Shein is a global phenomenon. Consumers are smitten with the Chinese retailer’s heady blend of hot fashion and low prices. From 2019 to 2021, revenue increased by 398% and although growth has slowed since then, the company has ambitiously predicted sales of $60 billion by 2025.
Shein has a loyal South African fan base and its share of spending among 22seven users has increased significantly – we have shown previously that this market share is composed of a relatively small number of customers spending relatively large amounts, especially when compared to the average transaction values at competitors.
Shopping at Shein is not as simple as one might expect from the world’s largest online-only fashion company. Since all items are manufactured in China and shipped from there, delivery times are slow and customs fees come into play. Similarly, returning items is a headache.
But local consumers seem quite happy to overlook these issues. 22seven users are just as likely to shop at Shein as they are at well-known brands like Cape Union Mart or Zara.We wanted to find out why, by asking this question: How do consumers arrive at the decision to purchase from Shein?
The starting point is to assume that every consumer is on a journey. Decisions about where to spend money are informed by the user’s needs, wants and current circumstances. Such decisions are also informed by past transactions and the purchase and product experience of transacting with other retailers.
In the research note Mirror, mirror, we provided quantitative evidence that success in the apparel market is dictated by variety and choice, especially when attracting customers in higher income brackets. If anything Shein offers plenty of choice!
In this report, we seek to understand the purchase decisions that precede a Shein purchase: What experiences did the customer go through to make them decide to shop on a foreign platform with import duties, that takes two weeks to deliver? Also, which purchases did this customer forgo when they moved to Shein?
The beauty of Insights data is that we have sight of a user’s entire purchase history over time. For this analysis, we identified all 22seven users that transacted at Shein in 2022. There are 4,450 of them.
Next, we sequenced all of these users’ apparel transactions at more than 125 clothing and footwear retailers, ending up with each user’s purchase journey until the moment they decided to buy from Shein.
To make it easier to explain the methodology and findings, we’ll focus on users earning R25 – 40k pm. We’ll highlight where the findings differ in other income groups.
What does a Shein customer look like?
The chart below shows how 22seven users who shopped at Shein allocated their total apparel wallet during 2022, compared to those who didn’t shop at Shein.
The first insight from the data is that Shein shoppers are valuable apparel customers. Controlling for income, these customers spent R1,062 a month on apparel in 2022, more than 2x what non-Shein shoppers spent.
Next, these Shein customers spent 20% of everything they spent on clothing and footwear in 2022 at Shein. That’s a lot!
The split of the other 80% is shown on the top right pie chart, where TFG, MRP, Superbalist, Retailability and PEP make the top five by share.
The spending split by users who didn’t shop at Shein has similar proportions, but the difference (shown in the lowest chart) shows that Shein customers spend more on average at Zara, Superbalist, PnP Clothing and Pep, and less at Sportsman’s Warehouse and Cape Union Mart.
At the risk of stereotyping, this evidence suggests that Shein customers are more likely to be female. (Shein mostly sells women's clothing.)
Which retailer is the gateway?
Now let’s look at the sequence of purchases preceding a customer’s first Shein transaction. The example below depicts a 10-purchase journey for a random user in our sample. Seven apparel transactions before this user spent R1,578 at Shein, they spent R499 at a TFG store. The very last purchase before they clicked ‘buy’ on za.shein.com was R650 at Tekkie Town.
Does a user’s behaviour change in the lead-up to the first Shein purchase? Our hypothesis is that the proportion of spend for all users in the sample should be the same at each point leading up to the Shein order.
To test this, we aggregated all the user journeys and compared the spending share immediately before the first Shein order (the green block above) with transactions earlier in the users’ history (the red block).
We’re delighted you’ve read this far. But research is only valuable if it’s exclusive. To be fair to the retailers and investment teams who subscribe to Insights, we have to say goodbye before we get to the juicy bits. Contact us to find out how our research can help you.
Simon Anderssen | simon.a@22seven.com | +27 84 730 0309
