Friday, June 21, 2024

Shein Reenters India in Partnership with India’s Largest Retailer – Reliance Retail

The US #2 shopping app and one of the world’s largest fashion retailers, Shein reenters India after facing a three-year ban from the country back in 2020. Previously, Shein made a comeback in India in 2021 by selling products on Amazon India. However, now the company is reentering much stronger through the partnership with Reliance Retail, India’s largest retailer.

Shein is a globally well-known online fashion and lifestyle retailer brand. It has witnessed massive growth in the US and other countries. Therefore, let’s talk in detail about Shein, especially highlighting its return in the Indian market.

  1. Shein – A Quick Overview
  2. Shein Ban in India and Its Scrutiny by Congress in America
  3. Shein Used Amazon to Avoid India’s Ban
  4. Shein Reenters India with Reliance Retail
  5. Why does Shein want to reenter India?
  6. Shein & the US IPO in 2024
  7. Wrapping Up

Shein – A Quick Overview

Shein is a China-based direct-to-consumer (D2C) fashion brand that was first launched in 2008 in China by Chris Xu. It offers a wide range of fashion items, including men’s, women’s, and kids’ clothing, stylish accessories, and much more. It is basically the Chinese version of H&M.

After 6 years of its launch, it entered the US market in 2014. Over the years, Shein gradually became one of the world’s best fashion retailers. In fact, it now has customers across 150+ countries in the world. Today, it is the #2 shopping app on the App Store, even surpassing Amazon. 

One of the reasons behind Shein’s success is affordability. Unlike H&M and many other fashion brands, Shein designs and manufactures almost all its items. In contrast, other brands work with a wide range of designers and suppliers. So this helps Shein to ensure high-quality products at a much lower cost.

Secondly, Shein’s main target consumer group in GenZ, which is known to consume trend-led clothing from cost-friendly retailers. That’s why today Shein is worth around $66 billion.

Shein Ban in India and Its Scrutiny by Congress in America

Shein was banned in India in 2019, along with 58 other apps. The main reason was the Himalayas border dispute between India and China.

Other than India, Shein also had to deal with scrutiny from Congress in America. Shein was not alone in scrutiny, as many other Chinese apps were also concerning the Congress, such as TikTok and similar others. However, the scenario was a bit different for Shein.

In the case of TikTok, the scrutiny was mostly related to privacy controls. However, the Shein scrutiny was mainly about ethical concerns for its product, such as forced and unpaid labor. Despite the scrutiny, Shein is still working in the US and dominating the fashion marketplace.

Shein Used Amazon to Avoid India’s Ban

Soon after the ban, Shein reenters India using Amazon. Since Amazon was fully operational in India and it allowed any brand to sell on its platform, Shein took it as an opportunity to reenter India.

The company made an announcement that it was returning back to India by selling on Amazon. Although it did raise scrutiny by some Indian lawmakers, still no action was taken.

Despite selling through Amazon, Shein has now announced proper “Shein reenters in India” through its strategic collaboration with Ambani’s Reliance Retail, India’s largest retailer.

Shein Reenters India with Reliance Retail

Reliance Retail is an Indian retail company that runs a massive network of convenience stores, supermarkets, and online stores. Its retail outlets offer groceries, food, footwear, toys, apparel, and much more. Today, it is India’s largest retailer in terms of revenue. The company is currently valued at $100+ billion.

It is now confirmed that Shein and Reliance Retail have made the licensing agreement in which Shein no longer needs to get approval from the FDI Proposal Review Committee of the Indian government. This is because the company does not intend to make any equity investments in the Indian company.

The Shein reenters India with Reliance Retail also involves granting its license of technology and trademarks to Reliance Retail. Basically, both are working to introduce exclusive retail e-commerce platforms specially designed for Indian customers.

The advantage for Shein in this deal is that it can isolate itself from political-motive scrutiny. In addition, it also makes the company align itself with India’s growing emphasis on increasing domestic economic growth, job creation, tax revenue, and local production. In addition, it also tackles data security concerns because Shein is able to isolate its Indian platform from the global Shein app. This means that the data of Indian consumers remains within India.

Why does Shein want to reenter India?

For the past many years, Shein has been working on diversifying its supply chain and reducing reliance on China. That’s the reason it has operations in over 150+ countries and serves millions of customers.

India is home to the world’s largest population and also the fastest-growing economy in the world. Therefore, Shein knows the market potential in India. That’s why it first reentered the market with Amazon in 2021 and now with the Reliance Retail partnership.

Shein’s partnership with Reliance Retail will also help the company to leverage the logistics infrastructure, sourcing capabilities, and warehousing facilities of Reliance Retail. In addition, this collaboration will also involve the participation of around 25,000 MSMEs (micro, small, and medium enterprises) in Shein’s sourcing.

In short, Shein reenters India is not only beneficial for the company but also going to create new local jobs and contribute to the Indian economy as well.

Shein & the US IPO in 2024

Shein reenters India is not the only news to consider for now. Shein is also actively trying to go public in the US. The company even tried it in 2020 but delayed it because of the US-China tensions.

As per the latest news, Shein has confidentially filed for a 2024 IPO in the US. Looking at the revenue stream of Shein, it will be one of the largest IPOs in the US by a Chinese company. It will also help boost the IPO market, which has been mostly slowed since 2021. According to Bloomberg, Shein targeted up to $90 billion in the float.

Back in 2023, China introduced many strict regulations for China-based companies to list overseas. That’s why Shein is seeking Beijing’s permission for a US IPO. This move is believed to increase complications in the listing plan because of the added scrutiny by US politicians. In fact, the US lawmakers of a bipartisan group have called on the SEC to prohibit the IPO of Shein until it confirms that it does not use forced labor.

In short, Shein’s IPO is still not clear. The company has filed for an IPO and is trying its best to succeed in this race. This will not only help the company to grab substantial capital but also play a key role in increasing its global presence and new innovations.

Wrapping Up

Shein reenters India is great news for Indian consumers who want premium-quality products at a cost-friendly rate. The collaboration with Reliance Retail will eradicate most of the political hurdles and make Shein effectively grab the Indian market. On top of that, the Shein fast global expansion and the target for US IPO in 2024 are also in line. Therefore, many interesting developments are going on for Shein. So, let’s see how 2024 turns out for Shein.