Fast-Fashion Giant Shein Explores Becoming Online Marketplace

The company’s supply chain is largely rooted in China’s southern Guangdong province, the country’s major manufacturing hub where it has a network of more than 3,000 suppliers.

“The marketplace platform makes available a range of additional merchandise and shipping options, and we expect it to result in increased customer engagement and satisfaction,” the memo said.

Shein has grown rapidly into one of the world’s top online retailers based on a business model offering a large assortment of apparel at ultralow prices tracking quickly shifting fashion trends. Valued at more than $100 billion and backed by big-name investors such as Sequoia Capital China and General Atlantic, the company is on track to generate revenue of $24 billion this year.

Creating a marketplace would put Shein in more direct competition with e-commerce giants such as

Alibaba Group Holding Ltd.

’s international shopping site AliExpress and

Amazon.com Inc.,

at a time when retailers globally are seeing growth slow amid economic uncertainty and consumer spending is weakening in some markets.

Shein didn’t immediately respond to a request for comment.

Shein, founded in Nanjing in China’s Jiangsu province in 2012, moved into its new global headquarters at Marina Bay Financial Centre in Singapore in February 2021. Since then its head count has increased from five people to about 100, including senior executives taking global and regional roles, the memo said.

Shein currently sells and ships products to more than 150 countries and carries pricier clothes such as evening gowns as well as household goods. It has become a major rival to European fast-fashion giants including Inditex SA’s Zara and

H&M Hennes & Mauritz

AB, which sell apparel and accessories in stores and online. Shein differentiated itself from its competitors with an “on demand” manufacturing model that uses proprietary software to track production in real time and gauges customer preferences and demand using algorithms that incorporate sales, browsing behavior on its app and other data.

Given its heavy reliance on Chinese suppliers, Shein has also faced increasing questions in the U.S. over its use of cotton from China’s far-western region of Xinjiang, where authorities are accused of suppressing the Uyghur Muslim population.

A new U.S. rule took effect this year called the Uyghur Forced Labor Prevention Act that allows American customs officers to seize shipments of any goods that are made in Xinjiang unless companies can prove their supply chains aren’t tainted with forced labor.

In its memo, the company told investors that Shein doesn’t have any suppliers located in the Xinjiang region, and it is company policy not to work with any of the entities identified on the act’s Entity List. The company regularly checks that its suppliers meet the requirements, it said. China has denied forced labor and suppression of the Uyghurs.

Write to Keith Zhai at keith.zhai@wsj.com