A cross-border e-commerce invisible giant is entering the public eye.
On May 28, cross-border e-commerce company SHEIN issued a statement stating that the company has no plans to conduct an IPO in the short term, clarifying rumors about the company’s recent listing. .
In 2021, SHEIN was selected as the most popular brand among young people in the United States by Piper Sandler, an American investment bank and asset management company. According to data from application tracking companies AppAnnie and SensorTower, as of May 17, SHEIN replaced Amazon as the most downloaded shopping APP on iOS and Android platforms in the United States.
SHEIN’s website is dazzling. There is a dazzling array of fast fashion clothing, with tens of thousands of new products released on the same day, and most of the products are priced between only US$6-20, which is low.
By selling cheap clothes to foreign young people, how did SHEIN become an e-commerce company comparable to Amazon? According to multiple industry insiders, SHEIN’s core advantage lies in its supply chain strength that has been ahead of the industry for at least 4 years.
1 year revenue of 10 billion US dollars
Cheap, trendy styles, and many categories, it is SHEIN’s first impression on consumers.
Click on SHEIN’s shopping page, and the screen is filled with discount information. New users will get a 10% discount for registration, and a 15% discount for orders over $69. Most products are priced no more than 20 dollars.
At the same time, SHEIN has many styles of fast fashion products. On one day in early June alone, SHEIN’s US station showed a whopping 27,396 new products were launched.
According to media reports, as early as 2019, SHEIN had launched 150,000 new models throughout the year, with an average of more than 10,000 new models every month, using only one or two In just one month, it caught up with Zara’s new arrivals throughout the year.
In the United States, SHEIN’s Google search volume is more than three times that of Zara, while in France, Spain, the United Kingdom, Saudi Arabia and other places, it is the number one shopping application on the AppStore. .
SHEIN’s high overseas traffic brings it high income. In 2018, SHEIN’s total revenue exceeded 10 billion yuan, and in 2019, it exceeded 20 billion yuan. While major fast fashion brands are closing their stores to survive due to the epidemic, SHEIN, which has no offline stores, continues to rise. Its total revenue in 2020 is nearly US$10 billion (approximately over 60 billion yuan). This is also SHEIN’s sixth consecutive year of operation. Revenue increased by over 100%.
According to SHEIN’s official website, the brand currently has six logistics centers in China, India, and the east and west coasts of the United States. It also has logistics centers in Los Angeles, Liege, Manila, Dubai, Seven customer management centers in Mumbai, Yiwu and Nanjing.
How did SHEIN quietly achieve its current achievements?
2 The ultimate model of low price and high volume
The low price and high volume model is very popular in domestic e-commerce. Business platforms are quite common, but to copy this model overseas, the most important problem to be solved is to get the huge overseas customer base to recognize and accept your own brand.
Before 2014, SHEIN did not have its own supply chain.
The goods are basically taken from the Guangzhou Shisanhang Clothing Wholesale Market. First, upload the wholesaler’s clothing pictures to the website, and then pick up and ship the goods when there is an order.
SHEIN was still very small at that time. In January 2013, the day after their wedding, founder Xu Yangtian wrote in English on Facebook, “My company has grown rapidly and I now have more than 50 employees!”
The first bottleneck came at the end of 2014. A SHEIN executive said that at that time, “SHEIN’s order volume reached 20 to 30 million yuan per month, with 40 to 50 million yuan at the peak.” However, due to the inability to stock all products, this became SHEIN’s bottleneck at the time.
“The disadvantage is that there are so many SKUs that cannot be stocked. As a result, the receiving experience has not been improved, the return rate has been lingering, and the marketing costs have been rising. It is not a virtuous circle, and it is entangled. in,” the executive said.
In 2014, Xu Yangtian decided to go to Guangzhou in person to build up the supply chain, built a design team, and built a board room for clothing pattern making. By 2016, there was a team of 800 people who quickly designed clothes, made samples, and finally sent them to factories for production.
The difficult part is placing an order for one hundred pieces at a time. In 2014, almost no factory was willing to deal with SHEIN and take such a small order.
The order quantity is small and the cost is high. “It costs more than this to start the machine even once, and it will be a loss.” A SHEIN women’s clothing supplier said.
There are many companies in China that want to make 100 or even 1 small order, and then add orders based on market response (the so-called “quick return for small orders”), but basically they have not been able to persist. .
But SHEIN did it. SHEIN takes the initiative to subsidize funds to the factory to ensure that the factory can produce 100 pieces without losing money. At the same time, it undertakes the work of sample making and pattern making by itself. This cost can range from hundreds to thousands – if the factory does it itself, an order of 100 pieces may not earn that much.
At the same time, SHEIN does not default on payment. This kind of “duty” that Duan Yongping talks about is quite rare in China’s real economy. They’ll even check out vendors in advance.
“We are all working hard to do SHEIN’s business now.” said the person in charge of the factory. 201In 5 years, SHEIN moved its supply chain center from Guangzhou to Panyu, and almost all the factories that originally cooperated with SHEIN moved with it.
The factories that relocated with SHEIN did not suffer any losses. In 2015, SHEIN entered the Middle East market, and sales exploded the following year. In 2016, some of SHEIN’s core factories began to receive orders worth 50 million yuan or more every year, achieving large-scale profits.
SHEIN’s sales in 2016 were approximately 4 billion yuan, and by 2017 they had exceeded 10 billion yuan. A US dollar fund investor who has researched SHEIN told LatePost that more than 80% of the orders placed by SHEIN in 2018 will be followed by new orders, further spreading costs.
According to its business plan, SHEIN’s supply chain focuses on transforming fabrics, printing and dyeing and other core links in 2018-2019, achieving 75% direct factory procurement. This can ensure the stability of material quality, further shorten the clothing production cycle, improve efficiency, and more importantly, provide huge space for cost optimization.
In addition, SHEIN will also provide suppliers with the fabric suppliers corresponding to each product, size guides for different styles of clothing, and the company’s summary based on big data product specifications. ,
Currently, at the fastest speed, fast fashion giant ZARA can make clothes and send them to stores within 14 days. We learned from SHEIN suppliers that currently, SHEIN The cycle from proofing to production is doubled compared to ZARA. The industrial supporting facilities formed by SHEIN in Panyu, Guangzhou have also attracted more cross-border e-commerce companies to set up business here.
In the view of financial commentator Wang Chikun, SHEIN’s current status is the product of the right time, place and harmony. “The company entered the cross-border e-commerce track early, targeting young foreign consumer groups and corresponding industry gaps, and relying on its strong supply chain and digital supply system to gain advantages in segmented fields. The independent website form has firmly established This allows SHEIN to firmly grasp the traffic.” Wang Chikun analyzed.
At present, it is difficult for other cross-border e-commerce companies to catch up with SHEIN’s development pace. But Lu Honghai also said that SHEIN’s business layout can still take a step forward.
3 SHEIN conquers American young people
Foreign fast fashion failed in China, Chinese fast fashion SHEIN But they have already conquered cities and territories and harvested young people from Europe and America. In the United States, SHEIN, founded in Nanjing, has become the most popular e-commerce platform among teenagers after Amazon. Among high-income women among teenagers, it is even more popular than Amazon. The number of users searching for it on Google is more than three times that of Zara.
In the UK, ASOS, Boohoo, and Misguided, which previously crushed ZARA several times in the supply chain, have now all lost to SHEIN.
A simple comparison can illustrate the popularity of SHEIN. In the high-income female youth category, SHEIN beat the popular Lululemon and came out on top.
Last year, 30 billion yuan of clothing was sold overseas – approximately equivalent to 1/7 Zara or 2.5 H&M. As the COVID-19 epidemic broke out, SHEIN officially announced at an internal meeting in June that sales had exceeded 40 billion yuan, hoping to hit 100 billion yuan. But at the same time, Zara announced that its revenue from February to April 2020 was almost halved and 1,200 stores were closed.
Addictive, cheap, and many choices are the keywords most frequently mentioned by SHEIN users. In the field of fast fashion, Zara is already moderately priced, with a dress costing US$30, but the same dress from SHEIN is only half the price, and some are even less than US$10. The price advantage is clear at a glance.
According to SensorTower data, as of September 2020, SHEIN’s global downloads have reached 229.4 million times, surpassing ZARA (123.5 million times) and H&M (90.6 million times) . SHEIN official website information shows that there are more than 20 million annual active users.
SHEIN’s next goal may be to build a vertical independent website to compete with Amazon, or to deepen the category and supply chain, or to expand the category to become a department store, but no matter what, Success often only belongs to a very small number of players. At present, almost all domestic fast fashion brands are in danger and have to find a new way out. The golden age has ended, but it does not mean that it will disappear completely. Fashion is also reincarnation. As long as we can grasp the preferences of mainstream consumer groups and pay attention to Quality and social marketing can also break new ground.
After all, with the best value for money, fast fashion brands can still attract a group of consumers. New stories may also help them get back on top after being briefly lost.
SHEIN’s emergence from the industry also fully demonstrates that although China’s fast fashion brands have finished their start, they should be the most sensitive to business. The global pattern of fast fashion in the future will need to be reshaped. divided. </p
