After facing a ban of four years, Chinese fast-fashion brand Shein is going to return to the Indian market through Reliance Retail. Shein has started testing and cataloging its collection on Ajio, the online platform of Mukesh Ambani-led Reliance Retail. Reliance will expand this brand to its other platforms. This will further intensify Reliance’s competition with Tata Group’s Zudio and Flipkart’s Myntra in the affordable fast-fashion segment in the Indian market. The government banned 50 Chinese apps including Shein in 2020 amid rising tensions over the India-China border dispute. Shein will not have access to Indian data
However, recently, Commerce and Industry Minister Piyush Goyal told the Lok Sabha that Shein’s operation will be on an indigenous retail platform of the country. Shein will not have access to the data of the platform. Shein is re-entering the Indian market at a time when its revenue growth has seen a decline. In the first half of this year, Shein’s revenue growth has come down from 40% last year to 23%. According to RedSeer Strategy Consultants, the fast fashion segment grew 40% in India last financial year, which is 5 times the 6% growth of the total retail segment. By 2031, this market will be worth 4.5 lakh crores. Shein sold clothes worth 3.83 lakh crores last year
App-based e-commerce company Shein has a presence in more than 170 countries. It has 5.3 crore users. Its growth in the US is increasing surprisingly. By November 2022, Shein’s share in US fast-fashion sales had reached 50%, which was 12% in January 2020. After shifting its headquarters from China to Singapore, Shein made a profit of 17 thousand crores in 2023. Products worth a total of Rs 3.83 lakh crore were sold. Here in questions and answers, understand what impact this deal will have on the Indian market… Meaning of the Reliance-Shein deal? Chinese brand Shein will get access to 19 thousand stores of e-commerce platform Ajio and Reliance Retail. Reliance Industries is the world’s largest polyester fiber and yarn producer. Annual capacity is 25 lakh tonnes. Shein’s products contain polyester in abundance. This will support its manufacturing. Reliance aims to double its retail business in 4 years. The affordable range of clothes will help it increase its customer base. In the financial year 2024, Reliance’s income from retail business grew by 18% to Rs 3.06 lakh crore. What will be the impact on the Indian market?
This agreement will increase competition among fast-fashion companies. This may force established players to reduce their strategy and prices. Shein may pose a new challenge to big e-commerce platforms like Myntra as well as stores like Joodios, Lifestyle and Pantaloons. Zara and H&M may also have to change their strategy. Why can Shein change the market?
Shein’s strength is to identify fashion trends in a short time and bring them to the market. That’s why it is popular among Gen Z (12 to 27 years). The company brings 1.5 lakh new items every year. On an average, 10 thousand every month. Its dress is 50% cheaper than other fast fashion brands. Who has influence in this segment?
Tata Trent’s Zudio is the fastest growing in this segment in the country. One-third of Trent’s total income comes from Zudio. There are 559 stores in 48 cities across the country. Despite being smaller in size than Reliance Retail, its growth is fast. In the financial year 2023-24, Trent’s sales grew by 50% to Rs 12,375 crore and net profit increased 4 times to Rs 1,477 crore.
