Fast fashion juggernaut Shein has confidentially filed to go public, multiple sources report. The IPO, which people familiar with the matter said could happen as early as 2024, has the potential to be one of the biggest in years, according to the Wall Street Journal.
Rumors of an IPO for the discount app have swirled for over a year now as Shein has continued its meteoric rise in the U.S. and the world. The app first rose to prominence during the pandemic, as home-bound shoppers were drawn in by its vast range of value-priced, on-trend fashions. Then, earlier this year, Shein began to expand beyond fashion, taking on competitors like Amazon and Temu more directly with the debut of its third-party marketplace, which has brought in a range of new product categories from beauty to electronics.
Chinese Manufacturers: Shein’s Advantage & Achilles Heel
The app’s small-batch, on-demand production model — which leverages its direct connections to Chinese manufacturers and allows the company to turn around new designs in a matter of days when demand hits — is one of the biggest factors in its success, but it is also one of the biggest hurdles to Shein’s IPO ambitions.
As Shein has grown in the U.S. it has faced mounting scrutiny from lawmakers, as well as a lawsuit from rival Temu alleging anticompetitive practices with the Chinese manufacturers both apps rely on. In June 2023, a House Select Committee investigating “the threat posed by the Chinese Communist Party (CCP)” named both Shein and Temu as a focus in its investigation into the illegal use of forced labor. Then in September, a bipartisan group of 22 lawmakers from the U.S. House of Representatives issued a letter urging the SEC to require that Shein certify that it does not use forced labor before the company is allowed to launch a U.S. IPO. Shein has repeatedly denied these charges, saying that it has “zero tolerance for forced labor.”
Shein Makes its Case
Amid all this drama, Shein has been steadily working to enhance its legitimacy in the U.S. business world, most notably through its new joint venture with the U.S.-based Sparc Group, which owns fast fashion rival Forever 21. Sparc Group is now a minority stakeholder in Shein, and the partnership already has led to a number of joint pop-up events at Forever 21 stores as well as co-branded apparel on the Shein app.
In a further sign of its Western ambitions, Shein also bought UK women’s retailer Missguided from Frasers Group in late October 2023, with Shein Executive Chairman Daniel Tang saying at the time that the deal “ushers in a new format of partnerships for Shein.”
But the biggest tell that an IPO was forthcoming might have been the abrupt late-October announcement that Temu and Shein had jointly agreed to drop their lawsuits against one another. Perhaps the rivals decided that the U.S. was big enough for them both and their efforts would be better spent on larger goals.
While the IPO filing is a positive sign for Shein, CNBC did note that a confidential filing, while common, is typically a sign of caution, as it “allows companies to communicate with the U.S. Securities and Exchange Commission and make any necessary adjustments to their filings in private” before going public.
The only thing that is certain is that nothing is certain in the ongoing, tumultuous saga of Chinese shopping apps in America — just ask former top dog Wish.