We already know Shein is trash

Fast fashion slop-peddlers Shein made headlines in May for acquiring sustainable retailer Everlane. 

While I think this is actually a “private equity ruins everything” story, I’m going to focus on why fast fashion fucking sucks for now. Just know, Everlane was sold to Shein by private equity firm L Catterton, who were a majority owner for only like 16 months before they cut and run. I find the current discourse that this proved consumer’s commitment to sustainability was nothing more than an affluence marker to be exhausting. IMO, Everlane lost it’s relevance when they fired their support staff for trying to unionize.

I should also caveat — I’m not immune to fast fashion. I worked at Zara in 2005. I shopped at H&M when I was in college. I bought clothes from Mango and ASOS when I needed plus-sizes. I don’t want to blame individual shoppers for what is ultimately a failure of regulation. It simply should not be possible for companies like Shein to pollute so much and treat workers so poorly. At it’s heart, this is a governance problem. 

Shopping at Shein fucks with your cognition

It’s not uncommon for retailers to use little psychological tricks to get you to spend more money — like limited time sales or a gift with purchases over a certain amount. But what Shein does ventures into what we call deceptive patterns in UX. They’re being investigated by the FTC for this, by the way. Here are some common tricks:

• creating a false sense of urgency using countdowns, timers, or item scarcity
• using social proof to make items appear in-demand
• making products seem expensive or premium, even if they’re not
• using loss aversion to get shoppers to act before thinking

And here’s how they show up on Shein’s website:

Shein makes it’s money by rushing people through the conversion funnel before they’ve thought about what they’re buying. You can feel the frantic speed when browsing their website. It’s also how they develop products: Shein garments go from designs to being sold in just 10 days. Trends fly by at a lightening pace. I’d argue that people don’t even really like fast fashion, most garments get thrown out after a couple of wears. In the US, people throw out 82 lbs of clothing each year, and 85% of all textiles end up in a landfill anyway. Manipulating people into buy shit they don’t like is kind of a bad business model.

2x failures to go public

After trying and failing to get listed on the New York and London stock exchanges in 2024, Shein got approval in July to be listed on the Hong Kong market. I’m not big into stock market happenings, so I had to look into if this is weird or not.

In 2024 as Shein was trying to list in New York, CNBC reported their IPO was ‘dead’ due to increased scrutiny on Chinese-founded companies, concerns about user data being shared with China’s government, plus the allegations of forced labour in their operations. The London attempt failed too with Britain’s Independent Anti-Slavery Commissioner raising the same concerns about forced labour in Shein’s supply chain. 

I found this interesting, around this time Shein was rejected for a membership in the National Retail Federation (NRF), an US retail industry lobby group. Other NRF members were apparently not impressed by Shein’s use of US tariff law loopholes, allowing them to ship direct to consumers and not pay import duties on packages valued under $800. To compare, H&M paid $205 million in import duties in 2022, while Shein paid $0. 

Their business doesn’t work without this loophole

In 2022, Shein was valued at $100 billion USD. Just 4 years later they’re seeking a valuation of $40 to $50 billion for the IPO, so like half. The trade war the US is waging also saw the removal of that import duty exemption last year, so they’ve been feeling that. Apparently, to the tune of a $99 million USD loss in the first quarter of this year. Compare that to a net income of $395 million for the same quarter the year before, and it really tells a story.  

Companies IPO for a bunch of reasons: to raise capital, to be able to use their stock to acquire other businesses, to increase liquidity so owners can sell their own holdings… and a bunch of other reasons. According to their filing, Shein wants to use the proceeds from their listing to invest in AI tech to forecast demand, expand internationally, and improve logistics. So, I imagine they just don’t have the capital.

Now, a little detour through the past

The import duty loophole Shein relied on was called the de minimus provision — an amendment to the 1930 Tariff Act passed in the US by Herbert Hoover. The act was initially intended to protect just two products, wool and sugar, but industry lobbyists got protectionist tariffs put on over 800 goods. At least 1,000 economists signed a letter to Hoover outlining why this was a bad idea, but it passed anyway.

The Great Depression lasted for the next decade.

Much of profit from the industrial growth of the 1920s was parked in stock markets, real estate, and other speculative investments. This contributed to widening wealth inequality as wages weren’t keeping pace. Banks also weren’t really regulated at the time, so they were lending out a ton of money and households held a bunch of debt.

The stock market crash in 1929 kicked off a run on the banks, who didn’t have the liquidity to cover the withdrawals and many folded. People lost their homes, their savings, everything. And there was a dust bowl.

It’s the economy, stupid

There’s a trend line between inequality and radicalization. The Great Depression hit post-WW1 Germany extremely hard, for example, resulting in 6 million people unemployed and fuelling right-wing extremism. I suppose that might make it easier to support policies forcing communists and Jews out of their jobs in government and education. There’s a good series, Project 1933 on the In Bed with the Right podcast, that covers this time period. It’s worth a listen!

Today, debt is certainly widespread here in Canada. We’ve got the most household debt of the G7 countries (103% of our GDP). Unemployment is kind of high, 6.5% for adults and 12.7% for youth, although I find those figures don’t tell the whole story. Part-time, gig, and temp work is all counted as employed, and they don’t account for people who have left the labour force all together. Those of us who are working can feel the wage stagnation and constricting opportunities as costs for things like housing, food, and utilities get higher. It’s probably nothing to worry about.

Anyway, the cure for depression was the New Deal. Roosevelt created the SEC and FDIC to reinstate the public’s trust in banks, made the social safety net for the elderly, disabled, and unemployed, gave unions collective bargaining rights, and created the minimum wage, and the 40 hour work week. He was busy.

I didn’t know much about the New Deal since I’m Canadian, but I read about the Works Progress Administration (WPA) while writing this post. While the WPA paid men and women the same rates (in the 1930s), women were put into lower paid positions overall, like elder care, bookbinding, and sewing. 

New York, New York. Works Progress Administration (WPA) sewing shop at 475 Tenth Avenue, New York City.; ca. 1936 – ca. 1942; Records of the Work Projects Administration, Record Group 69

This isn’t totally unrelated to Shein. I wonder if the cure for our current stagnant economy is a similar investment in workers’ rights. I’m researching the death of the union-made clothing industry in Canada and the US over the last 50 years. I think it’s an important piece in the big picture of deregulation and globalization that allowed companies like Shein to prosper.

I was born in the late 80s, so I’ve never experienced a world where garment workers weren’t an exploited underclass. But it’s an important exercise, in my opinion, to imagine what material conditions must change to have a fashion industry free that’s from exploitation. I suppose it’s not unusual that my vision for the future is inspired by the past.