At Shein, you can get a T-shirt for just $6.99, a dress for $7.99, and put together a full outfit—from head to toe—for under $40…That’s almost half, or even a third, of the price for similar quality products at Zara.
Why are the prices so low on Shein? Today, I’ll objectively analyze the reasons and what we small e-commerce businesses can learn.
Built on China's unrivaled apparel and textile supply chains.
To most US and EU consumers, Shein is a global fashion brand headquartered in Singapore. But it actually started in China, first selling wedding dresses and, in 2012, transitioning to women’s fashion. It’s China’s supply chain that made Shein what it is today.
More specifically, it’s Guangzhou–China and the world’s largest clothing wholesale market + textile market + massive garment factories of all sizes.
Shein’s supply chain center is located in Panyu District, where thousands of clothing factories—most of them small, traditional workshops—are perfectly suited to Shein’s small-batch orders and fast production. There’s a village full of Shein suppliers, called “Shein Village”.
Based on skilled craftsmanship and an efficient supply chain system, workers can produce hundreds of garments per day, a speed that overseas factories can’t match. This brings to mind Ford’s “The Rouge” legendary factory a century ago and Tesla’s Shanghai Gigafactory today.
Today, Shein’s supply chain is not just limited to Guangzhou—it also extends to the surrounding Pearl River Delta and the Yangtze River Delta, with around 20k factories for production and supply. Shein has also expanded its supply chain globally, working with factories in Brazil to serve Brazilian and North American markets and Turkey for European markets.
China’s supply chain remains Shein’s backbone, due to abundant raw materials, complete and mature production chains, skilled and efficient workers, and highly cooperative factories. These advantages enable Shein to offer “ultra-low prices” while staying profitable—something that is hard to find elsewhere.
In contrast, Zara’s core supply chain is in Spain, centered around its parent company Inditex’s headquarters and in its own facilities to achieve speed and serve its physical store network.
Small-batch and fast turnaround production model
The model core is to use small-batch orders to quickly test new products and markets. Based on the vast network of small factories in China, Shein has taken this model to the next level.
Test order can be as small as 100 or even fewer.
For the first order of a new product, Zara requires at least 500 pieces, while Shein can start with just 100-200 pieces or even a few dozen. This allows Shein to minimize the risk of mistakes, as the small order size means any losses are easier to control.
Here’s an interesting behind-the-scenes story.
At first, no clothing factory was willing to take on such small orders, as the cost of running the machines for just one batch wouldn’t even be covered.
To solve this, Shein not only subsidized the factories but also shortened payment terms to one month or even less, which is much faster than the typical 90-day payment cycle for Chinese brands. This helped factories with their cash flow, and gradually, more small factories became willing to collaborate with Shein.
With the same 3,000 garments to test the market, Zara can only test 1 to 6 styles, while Shein can test up to 30. This gives Shein a much higher chance of identifying a bestseller. Once a product proves good, Shein immediately arranges bulk production, adding hundreds or even thousands of pieces based on market feedback.
This on-demand production model helps Shein significantly reduce inventory costs and waste. Shein’s inventory ratio has dropped to single digits, far below the textile industry average of 30%. Low inventory means lower costs, contributing to Shein’s low prices.
New product test orders can be produced within 7 days.
Shein’s suppliers can complete garment pattern making, samples, and production in just 5-7 days, while Zara’s fastest production lead time is 14 days. In the traditional mass production model (5,000 pieces per batch), the lead time typically ranges from 30 to 45 days.
Shein releases thousands of new styles daily and launches up to 1.3 million new products each year, truly embodying “real-time fashion”. In contrast, Zara releases new products twice a week, with around 35,000 new styles annually—something Shein can achieve in just a few weeks.
Digitalization spans the entire Shein supply chain.
Data is integrated throughout Shein’s business chain, from the initial demand collection and design to order management and production, with real-time data collection and analysis at every step.
Data-driven design
Zara is designer-driven, while Shein is data-driven.
Shein uses a proprietary tracking system that regularly scrapes data from various fashion and competitor websites, social media, and its own user data (main source).
Shein also works with search engines to track trending keywords and forecast fashion trends, while data from buyers and offline pop-up stores further support its decisions.
Using big data, Shein analyzes popular colors, patterns, price shifts, and trends. Then, instantly share these with the design team to quickly create new style designs. With the small-batch and fast-turnaround production model, these designs are rapidly tested. Compared to the broad and vague “consumer insights” approach, this method is much more specific, significantly increasing the chances of identifying a bestseller.
Digitalized procurement
Shein has developed its digital management system, with everything clearly organized: the type of fabric needed, the material quantity required per piece and order, which fabric suppliers can provide, the price per meter and total cost, etc.
Shein works with a select group of fabric suppliers who have already passed a quality audit, saving garment factories time in dealing with upstream fabric suppliers. With the textile market nearby, once an order is placed in the system, the fabric can be delivered the next day or even the same day.
Also due to its large and stable procurement volume, Shein has strong bargaining power and can secure better prices from fabric and accessory suppliers than competitors.
Digitalized manufacturing management system
During the production phase, Shein’s system precisely matches orders to the production capacity of different factories, ensuring maximum efficiency and minimizing waste. In Shein’s partner factories, screens are everywhere, displaying real-time order information, such as the number of SKUs, production quantities for each SKU, and the production ratio for each size. Every step of the factory production process and progress is updated on the platform as well.
This refined digital management allows information to flow like blood through every part of the supply chain, boosting efficiency. The value created here is passed down to end consumers, with endless fashion products, constantly rotating new styles, all available at affordable prices.
Additionally, Shein primarily sells through its online website and mobile app, with just one permanent physical store in Tokyo’s Harajuku and some pop-up shops (usually lasting 3 days) in major cities across the EU and US. This approach contrasts with Zara, which invests heavily in its physical store network. By saving on the high rent and staffing costs of physical stores, Shein can offer lower prices, being more competitive in the market.
Note that these pop-up shops typically don’t sell products directly but serve as showrooms, offering fitting services, and feature Instagram-worthy spots to encourage internet influencers and consumers to share and promote Shein items on social media.
Here’s the key to Shein’s success: becoming an industry giant like this is incredibly challenging for small businesses, but there’s so much we can learn from it.
The future of e-commerce competition boils down to three things:
Product selection – If you don’t get this right, no amount of effort will matter.
Low-cost testing and rapid iteration
Maintaining supply chain advantages
All of our most successful clients got their product selection right from the start. That alone gave them a 70% head start. Why?
Because today’s marketing strategies and traffic costs are transparent—everyone knows how it works. The real competition lies in who can test products in the market with the lowest cost to identify winning products, while maintaining a strong, stable supply chain. Everything depends on it—from improving your product, to scaling up production, to ensuring consistent quality. And let’s face it, this is no small feat for small business owners.
At Jingsourcing, we understand this. With millions of suppliers in China and countless small business owners seeking the perfect match, our mission is simple: make it easy. We connect you with high-quality factories, monitor and handle the entire sourcing process from samples to quality control, so you can enjoy a strong, steady, competitive, and efficient supply chain.
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