A customer carries a bag as she leaves the Chinese-founded fast fashion brand Shein’s pop-up store in Dijon on June 26, 2025.
Arnaud Finistre | AFP | Getty Images
Shane built a global fast fashion business by selling clothing at lower prices that align with real-time trends and bringing new designs to market quickly, while reducing inventory waste.
But the conditions that fueled its rapid growth are changing.
The Singapore-based company’s shares have fallen for the fourth day in a row and have fallen 17.5% since their Hong Kong market debut on Tuesday.
Early market reaction is focused on whether Shine can reaccelerate its growth as pressure mounts on the low-cost model that drove its growth.
Analysts say Shine needs to be competitive beyond price, localize its operations and find new sources of growth outside its key U.S. and European markets.
“I think this shows they have a lot of work to do to prove to investors that this is a business that will continue to grow,” said Josh Gilbert, Asia Pacific principal analyst at investment platform eToro.
$5 dresses will be harder to sell.
Shein reported revenue of $41.8 billion in 2025, compared with $38.7 billion in the year-ago period. The company posted a net loss of $99 million in the first quarter of this year, compared with a profit in the same period last year.
“The US and Europe are still key markets, but the easy part of growth is over,” Gilbert said.
Both markets tightened rules that allowed low-value imports to enter duty-free. In May of last year, the US ended mini-miss measures on cargo from China and Hong Kong, and in July the EU also ended tariff exemptions for low-value imports of 150 euros or less.
The EU has temporarily introduced a tariff of 3 euros per item. According to data from the European Commission, around 5.9 billion low-value items entered the EU in 2025.
“The structural advantage that allowed Shane to ship a $5 dress halfway around the world for next to nothing is gone,” Gilbert said.
This change poses a greater challenge for Shein as it increases prices. Gilbert said that by pushing up prices, the tariffs could cause shoppers who came to Shein primarily for price to start comparing on quality, starting “a battle that Shein never had to go through before.”
Brian Gildenberg, managing director at Retail Cities, said Shine’s ability to connect its technology to a network of manufacturers that can respond in real time remains an advantage, but competitors are closing the gap.
“Even though the fast fashion industry is catching up digitally, to me it still looks like a competitive advantage,” Gildenberg told CNBC.
Limitations of the Schein model
Marguerite Lerolland, senior global insights manager for fashion at market intelligence firm Euromonitor International, said Shein needs to redefine its value proposition beyond “low prices and a certain amount of newness,” including the selection of products on its marketplace and the development of services.
LeRoland also said that Shein needs to improve its brand image as regulators and public opinion become increasingly critical of the company.
“Companies will have to transform their models,” LeRoland said, pointing to increased localization as tariffs and regulatory requirements squeeze Shein’s cost advantages in the U.S. and Europe. Shein also added that to maintain global growth, the company needs to scale across Asia Pacific, the Middle East, Africa and Latin America.
But expanding into new markets comes with its own challenges. While pointing to Southeast Asia as one potential growth region, Gildenberg said Southeast Asia is probably one of the most competitive e-commerce markets in the world.
