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Average price of a dress on Shein jumps by 28% in U.S.

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Price hikes aimed at boosting revenue and profit

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Higher prices also driven by external brands like Skechers

By Helen Reid

LONDON, June 13 (Reuters) - Fast fashion retailer Shein,

known for its China-made $5 tops and $10 dresses, has hiked

prices by over a third on some core products, in a move likely

to boost revenues ahead of its planned IPO, according to an

analysis of its pricing strategy.

Shein's average price hikes exceeded those of its rivals H&M

and Zara, according to data from London-based

research firm EDITED, which compared prices on June 1 with a

year earlier.

Shein declined to comment.

The company operates an online marketplace selling an array

of merchandise, though its main business is making and selling

Shein's own brands, primarily women's clothing.

Shein taps a network of largely China-based suppliers, which

buck traditional manufacturing processes by taking small initial

orders and scaling up based on demand. Most of the clothing

Shein sells is made in Guangzhou, China, by its roughly 5,400

suppliers.

Though Shein doesn't disclose financial data publicly,

Coresight Research estimates that Shein's revenue will reach $50

billion this year, a 55% jump over last year's figure.

Making its core women's clothing lines more expensive and

getting more outside brands to sell on its site can help Shein

to hit that sales figure and boost profits.

"Shein has seen very strong momentum recently, which could

play favorably into its IPO plans," said Erik Lautier, ecommerce

expert at consultancy AlixPartners.

As Shein prepares for its initial public offering (IPO), it

faces the higher costs of being a publicly listed company. It

must also comply with new EU regulations on online platforms

that could add to its expenses, pressuring profit margins.

In the United States, Shein's biggest market by sales, the

company hiked the average price for women's dresses by 28% in

the year to June 1, to $28.51, the EDITED data showed.

While still well below the average for an H&M dress ($40.97)

or a Zara dress ($79.69) in the U.S., Shein upped prices by a

bigger percentage than its rivals over the same period,

according to the data.

On Shein's UK site, a dress cost 24.12 pounds ($30.97) on

average, 15% more than a year ago, while the average dress

across France, Germany, Italy, and Spain was 36% more expensive.

Shein wants to show that it can sustain its recent growth

and sell more higher-priced products ahead of its stock market

listing, retail experts say.

"If they can demonstrate that these prices stick then the

valuation increases significantly," said Alex Romanenko, head of

retail at pricing consultancy Pearson Ham Group.

Shein is seeking a valuation of around 50 billion pounds in

a London listing, Sky News has reported. The company declined to

comment on its IPO plans or valuation.

Having gained market share with rock-bottom prices, Shein's

price increases are also aimed at boosting profit margins prior

to listing, Romanenko said.

In the U.S., Shein's biggest market, the biggest price

increase was in footwear, with the average pair of shoes on its

site selling for $40.7, up from $25.3 a year ago.

That partly reflects Shein bringing other brands onto the

platform, like sneaker brand Skechers, which sells shoes

ranging from $32 to $174 on shein.com. Skechers declined to

comment on how its sales on Shein have been performing.

Overall, Shein's growth is bound to slow in its more

established markets such as the U.S. and the UK, said Louise

Deglise-Favre, apparel market analyst at GlobalData.

"On a global level Shein may be able to sustain similar

levels of growth as it continues to enter and develop into new

markets, strategically increase some of its prices or through

acquisitions," she added.

The U.S. accounted for 28% of Shein's sales in 2023,

GlobalData estimates, with Germany and the UK the second and

third biggest markets. Shein also makes significant revenues in

Brazil and Mexico, and is growing rapidly in other emerging

markets.

However, price hikes can only go so far to boost Shein's

revenues, AlixPartners' Lautier said, as higher prices typically

impact the share of visits to the site that turn into purchases.

To drive sales growth further Shein will have to bring more

people to its platform, and get them to visit more frequently.

($1 = 0.7789 pounds)