The leanest middleman still has to buy attention.
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Hi,
on 1 September, Shein listed in Hong Kong. Three weeks later, it published its first results as a public company, including a second quarter the prospectus never showed. Most pre-IPO takes I read concluded that online retail is simply the weaker model. After reading both documents, I agree with half of that.
THE MODEL MAKES SENSE
The starting point is hard to argue with. Logistics firms move the goods, payment providers handle credit, data replaces the buyer's taste. Once that's true, the most efficient setup is factory to consumer, and the retailer's only remaining job is aggregating attention and showing customers what's available. Shein runs that layer leaner than anyone: batches of 100 to 200 pieces, reorders within as few as five days, inventory turning in approx. 36-38 days.
THE NUMBERS DON’T YET
First-half revenue: $20.1 billion, up 1.0%. In Q2, orders grew 7.6% and active customers 15% to 291 million, but Shein's own product sales fell 3.4%. The growth came from marketplace fees (+44%) and the rest of the world, mainly Latin America (+21.6%). The US fell 6%. Europe fell 13.9% after Shein raised prices and cut online ads ahead of the EU's €150 duty exemption ending on 1 July. Fulfilment took 50.4% of revenue, marketing 13.6%. Operating margin: 2.1%, down from 6.4%.
Shein’s Interim H126 Results (see source below)
That fits the two weaknesses the sceptics point to. The marketing buys orders rather than habits: switch it off and the demand cools with it. Customers buy less often (by my count, about 3.8 orders a year, down from 4.0). And new markets keep the total growing for a while, but every new market is a smaller prize than the one before.
WHERE ZARA WINS
Inditex sells roughly as much fashion (€19.8 billion in its first half, +7.6%) at a 19% operating margin, and is worth about seven times Shein. The gap shows up in three cost lines (rough industry estimates, but the direction is clear):
1) The rent is the marketing. Zara doesn't buy each visit from Google or Meta. The street brings the traffic, and Inditex's fixed rent came to about 5% of sales in the first half. Shein spent 13.6% of revenue on marketing in Q2, a toll paid to whoever owns the attention.
2) Logistics close to home. Inditex sources much of its range within the season and runs it through centralised logistics hubs. It doesn't disclose what that costs, but it's a different world from Shein, where fulfilment took 50.4% of revenue in Q2.
3) The fitting room. Online fashion lives with high return rates, and every return is another parcel to pay for. In a store, much of that decision happens before the purchase.
MY READ
If aggregating attention is the last job a retailer has, the winner is whoever owns that attention. Zara pays a landlord on terms it signed. Shein pays an auction, where every Temu bid raises the price.
One number argues against me: in Q2, Shein cut marketing by 4%, and orders grew faster than in Q1. Maybe more of its demand is its own than I'm giving it credit for. Q3, the first full quarter with the EU duty, will show which it is.
Where does most of your demand come from: attention you own, or attention you rent? Hit reply and let me know.
YOUR QUESTION, IN THE ROOM
Last week's vote is still open. Vote for one, and the top-voted one will go into the next recording.
One of these goes into the recording. Which one?
Voting closes: Tuesday 13.10.2026.
Talk soon, Luca
P.S. Today was meant to be launch day. It isn't. I've moved episode 1 again, and this time I won't name a date until I'm sure I can keep it. You'll hear it here first. The clue winners keep their early link.
