Shein is recognized around the world for selling fashionable clothing items at reasonable prices online. By offering a wide variety of products at low costs, Shein has become very popular with people who enjoy fashion across the world. Besides, Shein is popular across the world and has rapidly earned a reputation as a place where shoppers can affordably buy the latest styles. Yet, Shein has cut its ties with Israel.
Shein no longer gives free shipping to Israel, has prohibited selling Israeli flags on the site, and has ended its relationships with Israeli influencers.
Israeli consumers responded with complaints and a boycott when Shein decided to sell Palestinian flags but not Israeli ones. For this reason, Shein implemented these changes. Some Israeli customers saw their orders covered with the colors of the Palestinian flag, and Israeli influencers learned that Shein was halting their participation in paid campaigns indefinitely.
Why did Shein stop collaborating with Israeli influencers?
Due to boycotts and negativity, when Shein decided to sell Palestinian flags but not Israeli ones, it stopped working with Israeli influencers. Israeli customers were furious about this and accused Shein of supporting Hamas, which is a terrorist organization, and set out to boycott the business. A near-permanent suspension of collaborations was indicated when Israeli influencers were emailed to inform them of campaign postponements and to refrain from posting about Shein. Even though there has been a lot of criticism from Israeli customers, these activities seem to be Shein’s method of demonstrating solidarity with Palestine amid the ongoing Israel-Gaza war.
How has Shein’s decision influenced its sales in other countries?
So far, it seems that Shein’s decision to end its partnership with Israel has not negatively affected its international sales. With business in over 150 nations and over 100 million app downloads, Shein remains one of the biggest players in the US and European fast fashion e-commerce arena.
Shein’s achievements are largely driven by its ability to offer low prices, respond to trends efficiently, use a nimble approach to manufacturing and shipping, and depend greatly on social platforms and micro-influencers to market to Gen Z internationally. Shein has expanded greatly outside of China by building more manufacturing and distribution facilities, for example, by setting up new centers in Europe and Turkey, at the same time continuing to face possible US import tax changes and criticism about its labor standards.
Also, despite the difficult geopolitical situation, Shein’s sales in critical regions like the UK expanded at a rapid rate, surpassing local fast fashion behemoths with a 38% sales increase for 2024 (£1.55 billion) and more than doubling pre-tax profits.
What are the main challenges Shein faces in its largest markets?
In its biggest markets, namely the US and Europe, Shein faces many significant obstacles that could affect its expansion, financial success, and standing:
1. Tariffs and trade policy changes
One major risk is that the US de minimis exemption could go away, which allows Shein to bring in goods less than $800 duty-free. Forcing stricter customs inspection procedures and duties on Chinese imports might mean Shein has to charge higher prices, compromising its main value proposition of reasonably priced clothes. Shein is attempting to mitigate this by increasing production in other countries like Vietnam and Turkey to diversify its manufacturing; however, changing garment factories takes time and money.
2. Labor and supply chain issues
Shein’s supply chain is on constant review for forced labor and poor working conditions allegations, particularly with suppliers and factories in the Xinjiang region of China. These types of supply chain issues make it more difficult for Shein to obtain a public listing through its planned IPO, and they have led to regulatory scrutiny and criticism from activist organizations. Building back trust is still a serious problem despite the company’s direct investments in supplier audits, compliance programs, and partnerships with impartial organizations intended to increase labour standards and transparency.
3. Supplier relations and competition
Other international e-commerce sites like Temu, AliExpress, and TikTok are posing a serious threat to Shein and are drawing in talent and suppliers. Furthermore, some suppliers have become dissatisfied with Shein’s stringent quality control and price verification procedures, which have resulted in lower order quantities and even supplier walkouts. This might affect product availability and profitability.
4. Sustainability and reputation concerns
Shein is criticized for its quick fashion approach due to ethical, sustainable, and environmental issues. Brand perception is impacted by unfavourable press releases regarding labour practices, cultural insensitivity, and product quality. These issues have caused several influencers to break off their relationships with Shein, which may affect the efficacy of marketing and customer confidence.
What impact do US tariffs have on Shein’s profitability?
The new tariffs on Chinese imports (including the elimination of the de minimis exemption for shipments valued below $800) have significantly impacted Shein’s margins in its most significant market. This de minimis exemption helps Shein keep extremely low prices and maintain its competitive advantage in the US market by permitting the duty-free importation of low-value products. Since the exemption was lifted, Shein’s operational costs have increased significantly due to tariffs that can exceed 120% or set fees of up to $200 for each shipment.
Shein has increased prices in the United States by as much as 5% to 50% to offset these tariff-induced cost increases; the biggest increases have been seen in some categories, such as games, toys, cosmetics, and health products.
Because of its initial cheap pricing strategy, experts say Shein’s prices remain competitive when compared to traditional US retailers, even with these hikes. The price increases, however, run the risk of decreasing consumer demand; according to research, almost 30% of consumers may cut back on or quit buying if costs keep rising.
Shein has also been compelled to reevaluate its US business structure as a result of the tariffs. To reduce tariff exposure and preserve margins, the company is considering restructuring options, such as moving production and fulfilment from China to nations including Turkey, Vietnam, Mexico, and Brazil. Shein’s intended London IPO and profitability both depend on this reorganization, which could be in jeopardy if tariff constraints continue to severely reduce US revenues.
Does Shein support Israel?
There’s no evidence that Shein is publicly supporting Israel or engaging in activities that support Israel. Rather, the recent controversies related to Shein relate to other issues (product safety, compliance, supply chain ethics, and US tariffs). In the results, there was no evidence of support for Israel by Shein or anything related to the Israel-Palestine conflict at this time.
