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Shein Overstock is Getting a Second Life in Latin America’s Street Markets

Among the colorful stands of Mexico City’s popular street markets, like El Salado in the Iztapalapa neighborhood, piles of garments are stacked high under neon-colored signs. Bright lettering hovers over each pile — sometimes highlighting the more expensive brand-name bundles, other times indicating where to find the cheapest unbranded clothing. Prices can go as low as 5 pesos (29 cents) per item. 

For years, many of Latin America’s informal street markets have sold ropa de paca — massive bundles of garments, commonly from mid- or high-end U.S. brands like Tommy Hilfiger or Calvin Klein, available at very cheap prices. Often secondhand or defective, they’re sold wholesale in bundles, or pacas, of hundreds of items that buyers rummage through. More recently, though, street markets in Mexico and other Latin American countries have been pushing a different type of ropa de paca: surplus from manufacturers that produce clothing for Shein, the Chinese ultra-fast fashion company. Known for selling trendy garments at already cheap prices, the e-commerce platform has no permanent physical stores.

Selling Shein’s surplus stock is ideal for Latin America, since people in the region love the brand but are not entirely sold on online purchases. Resellers have profited from the fact that many of Shein’s Latin American fans can’t — or prefer not to — buy its products online, creating a thriving regional wholesale industry. Informal street vendors, who sell clothes unfit for sale on the brand’s official platform, offer the lowest prices. 

When asked for comment on the sale of surplus products, Shein told Rest of World it was investigating the matter.

Shein’s combination of affordability while keeping up with current trends has nurtured an almost cult-like following. The brand’s offline clothing boom comes down to this high demand, but there’s no way for many customers to buy online, either because they don’t have credit cards, data on their phones, or simply don’t understand how to place an order through the company’s app or website. Retailers have spotted an opportunity to sell Shein’s wares to the masses in the way they prefer: Offline, and paid in cash. 

“It’s not hard to sell this brand — people are willing to wait 30 days for the next shipment,” Libby Sabillón, a Shein surplus wholesaler in San Pedro Sula, Honduras, told Rest of World.

But high local demand for Shein clothing is only half the story. A big reason for the boom is that wholesalers in Latin America can buy readily available masses of cheap surplus clothing directly from Shein’s manufacturers in China, who are keen to cash in on what would otherwise be wasted production.

“Shein clothes — cheaper over here than in the app!”

Fast turnaround is part of Shein’s global success: The company added between 2,000 and 10,000 new garments to its app every day between July and December 2021. But it’s still somewhat unclear what happens to the unsold or returned garments from this massive catalog. Rest of World investigation found that Shein returns are a logistical and financial nightmare, with manufacturers furtively sending bulk shipments of surplus or returned goods to destinations in Africa, Southeast Asia, and Latin America.

Shein has said its suppliers are not authorized to sell its products on any other platform. But many items still end up on private WeChat groups, run by manufacturers looking to contact resellers in countries like Mexico. 

“Shein puts out new clothing by the minute so old clothes keep being tossed out of its warehouses in China,” Luis Campagne, a Shein wholesaler from Sonora in northern Mexico, told Rest of World. This provides him and other resellers with a steady supply of garments that will often make a stop in the U.S. — which usually has lower import tariffs on clothing — before being shipped off to Latin America.

The journey of a garment from a Shein factory warehouse in a city like Guangzhou to the informal street markets of Latin America is determined by a chain of wholesale resellers. The first link in the chain might be a warehouse owner in Mexico City interested in buying thousands of unsold or discarded items straight from Shein manufacturers. That first reseller brings those tons of clothes to Mexico, where they are sorted, sent to warehouses, and packed into pacas of between 300 to 1,000 items. Informal vendors then descend on the warehouses to buy the pacas and take them to where the final buyer can find them: often a street stall, with customers rummaging for the best deals.

According to Tania Honorat, a social researcher from Bitácora Social, a research center focused on societies and business, Shein items that end up in the pacas would have likely gone through three or more resellers. “There are as many sales channels for Shein clothing as there are types of consumers eager to resell them,” she said.

Rest of World identified at least three locations in Mexico City’s busy downtown area, advertised through TikTok, that sold Shein clothing wholesale in warehouses not sanctioned by the brand. The wholesale operations of Inventory Shein, a warehouse whose TikTok content recently went viral on social media, were “not related to the [Shein] app so we don’t take individual orders,” said manager Gabriela Santana over WhatsApp. 

Both Campagne and Sabillón declined to state what they had paid their suppliers in China for the Shein clothing. Honorat and Ricardo Flores Llamas, general manager at Mexico City-based international logistics company Silsa, claimed these initial resellers could be paying less than a peso (about 0.05 cents) for each item.

Campagne and Sabillón said they don’t resell the rejected or surplus clothes from Shein without inspecting them. “You get them for cheap because you don’t know what you’re going to get and many items come with significant tearing or damage,” said Sabillón, though she’s willing to take the risk because her earnings from the sellable items make up for the losses. “I make an effort to sell good clothes that benefit my customers and can keep their businesses going.”

To ensure the street vendors keep coming back, she and Campagne put the clothes through a time-consuming process. First, they discard items that may be totally unfit for sale. Then they wash, iron, and even repair some of the clothes before repackaging and selling them to the next reseller. They take special care to highlight the brand, packing each individual item into Shein-branded plastic bags. 

Luis said his team goes through an additional “quality control” process, so that whoever buys his bundles doesn’t end up with pacas full of out-of-season items, garments in just one size, or large amounts of a single style of clothing. He prepares assorted packages to sell wholesale, starting at 50 items for 3,750 pesos (about $220) to 300 items for 18,000 pesos (about $1,050). He promises his customers a profit ranging from 20 pesos (about $1.15) to 100 pesos (almost $6) per garment. 

Back at a street market in Mexico City, a familiar scene unfolds as groups of customers frantically open pacas and sort through hundreds of Shein-branded bags of clothes. A stand attendant films the action on his phone and posts the video on TikTok. “Shein clothes — cheaper over here than in the app!” reads the caption. 

Source : Rest of World