(Yicai) Sept. 2 -- Shein’s share price continued to tumble today, a day after the Chinese online fast-fashion and lifestyle retailer made its much-anticipated debut on the Hong Kong Stock Exchange, following years of failed attempts to go public in New York and London.

Shein’s share price [HKG: 0625] closed down 5.1 percent at HKD46 (USD5.80). Yesterday, the stock plunged almost 10 percent at one point, closing down 0.12 percent from its issue price of HKD48.56 (USD6.20) at HKD48.50.

There was a relatively subdued atmosphere at the listing ceremony, Yicai observed. Founder and Chief Executive Officer Sky Xu made a low-key appearance but did not take the stage or take part in the traditional gong-ringing ceremony.

Shein's pioneering large-scale automated test and reorder business model has evolved over the past decade into infrastructure for digital fashion, Chief Financial Officer Leigh Gui said at the opening ceremony. The company now serves approximately 160 markets worldwide and boasts 273 million active customers.

The Hong Kong listing marks a new starting point for Shein, Gui said. Going forward, Shein will continue to innovate, collaborate with supply chain partners to create shared value, and embed compliance, transparency and Environmental, Social and Governance principles throughout its value chain.

Shein’s valuation in the primary market reached approximately USD98.2 billion at one point in 2022, while its market capitalization at the time of the IPO was about USD26.5 billion.

For every USD100 in net revenue, Shein spent USD29.60 on the cost of goods sold, USD15.80 on marketing and USD47.70 on fulfillment, according to its prospectus released in July. After deducting USD2.70 for technology and content expenses and USD1.30 for administrative costs, only USD2.90 remained.

High Efficiency

The company’s efficiency on the merchandise side has not deteriorated. Shein does not operate its own factories, instead, it collaborates with manufacturing partners, whose number increased to more than 7,500 last year from 5,800 in 2023. Most are located in the Pearl River Delta. Contracts are typically renewed on an annual basis and do not include minimum purchase commitments. In the first quarter, the firm’s top five suppliers accounted for just 16.4 percent of procurement costs.

Shein’s inventory turnover also remained highly efficient. In 2025, its inventory turnover stood at 36 days, compared with approximately 114 days for Fast Retailing, 130 days for H&M and 72 days for Inditex.

Regulatory pressure is affecting the business. Starting from May 2, 2025, goods shipped from China to the US no longer enjoy the USD800 minimum threshold for duty-free treatment, which has narrowed the cost advantage of direct-to-consumer shipments. SHEIN's revenue in the US slumped around 3.5 percent in 2025 year on year, and tumbled by another 14.3 percent in the first quarter to account for 22.5 percent of revenue.

Meanwhile, fulfillment costs, including tariffs and shipping, surged 12.8 percent in the first quarter from the year before to USD4.3 billion. As a share of net revenue, fulfillment costs rose to 47.7 percent from 42.8 percent with the prospectus citing tariff changes as one of the contributing factors.

Mounting Pressure

The other side of Shein’s "low profit, high volume" model is also showing signs of slowing. Growth in active customers dropped to 18.7 percent in 2025 from 23.7 percent in 2024 and was just 8 percent in the first quarter of 2026. Meanwhile, net revenue growth slowed to 16.6 percent from 20.7 percent over the period and was 1.1 percent in the first three months. Customers’ annual purchase frequency has remained steady at between 3.8 to 4 orders.

As customer acquisition becomes more difficult, platforms such as Temu have intensified competition for ad placements on channels like Google and Meta, driving up advertising costs. Shein’s marketing expenses as a percentage of net revenue jumped 31.4 percent year on year to 15.8 percent.

Regulatory pressure is mounting across multiple markets. Last year, France's data protection regulator, the National Commission on Informatics and Liberty, fined SHEIN EUR150 million (USD170 million) over compliance issues related to cookies. The firm has appealed the decision and made provisions for the penalty. The European Union has also classified Shein as a Very Large Online Platform and launched an investigation under the Digital Services Act in February.

Shein's response has been to shift away from direct shipping toward overseas warehouses and local inventory, while also expanding its Marketplace business and broadening its product offering beyond apparel.

In the first quarter, the company's service revenue accounted for 14.3 percent of total revenue. The Middle East, Latin America, and Southeast Asia collectively accounted for 45.4 percent of total revenue, surpassing the combined share of Europe and the US.

Editor: Kim Taylor