Singapore-based Shein shakes up South African fashion retail

Shein, the Singapore-based Chinese fast-fashion e-commerce giant has become a significant player in South Africa. But its astronomical rise has left some established fashion retailers in Africa on edge, and trade unions have voiced concerns about its practices.

Making its debut in South Africa during the Covid-19 pandemic, Shein, known for its efficient use of social media for marketing, quickly climbed the ranks to become the republic’s most downloaded shopping app. Drawing consumers with sharply marked down prices, contemporary fashion, and swift delivery, the platform offers items such as women's attire for as low as ZAR65 (US$3.50). In comparison, local vendors price similar products at ZAR150 (US$8) and up. Some savvy South Africans have even begun consolidating orders from friends and neighbours, purchasing in bulk from Shein to capitalise on reduced shipping fees and volume discounts.

In a recent interview, Anthony Thunström, the CEO of South African retailer The Foschini Group (TFG) – owner of retail brands such as Foschini, Jet, Sneaker Factory, and Totalsports – highlighted the expected future competition from companies like Shein and Amazon. It's anticipated that Amazon will launch its e-commerce delivery service in South Africa in the upcoming months.

The National Clothing Retail Federation of South Africa, along with the Southern African Clothing and Textile Workers’ Union, have approached the government with concerns regarding Shein's potential exploitation of customs tax laws. They assert that Shein, which doesn't have any manufacturing facilities within South Africa, benefits from reduced import taxes by importing clothes in smaller quantities and packages. By doing so, they leverage the e-commerce exemption known as the de minimis value, a threshold under which imports are duty-free. In South Africa, imports below a value of ZAR500 (US$27) are exempt from duties. The prevailing import duty system is primarily designed for cargo containers, rather than small parcels.

Earlier this year, South Africa’s Department of Trade, Industry and Competition launched a probe into Shein's import practices. The current status of the investigation is not yet clear.

In light of these allegations, Shein stated that it adheres to local laws and regulations. Furthermore, the company expressed its willingness to engage and cooperate with the South African government.

In a move to counter competitors like Shein, TFG last year unveiled a new fashion and lifestyle shopping platform called Bash, which features products from its various brands. Shortly after its debut, Bash ascended to the top position in the Apple App Store across all categories and secured second place in the shopping category of the Google Play Store. Notably, South African retailers such as TFG, Truworths, and Woolworths, hold an edge over international counterparts by providing South African consumers the option to shop on credit.

Most brick-and-mortar retailers in South Africa have ventured into online shopping, complemented by pure-play e-commerce platforms like Superbalist and MyRunway. However, digital commerce is still nascent, representing 4.7% of total retail in 2022. The sector has nonetheless experienced rapid growth, with the pandemic acting as a catalyst, as evidenced by online sales jumping approximately from R42.3bn (US$2.26bn) in 2021 to R55bn (US$2.93bn) in 2022.

References

‘How Shein became China’s ‘TikTok for e-commerce’’, TechNode, 31 May 2022

‘Bash is here – TFG’s online shop with over 200 brands’, MyBroadband, 21 July 2022

‘Online retail passes R50-billion in 2022’, MasterCard, 22 December 2022

‘Fast-fashion giant Shein faces South Africa probe over import practices’, The Wall Street Journal, 13 March 2023

‘Why Shein is under fire in South Africa’, News24, 19 March 2023

‘Shein — loved by shoppers, hated by rivals — is under investigation in South Africa’, Rest of World, 22 March 2023

‘TFG offers customers a “mall in their pockets”’, TFG, 14 June 2023

‘Bash disrupts fashion: TFG’s shopping platform dominates SA’, Ventureburn, 27 June 2023

‘How Shein, the Singapore-based China-founded Asian retailer is outgunning Amazon and Walmart in South Africa’, South China Morning Post, 20 August 2023