Shein launches its first branded credit card in Mexico to boost loyalty, but experts forecast a slowdown in the fast-fashion giant’s growth due to mounting regulatory and ethical challenges.
Shein’s recent decision to launch a branded credit card, developed in collaboration with the Mexican fintech firm Stori, comes as the ultra-fast-fashion powerhouse prepares for what experts predict will be a downturn in its growth next year. According to a press release shared Wednesday, the credit card initiative signals Shein’s first foray into branded financial services. While available globally with Mastercard backing, the new Shein card primarily targets consumers in Mexico, a market with historically limited access to credit. Shein’s move is part of a broader trend as fashion giants look to financial services to deepen brand loyalty, but the timing coincides with a looming slowdown in the brand’s rapid expansion.
Through its Stori partnership, Shein seeks to address Mexico’s unique challenges with financial inclusivity. The Shein card offers an exceptionally high 99 percent approval rate and comes in both physical and digital formats. Marlene Garayzar, Stori’s chief growth officer and co-founder, noted the partnership’s significance,“We are very proud to be the first partner in the world with which Shein has made this kind of alliance. We have created a tool that facilitates access to credit and rewards everyday use, in addition to always ensuring that users receive information on how to use it responsibly,” she said. As Shein’s first branded credit card, it opens an avenue for the company to tap deeper into consumer spending while encouraging repeat purchases. New users are rewarded with 250 “Shein welcome points,” while all purchases on Shein’s Mexico platform earn double points. For purchases outside the Shein ecosystem, consumers earn one point for each purchase made, whether national or international.
In addressing the broader financial inclusion issue in Mexico, Ted Wang, Shein’s head of global payments, described the partnership with Stori as a “natural step” toward elevating the shopping experience for its customers. With Shein’s card, the company positions itself as not just a shopping platform but also a supporter of financial accessibility, even as it navigates increasingly complex challenges globally.
Despite Shein’s expansion through initiatives like the credit card, the company’s trajectory may not maintain its recent growth pace. A newly published report from U.S.-based research firm Forrester predicts a significant slowdown for Shein and its primary competitor Temu, another Asian-based online marketplace, as early as next year. The anticipated downturn is attributed to rising consumer complaints and scrutiny over production quality, ethical concerns, and logistical practices, particularly in Europe. “Complaints about quality of goods, unethical production processes, unfair advantages in shipping, and increased nationalism” have turned Shein and Temu into focal points for environmental and governmental bodies in Europe, according to Forrester’s report. Both companies have been compelled to provide detailed explanations on business practices to the European Commission, responding to demands for transparency from environmental groups and consumer organizations concerned about compliance with European standards.
Shein and Temu have each faced mounting calls to address sustainability and ethical production concerns. Forrester’s report notes that the two platforms are under constant scrutiny, as European regulators and watchdogs continue to push for more transparent and compliant business practices. The European Commission has already requested disclosures on various aspects of their services, emphasizing the need for both companies to align with European Union regulations, which are more stringent than many other markets. Consumer interest organizations, likewise, have spoken out against these platforms, asserting that both Shein and Temu fall short in key regulatory areas, especially regarding fair trade and environmental practices.
Additionally, Shein’s ongoing attempts to secure an initial public offering (IPO) in the United Kingdom have encountered obstacles, leaving the brand without the substantial capital boost that a successful IPO could provide. An IPO would not only infuse Shein with capital to fuel its expansion but could also help stabilize its position in the face of increasing competition and operational expenses. For Temu, the competitive landscape has introduced its own set of challenges; high customer acquisition costs continue to strain the company’s profitability and growth strategy. Forrester’s report anticipates that these costs will contribute to a decline in Temu’s growth next year, mirroring the trajectory expected for Shein.
Temu recently managed to edge out Shein in market share in France within just four months of launching, capturing 11.9 percent of the market, while Shein holds 12.8 percent. The two rivals have aggressively pursued dominance in the European market, but these gains have come at a cost. Forrester’s report attributes much of the slowing growth to consumer dissatisfaction in Europe, where shoppers are increasingly vocal about ethical issues in fast fashion and are urging companies to adopt more sustainable and transparent practices. Additionally, a wave of “increased nationalism” has taken hold, with European shoppers and regulatory bodies pushing for policies that support local businesses over foreign imports.
Even as Shein turns to the financial sector with initiatives like its credit card, its success in Mexico may not translate as readily in markets where regulatory pressures and consumer sentiment weigh heavily on fast fashion. By leveraging financial partnerships and expanding its consumer offerings, Shein may retain a level of loyalty in key demographics, yet it must address the ongoing concerns that are shaping its market trajectory. For Forrester and other industry analysts, these hurdles underscore the challenges Shein and Temu face as they navigate a complex international market landscape.
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