While it's commonly understood that inexpensive products often use lower-quality materials, the chart from Johannes Stefan using EDITED data offers a revealing perspective. Still material cost is not the only point of differentiation between typical brand sourcing from Bangladesh and Shein
If we assume average price for a branded t-shirt is EUR 29 (In line with CleanClothes study) then Retail cost take 17, brand profit EUR 3. Real production cost is only EUR 5! Shein can have that delivered to your doorstep for EUR 8-9. How?
No expensive store and staff. Only taxes and marketing spend. Shein does not spend like Temu (who apparently spent $3B while targeting $13B GMV⊠23% of GMV!). Letâs assume its 5% of GMV (e.g. Allegro spend 1M out of 58, 2%). Here you can find old study comparing retail vs ecommerce.
Shein take rate expected to be somewhere between 5-10% vs 12% in the typical âbrandâ as calculated by Clean Clothes Campaign
Typical brand spends 8% but this do not account for last mile (just transport to store). Some report suggest, Shein transportation cost (including duties) is below 20% of GMV. Temu, Shein are using âThe de minimis loopholeâ meaning cheap staff can be transported into the U.S. tax free. The dollar amount of tax-free stuff you could ship was raised from $200 to $800 in 2015, and then online retail kind of exploded.
None. Shein works directly with factories
For simplicity we can assume it is same as in branded. In reality I can imagine Shein with its scale gets better conditions than âtypicalâ brand
85% of Shein products have polyester (Almost double vs Zara and H&M) which is way cheaper than natural materials. Leading apparel brands use it to drive cost down.
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