SHEIN’s digital market share, app strength make the case for IPO

Over the past months, rumours of Chinese fashion retailer SHEIN filing for a potential IPO in London have made headlines. The fast-fashion brand has faced steep criticism suggesting that the retailer's IPO filing is acting as a tax loophole for the retailer and, therefore, dimming its chances of being successful. Despite these valid concerns, when looking at the current digital economy trends, SHEIN is in a strong position as a leading online player in the game of fast fashion against its competitors.  

In this article, the Similarweb analyst team has examined the online presence of the key ecommerce player and uncovered that while some web metrics are down, SHEIN has established a larger digital footprint in the UK than fashion rivals like ASOS and Zara, with its app-first strategy driving a user base rivalling that of Temu and outpacing its competitors. Their successful online strategy could be a significant factor in helping the brand in succeeding its IPO and attracting both retail and institutional investors, despite critics around its sustainability and ethical practices.

SHEIN remains a champion in digital share 

Late 2023 paved the way for rapid growth in Shein web traffic, but in recent months this has fallen. SHEIN's global web traffic over Q3 2024 is down –18% year-over-year (YoY), compared to the industry trend of –8% over the same period. Despite the overall web traffic decline, SHEIN continues to attract a greater share of global traffic to fashion players of any retailer.

The decline in web traffic is not necessarily something to worry about, as the drop in traffic is counterbalanced by SHEIN's increase in app users. This is an intentional strategy from the brand as it serves its digital marketing plans to shift consumers and drive app engagement.  

App-first strategies are the priority  

Driving app engagement is part of SHEIN's strategy for continual consumer engagement. The nature of the devices in which they operate in are convenient, easily accessible and provide app notifications to remind customers of the latest offers, enabling the retailer to stay at the forefront of consumer's mind.  Additionally, an app-first strategy allows SHEIN to collect far more consumer behavioural data and tweak their strategies accordingly.

SHEIN does not miss the mark. Low price retailers are significantly driving the growth of app usage, but notably it stands out as the fastest-growing fast fashion app in Q3 2024, with a year-on-year growth of 38% in the UK. In this market, SHEIN is well ahead of its fast-fashion rivals, such as ASOS, who have also looked to adopt an app-first strategy. SHEIN has just shy of 10 million active monthly users in the UK across iOS and Android devices compared to ASOS who have just under 4 million monthly active users.  By implementing app engagement practices to acquire and retain customers, SHEIN has achieved notable success as a leader in ecommerce and budget fashion. 

The impact of AI chatbots on the digital economy – does this pose a risk on SHEIN? 

Beyond SHEIN online and app presence, part of Similarweb's research has been looking at the impact of AI chatbots on the digital economy, particularly in terms of the challenge they pose to traditional search engine optimisation techniques of attracting traffic to websites (or, for that matter, to app download pages). Even if consumers don't seek AI's advice from a service like ChatGPT, they're starting to be offered it in the context of Google search results.

An analysis conducted in Q1 2024 found that 37% of prompts included SHEIN by name when related to affordable apparel, showing a sign of brand awareness by consumers. But when consumers did not ask for brands specifically by name, the chatbots often didn't mention them in response to general questions about where to buy affordable clothing. In only 9.6% of cases did ChatGPT include SHEIN in its answers – despite its prominent brand awareness. This is similar to Chinese retailer Temu, which was mentioned in 31% of prompts related to affordable apparel, yet no mentions of the retailer were included in Chat GPT responses. 

In comparison, the likes of Zara, H&M, ASOS are often mentioned by popular AI chatbots. As we are experiencing a transition for search and SEO and heading towards a more focused AI future, SHEIN needs to keep a close eye on what opinions its consumers are expressing online which in turn influence its reputation among chatbots.  

SHEIN is in a strong position

I am not entitled to say whether the SHEIN IPO is a good investment or not, however, overall, the above highlights that the brand is in a strong position within the budget fashion segment when taking into accounts its digital market share on the web and growth in app engagement.

With phones taking charge of the wallets in people's pockets, SHEIN is pacing itself forward through its app strategy, which will allow many customers to shop at their own convenience. The app-first strategy is paying off in the UK and could, therefore, be a reason why the retailer turned to the London market for its IPO. Despite the mixed sentiments in AI, SHEIN still holds a high share of direct visits and welcomes a large online community on social media, highlighting that the brand holds strong engagement. There is no doubt that SHEIN pioneers in its success and strategy– inviting customers to keep coming back