When the news broke this weekend that ultra-fast fashion giant Shein plans to acquire Everlane, the social media commentary ranged from “gutted”, to “this feels like Whole Foods getting acquired by Dollar Tree”. But while many are focused on the seemingly odd fast fashion x slow fashion mashup and what that signals for sustainability, few have examined what it says about fashion’s value chain.

Experts say the deal is less about a dilution of what Everlane stood for, but more about what could be gained from a collision of business models, both key to shaping fashion’s future.

Consumers have been more conscious of what they put in and on their bodies in recent years, calling for a change in fashion that hasn’t really materialized. That’s largely because sustainability has been historically treated as a standalone issue, partly pacified by things like organic cotton capsules, emissions frameworks, and marketing that’s either really good or greenwashing — all the pretty parts that make the effort visible. But for fashion to really move the needle on reducing its footprint, sustainability has to be embedded in supply chain efficiency. The Shein-Everlane deal would bring both sides of this story together.

Everlane’s market positioning and what it accomplished with supply chain transparency likely has “great appeal” for Shein, says John Thorbeck, chairman of Chainge Capital, a consulting firm focused on fashion transformation and social impact. The proposed deal, he says, “is very much a warning sign to industry leaders of how important an end-to-end system approach is in a sector overly reliant on the diminishing art of merchandising.”

Sustainability equals efficiency

Contrary to what many might expect to hear about a business that makes quick-turn, quick-churn clothing and has been investigated for labor violations, Thorbeck says Shein has a “legitimate” point of view on sustainability.

“In an industry that makes 10 to sell three, Shein makes five and sells five,” he says. The company has created a supply chain network of smaller suppliers with excess capacity that can respond to trends in almost real time. Shein doesn’t hold or build inventory, which means it also doesn’t absorb the cost of markdowns, lost sales, or idle capital. The company certainly benefits from its access to lower cost labor in Asia, as well as fabric that make its price points possible, but its model still stands in stark contrast to retailers that sell high volumes but leave 40% to 50% of their goods discounted or unsold, on average. “When you’re eliminating excess inventory and operating with a make-to-sell capability, it may be lower price, but it is actually more profitable.”

Since its US launch in 2017 and subsequent meteoric rise in relevance, Shein’s business model has been closely studied. But people aren’t buying into the Shein brand, Thorbeck says, they’re buying into a supply chain and logistics capability no other brand can seemingly match.

“They really have inverted the source of value,” says Thorbeck. “[Most] US brands think value is created on the front end of the relationship with consumers, through branding, merchandising, and style. But Shein turns that around by creating value with really rapid cycles, media trends, and the ability to respond and move on with far less risk… It really means that financial value is derived from the supply chain and through superior responsiveness to trends rather than frontend marketing and branding.”

Everlane had the branding, the merchandising, and the style — but also the debt, amassed in part from expensive inventory financing. Shein has the capital to spare, but also a gap at the higher value end of the market. As a case study from Camille Moore, founder and president of boutique branding agency Third Eye Insights, notes, Everlane was able to identify the gap between consumers’ intention to buy sustainably and the access they need to do so, but it couldn’t hold its position in the market. Quince came in with better basics at a lower price, a factory-direct model that enabled more control over the supply chain, and proved the market was viable. In less than 10 years since its launch, Quince secured a $10 billion valuation.

“Shein just bought the brand most associated with the values that customers were already looking for, but at a distressed price, adding a balance sheet and distribution network that reaches the customer in ways Everlane never could,” Moore writes in the case study.

“A groundswell of making better choices”

Everlane’s customer is one Shein wouldn’t have appealed to without the acquisition. In the best-case scenario, Shein uses this opportunity to prove that its model can work in tandem with sustainability, positioning itself to benefit from the consumer shift Moore calls “a groundswell of making better choices”. Demand for better products is changing in real time, she explains. “A lot of this [sustainability] stuff used to be really for the 1%, educated, with white-collar jobs — but that’s just not the case anymore. Because that’s not really Shein’s business model, it tells you clearly that if Shein is investing and buying an organic conglomerate, it has gone to the masses.”

The groundswell of pressure — from consumers, lobbyists, and the industry alike — has also forced regulators to apply a heavier hand. Now, brands need to consider the end-of-life of their garments — and, at least in Europe as of this July — stop destroying unsold products.

That’s likely why Shein is acquiring the ability to have products for a higher-income, more eco-conscious consumer, says Jen Guarino, co-founder and CEO of ISAIC, a Detroit-based non-profit focused on innovation in apparel manufacturing.

The rise of platform competition

The Shein-Everlane deal is one part of a growing trend toward platform competition, where fashion companies are increasingly competing as ecosystems and infrastructure operators rather than simply brands. Companies like Shein, Amazon, Quince, and Inditex have centralized their data systems and are using ownership over things like sourcing, fulfilment, pricing, and creator ecosystems to both shape demand and respond to it. In the same way Shein may be doing, Inditex has also traded up in recent years, moving further upmarket, shedding some of the fast fashion stigma, and skirting some of the price pressure of low-cost clothing. The fact that it has total command over its logistics is what made the shift possible. “Brands must be different or fast, that’s the choice,” Thorbeck says. “Few can balance the capabilities and culture of both.”

This change, he notes, is as significant as when postponement shifted electronics manufacturing in the ’80s and ’90s. Companies tried to respond to shortening demand cycles by making production decisions later, so they could respond to actual demand rather than forecasts — something many in fashion are still trying to navigate. H&M is already trialing a version of this, allocating product volumes to suppliers upfront, while making specific decisions about style and materials nearer the time. Shein, Thorbeck says, “is postponement on steroids”, and that’s what brands will have to grapple with if they want to adopt a similar model.

The Shein-Everlane pairing is evidence of different capabilities entering the same system, says Christine Goulay, founder of Sustainabelle Advisory Services. Sure, Everlane will have to navigate what an association with Shein may mean for its perception among consumers as a sustainability-first brand, but it could land in an unexpectedly positive position. What Goulay is thinking about is: “Can positive spillovers be created on both sides, where sustainability and operational performance become part of the same value-creation story? That will be something to watch.”

Right-size production isn’t everything

Only producing what you can sell may be good for minimizing waste, but it doesn’t cancel out all of the other ways products can be “problematic”, says Guarino. “I’m interested in seeing whether this truly is an example of a business converting its strength in technology and supply chain into higher quality, longer lasting product that won’t go to landfill so quickly. There are still doubts over whether Shein can operate the same model with higher priced materials — namely, less polyester — and higher worker wages. “If they can do that, that’s super interesting, because that begins to prove that low cost, low quality isn’t necessarily the best business model. And that, if you get rid of all these indirect costs, then you start to get some real movement in changing the harmful impact of what we’ve seen.”

Regardless of exactly how it shakes out, Thorbeck says as Shein prepares for its IPO, it’s out to make sure investors know its model isn’t limited to the low end of the market. Whether intentionally or not, it may also prove that the brands with deeper control over sourcing, manufacturing, logistics, and pricing are the ones that will come out on top.

“Everlane is a proof point and a launch into how Shein applies a system to higher priced brands,” he says. What we’re witnessing, Thorbeck adds, is a “significant change in the industry”, where business models that prioritize responsiveness will be increasingly valued. “The idea that fashion is a fixed system of large retailers served by volume suppliers is falling apart.”