic prosperity in Ghana. It also made multimillion-dollar commitments to the Apparel Impact Institute and the Supplier Community Empowerment Program. I’d calculate these investments add up to less than 1% of annual sales.
These investments do not change the reality that none of the costs of the negative environmental impacts of these products are borne by the purveyors of instant fashion. Instead, these costs that damage human health and accelerate climate change fall to citizens, especially those in the global south. Because instant fashion purveyors promote more impulse overconsumption, any reduction of excess that accrues from its on-demand production model are more than offset by the volume of its cheap plastic output.
Many fashion companies are struggling to deliver on sustainability. Shein’s own reporting offers insight into the challenges for instant fashion. Though the company pledged to reduce its carbon footprint by 25% by 2030 from a 2021 baseline, its emissions grew by 52% in 2022 to more than 9 million tons of carbon dioxide, or the equivalent of close to 1 million long haul flights. Even worse, this reporting does not include any carbon emissions associated with the use phase or the end of life of Shein’s clothing.
The fashion industry’s attempts to address negative externalities via sustainability reporting, voluntary collaborative consortia, and pledges to reduce emissions have not led to social or environmental progress. Even prior to the advent of instant fashion, the industry was already at receiving increasing scrutiny from regulators, especially in the EU. As a result, two paths forward are possible. Either the zeitgeist shifts and overconsumption slows. Or, consequential regulation is enacted to restrain the harmful impacts of an industry that has reached the limits of speed and excess.
