Shein becomes a marketplace in Brazil

April 26, 2023 by
Frank Calviño

Shein has become a full-fledged marketplace in Brazil, from which it will begin to offer, in addition to items from its collections, products from third-party brands. Shein had been preparing its leap to the marketplace model for several months.

The company kept as a strategic objective to continue boosting its business model, to take advantage of the full potential of its online commerce platforms to begin to accommodate the articles and products of third-party brands. 

Proof of this was the alliance that the company established with Amazon in July 2022 to start selling its products through the marketplace, but Shein's managers were apparent that they wanted to sail alone.

During the past year, Shein carried out a series of pilot programs both in Brazil and Mexico, which have already ended with the formal conversion of Shein's platform in Brazil into a marketplace open to the offer of third-party brands. 

Shein will seek to empower and help a broad community of local brands, thus advancing in its commitment to nationalizing 85% of its sales in the next four years, as announced by Fernando Haddad, the country's Minister of Finance.

Shein rides the fading wave of fashion e-commerce

Shein's bet on a marketplace approach makes a lot of sense if we look at the current state of global fashion e-commerce. After experiencing 18 months of robust growth (early 2021 through mid-2022), the fashion industry is again facing a challenging climate.

Hyperinflation and depressed customer sentiments have already resulted in declining growth rates in the second half of 2022. The slowdown is likely to continue through 2023.

Many industry players are in a stronger position than they were a year ago, however. The fashion industry delivered a 21 percent increase in revenues in 2020–21, and EBITA margins doubled by 6 percentage points to 12.3 percent.

So, what does this mean for Shein? Well, being Shein one of the biggest global ‘fast-fashion’ - or cheap fashion - brands - if not the biggest globally - the creation of a marketplace aims at removing and reducing all possible middleman-costs of selling using other platforms, such as resellers or even other marketplaces such as Amazon. 

Shein is trying hard to directly reach their end-consumers and thus increase as much as possible profitability in a complex 2023 and with a complex product - fast fashion - that, by definition, already has highly tight margins.

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