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Shein Moves Into the US Market, But May Struggle to Recruit 3P Sellers

After testing the waters in Brazil, Chinese fast-fashion giant and the world’s most downloaded shopping app, Shein, now appears to be finally moving into the US market and is adding new sales categories, such as Home and Beauty, to further compete with similar eComm retailers. 

Marketplace Pulse CEO, Juozas Kaziukėnas, recently came across multiple job openings posted by Shein on LinkedIn for positions in California. One of the newly posted positions is for a Senior Business Developer for the company’s US marketplace, whose primary responsibility will be to identify and pursue new business opportunities.

In addition, Shein is also seeking to fill the role of AML Compliance Officer – Global Operations Center, USA to “lead, oversee and ensure effective execution” of compliance and anti-money laundering initiatives in the Americas. Other available positions include a Supplier Management specialist and an Inventory Clerk.

This move comes after Shein revealed its plans to build 3 large distribution centers in the US to keep up with soaring demand and to shorten shipping times by 3 to 4 days. The retailer directly ships orders from China to over 150 countries and the standard shipping time for US customers usually takes 1 to 2 weeks, which has left many feeling frustrated.

By contrast, Amazon only takes about 1 to 4 days to get orders delivered across the mainland US, all made possible by its vast fulfillment network, including pickup locations at Kohl’s, Whole Foods, and Amazon Fresh.

According to Shein, they have been using both air and ocean freight for global shipping, but they are now exploring ways to identify more products that can be moved cost-effectively by sea. They’re also looking to source goods from locations closer to customers.

Last month, the etailer said it will invest almost $150 million in Brazil to build out its own network of manufacturers in the region. The money will be used to “provide tools and training for factories to upgrade their traditional production models” and “enable local producers to better manage orders, reduce waste at the source and lower excess inventory.”

Meanwhile, over the US, Shein is making strides to enhance its first distribution hub’s capacity by 50%. The company is also gearing up to launch a second center in California in 2023, with plans to introduce a third one in the Northeast with a yet-to-be-revealed timeline, the Journal reports.

Aside from significantly cutting shipping times, Shein also hopes to attract more local third-party sellers with its US expansion, which other Chinese eComm marketplaces like Alibaba and  TikTok have reportedly struggled with.

Shein needs American sellers to introduce more variety to its mostly Chinese-based product selection. However, retail experts interviewed by Modern Retail believe that the company might also suffer the same fate as its Chinese contemporaries.

According to Ryan Craver, Founder of Commerce Canal, Shein’s pricing strategy “works well” for Chinese merchants that have the same fast-fashion mindset.

“But it’s very difficult for US sellers and operators because the price point is so critically low,” which not only reduces the perceived value of a product, but also forces local brands to drop their prices in order to win the price war versus Chinese merchants.

Therefore, selling on Shein might feel like a race to the bottom for US sellers, especially those in the mid and upper-range markets.

Shein might have an answer to that, though. In 2021, the retailer launched a premium clothing brand called MOTF. Prices range from $5 to over $100 depending on the type of product and material.

The Journal reports that Shein aims to sell more high-end products with greater profit margins, but they may struggle to attract customers with a week-long lead time, hence why the company is doubling down on its fulfillment expansion plans.

So, perhaps until Shein has successfully gained a deeper foothold in the country with multiple distribution centers and a more favorable pricing strategy, only then will US sellers find the marketplace a viable contender to Amazon and other sales channels.

Related: Should You Be Selling on These New Sales Channels?, TikTok Gears Up for US Market Entry

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