Online retail giant Shein has filed with US regulators for an initial public offering (IPO), with the company seeking a $90 billion (R1.7 trillion) valuation following its rapid growth globally, including in South Africa.
Founded in 2008, the Chinese e-commerce clothing giant offers a wide range of clothing and fashion accessories to buy online and ship to dozens of countries.
The online retailer, now headquartered in Singapore, is working with Goldman Sachs, JPMorgan Chase & Co., and Morgan Stanley on the listing, Bloomberg reported.
Shein has become popular thanks to its trendy clothing at ultra-low prices.
The 11-year-old company is now one of the largest fashion brands in the world, with Shein’s estimated sales surpassing Zara and H&M in the US fast-fashion market.
The Wall Street Journal reported that Shein was valued at around $66 billion in a fundraising round in May and is likely to aim for an even higher valuation in an IPO.
The company has been hoping for a valuation of as much as $90 billion in a US IPO, Bloomberg News reported earlier this month.
Shein recorded $23 billion in revenue and $800 million in net profit in 2022 and told investors it delivered record revenue and income for the first three quarters of 2023
The retailer sells to online shoppers in more than 150 countries but not those in China. The US is Shein’s largest market.
Last year, Shein opened distribution centres in the US, Canada and Europe to accelerate shipping times in those regions. It has also begun to expand manufacturing in Brazil, Turkey and India.
Following its launch during Covid, Shein has grown rapidly in the South African market, taking on established players such as Takealot and Makro.
In 2023, the Shein mobile app ranked as the most downloaded app overall and in the shopping category on the Google Play Store.
In the shopping-only category, The Foschini Group’s Bash ranks second, while Superbalist is in 8th place.
On the Apple App Store, Shein is currently the third most downloaded app overall and first in the Shopping category.
The online giant complies with all local laws and regulations and remains open to engage and cooperate with the South African government, a spokesperson told Bloomberg, adding that the retailer finds the local market interesting.
One of the most-praised benefits of Shein is its low prices. The company is also able to ship directly to South Africans, bypassing many local taxes and requirements.
Shein customers can easily buy between five and ten items for less than R1,000, even when including shipping fees and import taxes.
The cost savings also make customers more forgiving regarding delivery times – which can take a few weeks.
Superbalist welcomes competition
While Shein has seen immense growth in South Africa, Takealot Group’s Superbalist has been struggling.
The company announced the start of a retrenchment process in August 2023 due to disappointing growth and pressure from offline retailers.
Superbalist’s parent company, Naspers, is focusing on increasing profitability after years of underwhelming performance.
MyBroadband asked Superbalist if Shein was also having a material impact on its business, but the company did not address the question directly.
However, it said that because of more frequent online shopping among South Africans, there was an opportunity for the entire category to grow.
“We’ll never shy away from going toe to toe with international competitors,” Superbalist said.
“We’re proud of our quality, and we believe that our products and service offerings are world-class,” the company said.
“We believe competition is pro-consumer, and we are privileged to have consumers who choose to shop with us.”
The company said it would welcome lawful and fair competition because it sharpened Superbalist’s product and service offering, ultimately benefitting the South African consumer with more options at better value.
Superbalist argued that its status as a proud South African company and ability to deliver quickly and efficiently to any part of the country were among the advantages it held over Shein.