The fast-fashion industry ushered in a big consolidation. Chinese online retailer, Shein, announced its strategic alliance with Los Angeles-headquartered apparel chain Forever 21 this Thursday.

Under their agreements, Shein is set to acquire approximately a third of Sparc Group, the operator behind Forever 21. In turn, Sparc will secure a minority share in Shein.

Forever 21's product line will soon be available on Shein's website and app. With access to Shein's 150 million customers, Forever 21, which filed for bankruptcy in late 2019, will have a chance to bounce back.

On the other hand, Shein also has the opportunity to establish physical retail locations within Forever 21's global network of 560 stores.

Since this year, Shein has been testing the waters of opening up its platform to third-party sellers in an effort to expand its user base and solidify its market position.

Sparc hinted that the alliance could expand to include more Sparc brands as Shein aggressively transitions from being a retailer to a marketplace giant like Amazon. The American fashion house operates a portfolio of brands such as Aéropostale, Brooks Brothers, Eddie Bauer, Forever 21, Lucky Brand, Nautica, and Reebok.

Founded in 2008, Shein takes advantage of China's clothing supply chain to provide global consumers with ultra-low-cost clothing. It posted a net profit of $800 million on $23 billion in revenue last year and expects revenue to grow 40% this year.

In May, the company raised $2 billion in its latest funding round at a valuation of $66 billion, down about a third from a year earlier.