Shein, the fast fashion behemoth that has swept across the world, is raising a significant down round as the startup world braces for a funding crunch. The e-commerce platform known for jaw-dropping outfit prices and savvy TikTok marketing is seeking $3 billion at a valuation of $64 billion, down from the $100 billion price tag in April, according to Financial Times.
Shein denies the accuracy of some of the information, a spokesperson for the firm told TechCrunch when asked to confirm details from the report.
One must wonder which part of the report got it wrong. To be fair, Shein’s plunging valuation is not an abnormality in today’s e-commerce world. Pinduoduo, the marketplace that has managed to threaten the dominance of Alibaba’s Taobao in China by offering attractive deals, has seen its market cap plunge to around $100 billion from a peak of $240 billion in February 2021.
Pinduoduo is now pinning its hope on its sister platform for overseas shoppers, Temu, which is gaining some ground in the U.S.
Sea, which operates the Southeast Asia-focused e-commerce giant Shopee, has lost over 80% of its market cap since November 2021. Shopee cut roughly 7,000 jobs within just six months to offset losses, Bloomberg reported in November.
Compared to other e-commerce counterparts, Shein’s drawdown doesn’t look too terrible.
Shein is still planning to forge ahead with its IPO, which could launch as early as this year, according to the FT report. There is a lot for Shein, which emerged from China’s reckless, cut-throat world of export e-commerce, to sort out before going public. The company has been preparing. For one, it has made its Singapore office the de facto holding company, at a time when China tightens up regulations around overseas listings and cross-border data transfers, and as U.S. regulators heighten scrutiny over China-related tech companies.
Shein has also significantly stepped up its ESG — environmental, social and governance — efforts. But it’s unclear how the firm can remake itself to be “socially responsible” without disrupting its business model, namely, fast fashion, which is fundamentally destructive to the environment. Multiple investors TechCrunch previously talked to also pointed to potential “accounting compliance” issues, as China’s clothing manufacturing industry is notorious for murky invoicing practices and tax evasion.