Shein Shifts Shipping Strategy to Bring China-Made Goods Closer to US Shoppers

E-commerce giant Shein is sending more low-priced apparel and home goods to US warehouses from China to speed up shipping times for shoppers, according to data from global trade analysis firm ImportGenius provided exclusively to Reuters.

Shein, known for its $10 tops and $5 biker shorts, until recently has made many American purchasers face wait times of up to two weeks or more to receive their goods. This, say analysts, has put the fast-fashion e-tailer at a competitive disadvantage to bigger rivals such as Target, Walmart and Amazon.com, particularly during the holiday shopping season.

Analysts told Reuters that Shein would likely continue to expand its bulk shipments to the US in a bid to compete with established retailers on delivery times as it eyes an initial public offering.

The import data seen by Reuters shows Shein's efforts to narrow the speed gap with retailers such as Amazon, which has made a push to offer next-day or two-day shipping to shoppers who pay $139 per year for its Prime membership service.

The move also marks a strategy shift for Shein, which has traditionally flown goods directly from China to shoppers. Shein lacks any physical stores in the US.

According to the import data seen by Reuters, Shein's ocean shipments of apparel have increased more than 2,000 times over the last two years, soaring from 312,385 pounds (141,695 kg) imported in bulk on container ships in 2021 to over 6.8 million so far this year. Virtually all came from China, where Shein relies on a network of suppliers to produce its expansive assortment of low-priced merchandise.

In 2022, Shein opened a warehouse in Whitestown, Indiana, where it generally stores that inventory to then be shipped to shoppers within four to seven business days.

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Shein had already launched a faster delivery option for goods stored in the US, called "QuickShip," in 2022. The same year, the retailer's bulk imports brought to the US by ocean freight increased by nearly 790%, from over 312,000 pounds to more than 2.7 million, according to the ImportGenius data.

Goods eligible for QuickShip are delivered significantly faster than Shein's standard shipping times, which can range from nine to 14 days, according to estimates on its website.

Facing long waits, shoppers will likely make "infrequent" purchases from Shein, particularly during the key holiday shopping season, analysts at UBS said on Tuesday.

The ImportGenius data did not provide detailed descriptions for Shein products imported in bulk on container ships. Importing high-demand products in bulk helps Shein save money, a person familiar with Shein's strategy said, as ocean shipping is significantly less costly than air freight.

Shein still sends the majority of its merchandise by air in individually addressed packages - most of which enter the US under the "de minimis" trade provision that exempts them from tariffs.

A June report by a US House of Representatives committee estimated that Shein and China-founded e-tailer Temu, owned by PDD Holdings, bring in nearly 600,000 packages a day under the exemption. Shein declined to comment on the estimate.

Shipping goods by air directly from China is a strategy that helps the e-tailer avoid unsold inventory piling up in warehouses, according to Juozas Kaziukenas, founder of e-commerce analytics firm Marketplace Pulse. Prior to 2020, Shein imported no clothing by ocean freight, according to the ImportGenius data.

Shein has said it plans to increase its US storage space with an expansion of its Indiana facility and a new warehouse in Cherry Valley, California, expected to open within months.

French cosmetics giant L'Oreal reported a 5.3% rise in second-quarter sales, below expectations and likely further rattling investors already worried about the lack of rebound in the important Chinese market.

The Paris-based company, which owns the Maybelline and Lancome brands, said on Tuesday that sales in the quarter reached 10.88 billion euros ($11.75 billion), up 5.3% on a like-for-like basis from a year earlier, but undershooting the 5.9% growth seen in a consensus compiled by Visible Alpha.

The company reported negative growth in the North Asia region, hit by weak consumer confidence in China and compared with the strong surge in demand at the same time a year ago.

L'Oreal CEO Nicolas Hieronimus had said last month that the global beauty market was growing more slowly than earlier predicted, at about 4.5%-5%, largely due to a lack of rebound in the Chinese market.

Shoppers in China, which has been one of the world's fastest growing beauty markets, are cutting back on spending over worries about job insecurity and a prolonged real estate slump.

The world's No. 2 economy grew less than expected in the second quarter, prompting consumers to buy fewer creams and lipsticks, both online and in stores.

L'Oreal, whose products span the mass market to the high-end luxury segment, had been expected to outpace its peers, but still see the impact of broadly slower growth.

Its sales in North Asia, which come mostly from mainland China, were down 2.4% like-for-like, compared with a decline of 1.1% in the first quarter.

"In mainland China, the beauty market was negative in the second quarter on a tough comparison base, exacerbated by lasting low consumer confidence," said the company in a statement.

Luxury bellwether LVMH last week said its perfumes and cosmetics sales grew 4% in the second quarter, slowing from 7% in the first three months of the year.

Shares in L'Oreal, Europe's 6th most valuable listed company, with a market capitalization of about 211 billion euros, have lost 12% so far this year, compared to a 31% fall at US peer Estee Lauder.

Shein Shifts Shipping Strategy to Bring China-Made Goods Closer to US Shoppers