Memo: online fast fashion retailer Shein is exploring becoming a marketplace for third-party merchants and started diversifying its supply chain away from China
The fast-growing company founded in China has also begun diversifying its supply chain to Europe, according to memo to investors Tweets: @astaniscia86 Tweets: Giulio S. / @astaniscia86 : Shein is on track to generate revenue of $24 billion in 2022. Creating a marketplace would put Shein in more direct competition with AliExpress and Amazon. https://www.wsj.com/... https://twitter.com/...
Context & Ripple Effects
Eight months after influencer-driven growth gave Shein a 28% share of the US fast-fashion market, private-market investors had already marked the company down from $100B+ to a $65B-$85B range, and this memo signals how management plans to defend that value: stop being purely a retailer. Opening the site to third-party merchants would convert Shein's traffic into a two-sided marketplace, directly overlapping AliExpress and Amazon's territory.
The second half of the memo — moving supply chain capacity from China toward Europe — reads as preparation for the endgame the related coverage later confirms: a confidential US IPO filing in late 2023, with Shein caught between American regulators and its Chinese origins.
First-order effects
- A marketplace puts Shein head-to-head with Amazon and AliExpress on their home turf of third-party selection, while giving outside brands a new low-cost channel built on Shein's ~$24 billion annual revenue base of shoppers.
- Shifting production toward Europe immediately raises cost complexity for Shein's sourcing operation but reduces single-country concentration in its supply chain at exactly the moment it needs a politically sellable story.
Second-order effects
- Amazon and AliExpress face pressure to respond on price and onboarding friction for small fashion merchants, since Shein's edge is a captive audience already trained on rock-bottom prices rather than paid acquisition.
- Once the supply chain is opened up, it becomes a product itself — which is precisely what happened when Shein later pitched a supply chain as a service offering to outside brands and designers.
Third-order effects
- The pattern points to vertically integrated Chinese-founded retailers converting their logistics advantage into platforms — but the later report that Shein's marketplace struggled to attract merchants suggests the merchant side of that flywheel is harder than the demand side.
- Geographic de-risking of the supply chain looks less like cost optimization than a listing prerequisite: as the US-China tensions coverage shows, Shein's ability to go public hinges on distancing the brand from China even as its operational DNA stays there.
The trend: Chinese-founded e-commerce giants are repositioning from pure retailers into third-party marketplaces and infrastructure providers while relocating supply chains westward to clear the political bar for Western listings.