Banned Chinese app is making a comeback in Indian market

Jul 27, 2021 E-commerce


More than a year after the Indian government imposed a ban on over 200 Chinese apps, popular China-based shopping platform Shein finds a way to make a comeback in Indian market. 

The firm partners with Amazon during its upcoming Amazon Prime Day Sale, as per the sale banner. The sale is launched across India from midnight of July 26 till July 27. 

As of the end of June 2020, Shein's top three most downloaded markets were India, the US and Saudi Arabia. Shein had more than 1 million daily active users and over 10,000 orders per day in India, and had managed to more than triple its business revenue in India in just one year, however its trajectory in India immediately changed with the arrival of a ban. With Shein's exit came new opportunities for platforms and retailers within the fashion space, such as Urbanic and Myntra.

However, as in other countries, Shein has gained a large following in India, and for almost a year, they often leave comments under its Indian account, expecting Shein to return to the Indian market.

However, Shein's partnership with Amazon has also left its own pitfalls. In India, Amazon itself is facing an anti-trust investigation, and the Indian market may not be an easy path for the fast-fashion brand.


Shein is relaunching its Indian business

Since June 2020, a wave of Chinese apps entered India's ban list due to border tensions, and Shein was not spared, becoming one of the first Chinese apps to be banned in India along with WeChat and TikTok.

However, the arrival of the ban changed the trajectory of Shein's development in India. On July 11 of that year, the platform had to announce the suspension of its Indian operations.

This is not the first time Shein has suffered a crisis in India; in July 2019, the firm got into trouble for allegedly underestimating the value of clothing imports to avoid customs duties. As a result, customs authorities in Mumbai, India, confiscated 500 packages from Shein's Indian retailer Sino India Etail.

As before, however, Shein seems to have found a way to defuse the crisis, and while its Indian website is still inaccessible, Shein will be back online in the Indian marketplace as an Amazon seller starting on Amazon Prime Day India. Amazon also started building momentum early, even creating a dedicated page for Shein's entry.

In response, Amazon said, "Amazon India offers its customers a wide selection of products across local and global brands. Shein branded apparel is one of the many new products that will be launched on 'Prime Day'."

Prior to the ban, Shein had already gained quite a following in India. Even though Shein has announced its farewell to the Indian market, under its official Instagram account in India, they still replied over and over again, "Come back." As Shein confirmed his upcoming return during Amazon Prime Day India, other Indians uneasily asked under the account, which has been offline for almost a year, "Just during Prime Day or is it a permanent return?"

The choice to partner with Amazon could be a win-win plan for both. In the short term, India has not yet released a signal of détente, many banned apps are not expected to return to India, and the market share Shein gained in India in the past is gradually lost.

After the temporary farewell to India, online apparel retailers such as Urbanic have also seized the opportunity left by the market vacancy and have started to grab market share. As for the fashion segment, Myntra, which is known as India's fashion portal, has risen to become the most downloaded vertical e-commerce app in India. By the end of 2020, Myntra's app had 30 million monthly active users (50% of whom are women), an average of 20 minutes per user to shop the platform, and about 30 million daily fashion information views, making it one of the most sticky fashion shopping apps for users. In its Myntra recently concluded sales campaign, Myntra even claimed that it sold 18 million products ordered by 4.2 million customers nationwide.

And Myntra is being owned by Walmart's Flipkart. In India, Flipkart is precisely Amazon's biggest competitor. In addition, for a long time, the fashion segment has been Amazon's shortcomings in the Indian market, and the cooperation with Shein is also seen as an opportunity for Amazon in the fashion sector. Ashutosh Dabral, chief product officer at fintech company MoneyTap, tweeted that Shein "will allow Amazon to gain real market share in the fashion segment".

However, Amazon is facing a crisis of its own in India, where regulators are launching an antitrust investigation into Amazon India and Flipkart.

The rapid growth of Amazon and Flipkart in India has also sparked discontent among brick-and-mortar retailers, who believe that the two giants are guilty of hindering competition in the market by creating complex business structures that bypass regulation under Indian law. Indian media also reported in February this year that the company has been helping some of its sellers get bigger on the platform for years and using them to circumvent India's foreign investment regulation laws. In addition, Amazon India has stakes in two large sellers, Cloudtail and Appario, and provides subsidies to them.


Focusing on the high-end market

In addition to Modi's ban, Shein's products have been doubted by Indians for their quality and environmental concerns.

Not only in India, Shein has already encountered criticism from environmentalists in several countries. As Shein grows larger and larger, the environmental controversy inherent in fast fashion brands will sooner or later fall on Shein's head. Globally, fast fashion brands are scrambling to improve their environmental and social contributions, trying to cultivate a more "green" image.

Inditex Group, the parent company of Zara, which is often compared to Shein, also announced at its annual general meeting on July 16, 2019, that the group's 7,500 stores will be energy efficient and environmentally friendly by 2019. By 2025, 100% of all the group's brands, including Zara, Pull & Bear, and Massimo Dutti products will be made from sustainable fabrics. Zara's Join Life collection is currently made from 100% sustainable materials, which account for 20% of the brand. In addition, the Inditex Group has pledged that by 2025, Zara will have no waste going to landfill and that 80% of the energy consumed by the company's headquarters, logistics plants and stores will be renewable.

For a long time, Shein has drawn criticism from overseas users due to its poor product quality. For this reason, another attempt by SheIn in 2020 was to develop a high-end version, SheIn Premium, which was officially launched in June of that year, maintaining a price point between $5 and $75. Shein has also launched an eco-friendly line under its premium brand Shein Premium, which is described in promotional copy as using biodegradable materials.

Entering 2021, Shein went one step further. On April 8, Shein announced that its high-end brand Shein Premium was renamed MOTF and intended to launch an independent website to enter the mid-to-high-end consumer market of fast fashion apparel, and released MOTF's supply chain investment plan.

In the MOTF brand introduction, Shein clearly stated that the brand is made of "higher quality" materials. MOTF, for example, has launched a silk collection that boasts "affordable luxury," which is what fast-fashion brands typically offer in their high-end lines.

MOFT is currently one of Shein's key brands, along with Shein's main brand, Sheglam, a Shein beauty brand, and Shein Curve, a plus-size brand. However, from the current perspective, MOFT still has only 128,000 followers on Instagram, which is still less than a fraction of the main account's 21.03 million followers, and it is still unknown whether it will continue to reap the love of users after the launch of its high-end brand standalone station in the future.

This is an article from WeChat official accounts The Passage (ID: passagegroup), written by Xie Xiaodan, translated by Chris.