Shein has been making inroads with American consumers, but has been stymied somewhat by concerns over labor and cotton sourcing for products sold through the retailer. Meanwhile, the company still wants to go public in London. That is the backdrop behind a $15 million compliance investment the company announced Jan. 31.
The $15 million that Shein plans to spend in 2025 will go toward its product safety testing and compliance protocols, according to the company. For Shein, that means focusing on compliance with laws where Shein operates — both for Shein and its vendors. It also comes after British lawmakers continued to press Shein about labor and cotton issues in January.
Shein is No. 2 in Digital Commerce 360’s Asia Database ranking ecommerce retailers in the region by annual online sales. The online apparel retailer was valued at $66 billion in May 2023 when it closed its latest funding round.
Shein’s compliance investment following cotton concerns
“Ensuring that our customers can shop with peace of mind is paramount at Shein,” said Leonard Lin, president of Europe, the Middle East and Africa (EMEA) and global head of public affairs for Shein. “From design to delivery, we all work to protect our customers at every step of the process.”
Lin touted Shein’s current efforts in its announcement, which noted that Shein had “terminated its engagement with more than 260 sellers on its marketplace who did not meet compliance requirements.”
“We have continued to expand our rigorous testing efforts, working with some of the world’s top global testing agencies, to ensure that our products meet the highest standards and we continue to invest in enhancing our approach,” Lin stated.
Digital Commerce 360 reached out to Shein for additional commentary but did not receive a response as of the time of publication.
Importance of compliance for Shein
Melissa Roth Mendez, a founder and global brand strategist at the retail consultancy MRM Brand Advisory LLC, said the compliance investment is part of the process of keeping Shein a global player.
In Shein’s case, that means going beyond just selling products in major markets like Europe and the U.S. where regulatory requirements may vary.
“Beyond that, robust compliance systems provide crucial competitive advantages — from more efficient supply chain operations to better risk management, stronger supplier relationships, and enhanced consumer trust,” Mendez explained.
She added that these systems also make companies more attractive to institutional investors and partners while protecting against the reputational risks that can devastate global brands.
“Compliance may not be sexy, and the average Shein customer may not care about these investments, but this move is about securing Shein’s future,” she stated. “When scaling a global retail operation, resilient compliance frameworks become increasingly critical. This investment shows that Shein is trying to mature from a disruptive fast-fashion player into a sophisticated global retailer.”
What’s at stake for Shein
In the meantime, Shein is seeking not only to go public in the U.K. but to build on its success in the U.S. as tariffs and scrutiny over the exploitation of de minimus rules for small-value ecommerce orders stand to complicate its strategy. In 2024, Shein agreed to participate in a U.S. Customs and Border Protection (CBP) Section 321 Data Pilot program in another act to demonstrate willing regulatory compliance.
Chirag Patel, CEO of Inspectorio, believes that Shein is taking the necessary steps to become more of a trusted player in the United States.
“Retailers and brands need to ensure they have the tools in place to maximize visibility and ensure proper, readily available documentation across their supply chains to minimize the risk of non-compliance and honor the regulations around them — as Shein is doing,” Patel stated, noting that brands should also ensure compliance and future-proof their supply chains.
“They can do this by creating a code of conduct to share clear guidance with all partners across the supply chain, mapping out their supply chain, and establishing traceability of chain of custody,” Patel stated.
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