A case for regulatory oversight of online clothing retailers
As a clothing manufacturer, I have to overcome many legal and regulatory hurdles in order to stay in business without breaking the law. Like government regulations, there are mandates from my clients around environmental and social standards. Environmental and social compliance are fundamental requirements for doing business in the Bangladesh RMG sector these days, and personally I have no complaints if this means that we are moving towards a more responsible industry. We all have to play our part.
While manufacturers have been forced to operate more responsibly over the past decade or else they risk being shut down or losing business, the same cannot be said of retailers. Many fashion retailers have become responsible and ethical in recent years as well, but there are others in the market that seem to be operating under a completely different set of rules. And what’s frustrating is that there doesn’t seem to be any consequences.
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I should clarify that my personal concern here is with online fashion retailers. This is an area in which regulators appear to be falling behind the pace of its rapid development.
Take the example of the rapidly growing online-only Chinese fashion brand, Shein, which is capturing market share over traditional rivals such as H&M and Zara. Shein is now valued by some analysts at over $ 30 billion. And yet, an analysis by the international news agency Reuters found that Shein did not publicly disclose working conditions throughout its supply chain, despite such disclosures being a legal requirement on one of their key markets, the UK.
In addition, it was found that, until recently, Shein falsely stated on her website that the conditions in the factories she uses were certified by international labor standards bodies. Shein sources from China.
Shein also claims that she never engages in child or forced labor, but the company does not provide the full supply chain information required by UK law. This is because unlike many big brands like H&M, Shein does not share its list of suppliers with the general public.
I use Shein’s example, but it’s not the only online fashion retailer that lacks transparency when it comes to ethical and environmentally responsible business practices. In fact, the advent of online shopping has opened up the fashion industry to many small online-only sellers who can use their fleet to evade regulators over compliance issues.
The issue here is one of accountability, which unfortunately seems to be lacking in the online fashion space. Online brands can quickly become operational in multiple markets around the world, and regulatory oversight of their activities becomes difficult, if not impossible. Where is their tax jurisdiction? What environmental and social standards do they adhere to?
While some online-only retailers seem to operate under their own set of regulations, more established names continue to push the needle towards sustainability. Major brands such as H&M have been at the forefront of the industry for years, whether that is setting science-based targets for climate reduction, working with more sustainable materials, introducing transparency to consumers on products by providing better information on how and where clothing is made, or by focusing on improving workers’ rights in supply chains.
Meanwhile, as a manufacturer, and certainly as an exporter of garments from Bangladesh, it is difficult these days to act irresponsibly. Our customers would just shop elsewhere, and the many audits we have to undergo each year would soon expose and uncover bad practices. We are under the microscope like never before, but at least that has the effect of raising the standards.
There is one major difference in the online-only fashion space and that is that the public is the end customer. The problem is that end consumers often lack the knowledge or understanding to ask the right questions about the clothes they buy. It’s easy for online sellers to ignore their customers’ sustainability issues; for proof, just look at Shein’s rapid growth in recent years.
The point, then, is that while manufacturers are responsible in the areas of compliance, it’s hard to say with any great certainty that the same is true for the rapidly growing online fashion space. Who does the audits in the online fashion market? Who checks where their suppliers’ factories are located, whether they are outsourcing, whether child labor is involved, and whether those factories are even safe? The global apparel supply chain is huge. If you don’t have an ethical mind, it’s easy to cut corners.
There is always someone who will produce for a lower price, especially if one is happy not to ask a lot of questions about where and how their clothes were made. A new online fashion seller could easily source irresponsibly and unethically, and there would likely be very little repercussions.
If fashion is to become more responsible, there has to be consistency and a level playing field for everyone, including manufacturers, traditional brands and retailers, and the new generation of online-only brands.
Governments in major markets, such as the United States and Germany, should start by making it mandatory that any online retailer selling to their respective general customer base be required to exemplify full supply chain transparency. This would include detailing complete lists of suppliers on their websites and adhering to appropriate industry standards. Do people who buy from Shein have any idea where their products were made and under what conditions?
I am not under the illusion that there are easy solutions here. The bigger point is that at a time when we as an industry are trying to make improvements at every level, it’s easier than ever to build an online fashion business that has little or no regulatory oversight. I feel for responsible brands and retailers, who have spent years investing to do the right thing, only to realize that they are being undermined by newcomers who care little about ethics and quality. durability.
There isn’t much these brands can do if new online operators simply refuse to play fair and by the rules. In such circumstances, just as we as responsible manufacturers depend on strong global regulations to ensure a level playing field for all.
A few cowboys can’t be allowed to undo all the good work we’ve been doing.
Mostafiz Uddin is the Managing Director of Denim Expert Limited. He is also the founder and CEO of Bangladesh Denim Expo and Bangladesh Apparel Exchange (BAE).