Fashionably Foolish: brilliance, bargains, disruption, money (lots of money), madness & climate change
Fashionably Foolish: brilliance, bargains, disruption, money (lots of money), madness & climate change
Could a cheap polyester blouse be the one thing too many that tips the balance for climate change?
Yes.
Well, maybe not all by itself. But as one of millions of packages air-freighted daily from China to destinations all over the world from fast fashion giants Shein, Temu and social-media-turned-ecommerce powerhouse TikTok, yes, indeed, it could.
“…Fast fashion now accounts for half of China's total cross-border e-commerce shipments and takes up about one-third of global long-distance cargo aircraft, according to cross-border transportation media firm Baixiao.com.
Shein and Temu's growth is squeezing out space for other industries on air freighters, just as global firms are scrambling to find alternative logistics options due to the Red Sea disruptions.
"When the Suez Canal (crisis) hit, there was no capacity to be bought, because e-commerce has bought it all," said an executive at an air cargo carrier, who requested anonymity due to industry sensitivities.
Pronounced demand for air freight from fast fashion started increasing dramatically in the second half of last year, several sources said…”
—Rise of fast-fashion Shein, Temu roils global air cargo industry, Reuters
As if an epic drought reducing freight traffic through the Panama Canal and Houthi pirates patrolling the Red Sea weren’t enough to spike global shipping costs, now there’s this. For a sense of scale, Shein alone ships 5,000 tons per day, which is roughly five times as much as Apple. The number is only going up. Quickly. By 2025—next year—Shein’s revenue target is close to $60 billion dollars, which is all the more astonishing given that only six years ago revenues came to $1.6 billion, a figure that now sounds positively modest.
Not only can shipping products by plane emit as much as 47 times the CO2 of shipping by boat, but emissions are injected directly into the upper atmosphere where greenhouse gases accumulate. This astonishing transportation carbon footprint does not include last-mile delivery by trucks, or returns. “Free shipping” comes at a price.
But of course shipping is only one small part of a much larger carbon footprint that includes materials (petrochemical polyesters; cotton grown using petrochemical fertilizers and pesticides); packaging (which accounts for more than a third of all plastics); and electricity to power server farms that make global e-commerce, increasingly reliant on energy intensive AI, possible.
In turn, fast fashion’s carbon footprint is only one part of a larger environmental story, which includes massive water usage, microplastics, and landfills piled high with discarded clothes. An estimated 92 million tons of clothes are thrown out each year, with a good percentage simply burned, generating yet more carbon emissions.
HOW DID WE GET HERE?
There is a genius to this madness. An actual genius: Shein’s mysterious founder Chris Xu, who elevated a talent for Search Engine Optimization (SEO) into an art form. While fast fashion pioneers H&M and Zara focused on leveraging efficiencies within the industry’s famously Byzantine supply chains, they didn’t change the basic paradigm of the business. Trend-spotting designers created collections. Orders placed with manufacturers working with lead times of months or more. Inventory shipped to stores. Marketing departments created pricey campaigns. Everybody hoped the designers guessed right.
Xu upended the paradigm. Instead of using “Just-in-Time” inventory, a supply chain efficiency that pushes the cost of warehousing onto suppliers, or relying on the practiced eyes of fashion designers to divine future sales, Xu cut right to the chase with a Consumer-to-Manufacturer (C2M) model. With C2M, customers “vote” with their wallets, determining whether a design for a blouse, a dress, or a pair of pants lives or dies. This is real time A/B testing, the workhorse of SEO, at scale.
Instead of mass producing a few dozen designs, a process that typically requires considerable planning and investment, Shein produces a small quantity, perhaps 100, of thousands of designs every day. Instead of shipping to stores, selections are shipped to TikTok “influencers,” who dutifully produce videos of themselves unpacking their “hauls” and talking up the virtues of various designs in exchange for free clothes and discounts. Shein and Temu also spend big on Google and Facebook ads. Production of the most popular designs determined by sales is immediately ramped up, with product ready to be packed and shipped by air-freight to customers’ doors almost anywhere in the world in a matter of days.
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The emergence global fast fashion juggernauts coming out of China, which seems inevitable now, wasn’t a given. Many things had to come together to make it possible.
The “adjacent possible” refers to how one development can lead to another and also the potential for novel combinations to change the game. It was an idea first put forth by a biologist and complexity theorist, Stuart Kauffman, to describe the collisions of Earth’s molecular “starter pack.” None of these molecules were capable of generating life, but over time collisions between them led to the creation of all the molecules required for the emergence of life.
Shein, Temu, Pin duo duo and other C2M online businesses are the beneficiaries of a long list of adjacent possibles, each one itself the result of adjacent possibles: The Internet. Cell phones. Data analytics. Social media. Influencers. Streaming video. Online shopping. Airplanes. Plastic. Polyester. AI.
Now that the model has been proven to be a powerhouse success, gobbling up market share like a retail Pac-Man, traditional brands and retailers are scrambling.
Joanna Williams is the co-founder of Moore Collective, a consultancy with extensive experience working with niche fashion brands leveraging TikTok and other digital platforms. For the last five years Williams has done everything but stand on her head to warn mass fashion brands of an impending existential threat.
“China 2.0 refers to the next major economic disruption and competitive threat emanating from China
The first wave was the rise of China as the world's manufacturing hub producing American brands
The next wave puts them at the forefront of disrupting American retail via direct manufacturing…”
The threat, as she reports in her daily LinkedIn posts, is now here:
• Profits at Nordstrom tanked by 45% in 2023.. Target’s sales are down 16%. Macy’s can’t seem to shutter stores fast enough.
• US apparel imports are down by 25% year-on-year.
• Last year, the top 10 American shopping app downloads were C2M apps from China.
• Two French luxury brand holding companies are now stuck with billions of dollars of unsellable, out-of-fashion clothes: $3.2 billion for LVMH and $1.5 billion for Kering.
Unsold inventory is an economic and environmental nightmare. For all the excesses of Shein, the amount of pre-consumer textile waste they produce is minimal. They don’t make what won’t sell.
WHAT NEXT?
There are other serious issues with Shein, most notably exploitive labor practices that border on modern slavery and sourcing cotton grown using Uygher forced labor.
The bargains that delight shoppers, the eye-popping profits, the $100 billion valuation that has investors salivating for an IPO—it is all built on suffering. It is paid for by people who lives have been cruelly stunted and the profligate generation of environmental poisons that will harm us all.
This is also disruptive innovation on steroids with implications for manufacturing models, supply chains, global trade, employment and even tax rolls (e.g., a closed Macy’s generates no local sales tax; a bankrupt mall generates no real estate tax).
Genies rarely go back into bottles, so the question is whether the brilliance of the C2M model coupled with the convenience of e-commerce can be reimagined in ways that trade in rapaciousness for better ways of doing business. A t-shirt selling for $3.24 would still be a bargain at $7. Paying a more-than-living wage to workers would be a good place to start.
Next, how could this new system be leveraged to scale-up adoption of fossil-free materials and compostable packaging?
How could production be re-scaled at a regional level around industrial clusters to reduce shipping costs and allow for a greater variety of local preferences?
The toughest nut to crack will undoubtedly be the thrill of being able to buy whatever catches your fancy—it is all so cheap—instantly and also socially. Many of these apps have buying clubs that offer better prices to groups of individuals who agree that to buy a given product at the same time. If one buyer can convince enough other people to join their club within a specified window of time, they are rewarded with deeper discounts and free merchandise. The experience is designed—optimized—to be addictive.
As Kenneth Pucker notes in his lengthy Harvard Business Review analysis, “…the emergence of instant fashion represents the apotheosis of a model that prioritizes speed, affordability, and disposability.
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The most confounding part of the fast fashion story is that its meteoric rise has been largely bankrolled by Gen Z (age 12-27) and Millennials (age 28-43), the generations who will inherit a severely climate-kinked, trash-filled world unless serious changes are made now. These are the generations of Greta Thunberg, Hannah Ritchie and most of the staff at the Ellen MacArthur Foundation. At least some of them seem to know better. Fast fashion is a stylish step in exactly the wrong direction.
Like fast food, fast fashion is empty calories, selling the illusion of bounty, but delivering gluttony.
Maybe what is now routinely referred to as “the climate emergency” seems so unfixable at this point that it doesn’t matter. Why not splash out with cheap clothes that deliver an endorphin hit, no matter how fleeting? We have been told there are only a few years left to make a difference. The atmospheric CO2 readings at Mauna Loa now hover at a record 425 parts per million; month after month is the hottest ever. So far.
Could the future of the future really be hanging by the thinnest of polyester threads?
There are now more than 8 billion people in the world. By 2050, another 1.7 billion will be added to the tally. Each and every one will need clothes—and food, water and breathable air. They will need everything that is part of our daily lives: buildings and furniture, pots and pans, cars and roads. Everything we make, including packaging, can be made better with materials that emit fewer or no greenhouse gases, that generate fewer or no chemical pollutants in their production, and can be more readily composted or recycled.
But it also a matter of getting business and financial models right. C2M is a sea-change, data analytics at its best: Make only what you know you can sell.
That leaves marketing, a discipline built on persuasion that all too easily can devolve into manipulation turbocharged by data analytics at its predatory worst. Last October, attorneys general from 33 states accused Meta (Facebook, Instagram) of repeatedly misleading “the public about the dangers of its platforms, and knowingly induc(ing) young children and teenagers into addictive and compulsive social media use.”
The Gen Z and Millennials fueling this latest cycle of consumer madness are literally fast-fashion victims swayed by “influencers” whose influence is a bought-and-sold commodity. But they can take back their personal agency.
A century ago, pioneers of another retail paradigm shift—the department store—declared, “The customer is always right.” That is still true.
They can defy the manipulations of influencers and refuse to behave as expected. They can out-algorithm algorithms by saying no to cheap, polluting, cruelty-drenched, future-endangering impulse buys. They can rank influencers for honesty and transparency. Who’s a pusher? Who’s a friend?
C2M is a winning business model. Online shopping is here to stay. Traditional retailers and brands either will either adapt or continue to see their businesses shrink, which means Shein will soon have competition and Gen Z and Millennial shoppers will have more choice.
They can “vote” with their dollars for a better future.