Asos and Boohoo may not get AIM crown back as Chinese challenger Shein bursts onto scene


Asos PLC and Boohoo Group PLC (AIM:BOO) have not only lost their crowns as the former kings of AIM but are facing increased competition from fast-growing Chinese upstart on both sides of the Atlantic that is reported to be eyeing an IPO before long.

Keeping itself relatively under the radar in recent years, shrewd observers in the retail world have been taking increasing note of Chinese online fast-fashion retailer Shein.

While based in China, Shein is focused exclusively overseas and, thanks to its aggressive online marketing spend on both sides of the pond, is starting to grab sizeable chunks of market share.

Shein has maintained strong momentum this year, grabbing the largest market share in US online fast-fashion, and was reported to now have a valuation of US$47bn – making the privately owned outfit a ‘unicorn’ many times over.

Founded in 2008 by American-born entrepreneur Chris Xu as a wedding dress business, with a change of name and focus to fast fashion in 2015, the business has reportedly doubled revenues for the past eight years to around US$10bn last year, making Shein the largest pure-play online fashion retailer in the world, according to Euromonitor.

Sharp-eyed investors might have noticed increasing online adverts for Shein, and that it was in the race to buy Topshop, which was eventually snapped up by Boohoo.

UK investors should take note, said analyst Eleonora Davi at Shore Capital. “Shein’s business model is reminiscent of that of boohoo’s test and repeat variety and targets the same demographics (‘the cheap and nasty’, as a distinguished industry veteran called it).

“Investors should be aware of the risk of intensified competition in the online and offline value spaces, initially in the US and progressively in the UK and Europe.”

Analysis of web traffic by Shore Cap has highlighted how Shein has “dramatically increased” market share in the US this year thanks to aggressive online marketing spend and is seeing similar dynamics in the UK.

Market share data showed Shein began 2021 with 13% of US fast-fashion sales, compared to 23% for H&M and Fashion Nova with 11%, but latest numbers showed Shein had jumped into the lead with a 28% share, with H&M down to 20% and Fashion Nova to 8%.

“She-what is here and now”, said Davi, “boohoo and others would be wise to take note.”

She added: “Despite the presence of many and very similar fashion businesses, only a few survive and prosper; customer acquisition and the rise in retention costs make it difficult for undifferentiated pure online players, in particular, to break even and stick around for the long haul.”


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