Fast-Fashion Giant Shein Exploring Online Marketplace

The Wall Street Journal has been able to view an internal Shein memo that indicates that the company is exploring building an online marketplace. This would mean a few things:

Other merchants that signup for the platform would be able to sell to customers.

Likely the company would expand beyond its traditional fashion assortment.

What’s my take here?

First, the fact that the company is considering launching a marketplace is _not exactly_ a scoop, given that Shein has already launched a resale marketplace for its products.

Second, a marketplace is a natural fit for a site with a ton of traffic which, as one of the biggest fashion retailers in the world, Shein qualifies for. Why do sites with significant traffic fit a marketplace model?

Mostly because of selection gaps coupled with buyer intent. High-volume sites have a ton of "zero" searches, stockouts, and natural opportunities for upselling and bundling, which are not taken advantage of without a broader selection. A marketplace allows a retailer to offer additional selection without carrying this inventory.

Third, a marketplace can also benefit retail buyers because it allows them to “try before they buy” for its first-party business.

I was trying to think of any downsides to this for Shein, and I think the main one is simple: if you think about the types of brands that may want to be associated with Shein, it will probably not be the major brands.

As a result, will Shein end up looking like another Wish? Finding the right answer to this question seems like the key to this marketplace initiative if it sees the light of day.