In October, App Annie released the Q3 2021 Mobile Top Apps and Top Games list, which included 3 shopping brands/platforms in the download breakout list, Blush Mark in France, AliExpress Russia in russia, and SHEIN in Japan.
Women's fast fashion brand Blush Mark is headquartered in Los Angeles, and also has employees in Shanghai, in addition to the product price is not as low as "SHEIN", a variety of play styles are basically the same as "SHEIN". Blush Mark also frequently appears on the list of popular apps in markets such as the United States.
What I didn't expect was "SHEIN" that entered Japan. Based on the data monitored by SimilarWeb, semrush and other tools, as well as the opening time of SHEIN Japan's social media accounts, the author speculates that "SHEIN" probably opened a Japanese website at the beginning of this year, and the website traffic really started in June, while the Japanese version of the "SHEIN" app was launched in August this year.
The above figure shows the download ranking of "SHEIN" in the Japanese iOS list, iOS shopping list and Google Play shopping list, it can be seen that "SHEIN" has better performance under the iOS list, and in addition to "SHEIN", Amazon and Nike, the shopping apps loved by Japanese users are basically packaged by local companies.
If you don't consider the website side, only consider the App, "SHEIN" is basically the peak of the line, and maintained well, since the launch, the iOS side of the total ranking has not been lower than 35. According to people familiar with the matter, the average daily order volume in Japan is about 2w, calculated according to the unit price of 70 US dollars, the average annual sales can also achieve more than 500 million US dollars, the annual sales of 100 billion yuan, and the contribution of the Japanese market at the beginning is almost 1/30. Although it is far from shein's achievements in North America, it is also very impressive.
SHEIN iOS download ranking (8.12-11.09) | source: App Annie
Although "SHEIN" has a global layout, it has been able to enter Japan smoothly and achieve good results, which makes me want to investigate the reasons.
In our impression, the Japanese market customer unit price is high, but the entry threshold is very high, island consumers have unique consumption habits and long-term cultivation of trust consumption channels, a new brand to get japanese consumer recognition, basically can not borrow the past localization experience in other markets, so going to Japan can easily become more than worth the loss of action. This is not only reflected in the brand, but also in the process of some pan-entertainment social apps going to Japan, it is extremely difficult to gain consumer trust, and Japan is a market that many developers dare not touch.
The easiest reason for "SHEIN" to successfully break into Japan is that the brand has made sufficient visibility in some high-line markets, and the resistance to obtaining the minds of users is even smaller. But if we look at the path of other overseas clothing brands into the Japanese market, we will find that "SHEIN" is still very different.
Fast fashion brands are entering the Japanese market at the same pace
According to Statista statistics, as of March 2020, the most popular fashion brand in Japan is UNIQLO, and from the 5th place onwards, it is the overseas brand, which is the American brand GAP, the Swedish brand H&M, and the Spanish brand ZARA.
When I looked at the path of these three brands into the Japanese market, the author found that there is a clear commonality.
GAP established a wholly owned subsidiary in Japan in 1994 and an offline store in Tokyo in 1995, when GAP had been overseas in the Uk, Canada, and had been on the market for some time. In 1991, Japan ended a four-year-long economic bubble that followed the Heisei Depression, and consumers saw greater demand for affordable products.
ZARA entered the Japanese market almost at the same time, in 1997, ZARA and Japan's BIGI Group joint venture to create ZARA Japan, in 1998, ZARA's first Store in Japan opened in Tokyo, that year ZARA in the very rapid expansion of overseas markets, basically using the same routine, in a city of famous locations to open stores, after attacking a city, before diverging to other cities. By 2005, all of ZARA Japan's equity had been transferred to parent company Inditex.
H&M entered the latest. In 2007, H&M's offline storefronts have been opened to many European countries, the United States, Mexico and China, and it is a world-renowned affordable fast fashion brand, but it has not entered the Japanese market until the global economic crisis in 2008. People's consumption budgets have shrunk overall, and the size of Japan's clothing market has also been reduced, but this is an opportunity for H&M to open up the Japanese market. In response to the rules of the Japanese market, H&M has also set up a "quality manager" position in Japanese stores to ensure the quality of clothing.
I don't know whether it is a coincidence or the company's positioning is similar, but there are many obvious similarities in the timing and path of the three fast fashion companies entering Japan:
The brand has formed a certain influence in the world, the Japanese economy has declined, and it has opened its business in Japan with a physical store in a Tokyo department store.
Of the 3 points above, "SHEIN" now accounts for 2 points.
The popularity of "SHEIN" is not to mention, when young people in the United States lined up to go shopping at the "SHEIN" pop-up store, it was already a node. The convening of the Olympic Games has filled the Internet with the question of whether Japan has no money. Economists predict that Japan's economy will not return to 2019 levels until 2024.
The only difference is that "SHEIN" does not have a stable storefront in the world, and only shein, an online business, can really penetrate the Japanese market?
Love offline shopping, where does the "obsession" of Japanese consumers come from?
Fast fashion brands are obsessed with the first store in Tokyo, which is actually related to the fact that Japan's demographic structure and economic level are very different from other markets.
Japan's middle class accounts for a larger proportion, which is related to the rapid development of the Japanese economy after World War II and Japan's lifelong employment system. Even now, the proportion of the middle class has been shrinking, until 2019, 67.2% of the people in Japan still consider themselves to be middle class and above.
Japan's Population Share | 2019 Source: Statista (2021)
This has led to the formation of 2 characteristics of the Japanese clothing market: one is that the proportion of brands at high-end prices is larger, and the other is that many department stores have been built around the transportation hub of the middle class commuting to work, and the density is large, and the workers can go shopping on the way to work. Compared with developed countries such as the United Kingdom and the United States, Japanese consumers have more stores per capita, which means that the flow of people in each store is smaller. These convenient offline shopping channels may be one of the reasons for the slower increase in e-commerce penetration in Japan. According to eMarketer, although it occupies the fourth place in size, Japan's e-commerce growth rate is only 6% (2018 data).
2018 Japanese e-commerce scale | source: eMarketer
Japanese consumers' offline shopping habits are established from the level of demographic structure and urban planning, and it is not easy to change. In this context, it is uncertain whether the genes of "SHEIN" rooted in the Internet, rapid iteration and extremely low pricing can still function as well as in other markets.
But another factor that seems to be favorable to "SHEIN" seems to have emerged, and there have been some changes in the pattern of the Japanese clothing market.
The following figure lists the general classification of different positioning clothing brands in Japan (see the words of each family for the classification method, and readers who have objections are welcome to discuss it together in the comment area). According to the Roland Berger report, the proportion of brands positioned in Japan's mid-to-high-end positioning is being squeezed by luxury brands and mass brands, and mid-to-high-end brands are becoming more and more subdivided and diverse. That is to say, the proportion of 2 and 3 color blocks in the figure is decreasing, and there is a subdivision trend.
So in the current situation of Japan's economic downturn and the loosening of the clothing market, can "SHEIN" use online play to infiltrate "traditional" Japanese consumers?
How does SHEIN "woo" Japanese consumers?
Japan Top 25 Clothing Retailer (2018) | Source: Business Finland
Japanese consumers have their own trusted brands and shopping platforms, well-known affordable clothing brands include UNIQLO, Shimamura, GU, etc., and trusted e-commerce platforms include ZOZOTOWN, Yahoo, Rakuten, and Amazon. When we communicated with some entrepreneurs before, they would think that Japan's e-commerce platforms are very old, and there is room for experience upgrades, but at the same time, a big problem is that Japanese consumers are more sticky to existing platforms, and the cost of letting them try new platforms will be very large. How did SHEIN, which entered as a brand independent station, try to break through this time?
Japanese consumers can't escape the low-priced temptation of "SHEIN"
In the context of the economic downturn, "SHEIN", which entered Japan, has maximized the brand's affordable characteristics.
The price of "SHEIN" itself is lower than the affordable brand recognized by Japanese consumers, and on this basis, "SHEIN" will also launch some discount benefits and pet powder plans from time to time. It turns out that Japanese consumers still eat this set.
During the Singles' Day Promotion, "SHEIN" reduced the free shipping range in the early warm-up, and all orders were free shipping on the day of the promotion. Immediately after Singles' Day, "SHEIN" launched a separate Black Five promotion, while in Europe and the United States, Double Eleven and Black Five promotions were merged.
Japanese consumers have Asian genes and are more tolerant of European and American cultures, which gives "SHEIN" more opportunities to do marketing activities. By browsing the account of the "SHEIN" Japanese website, it can be found that the number of fans has exceeded 10,000, the anniversary of the establishment of the brand and other dates have been used by SHEIN to launch discount activities, attracting consumers to place orders at the same time, growing fans and strengthening brand awareness.
According to Onesight data, on the day of Singles Day, the number of ins account fans of the "SHEIN" Japan station increased by 1500+, which is much more than the daily one. Another peak day for fans was October 8, when SHEIN also posted a discount post.
Low prices should also have a sense of branding
The lack of brand power is the hard wound that "SHEIN" has always been. Since the abundant funds, "SHEIN" has also held many large-scale marketing activities to spread brand power, and many activities have even been the first.
Specific to the Japanese market, whether it is consumer goods, social networking, or even pan-entertainment, Japanese consumers have shown a "low sense of trust" characteristics. This makes it harder for consumers to build trust in a brand, but on the other hand, it means that building a brand is more valuable. Therefore, even "SHEIN", which is already famous in other markets, has spared no effort to increase its presence in the Japanese market.
On September 5, "SHEIN" attended Japan's Kansai Fashion Week, and popular Japanese celebrities such as NMB48 member Miyuki Watanabe wore "SHEIN" costumes to the catwalk, which attracted a lot of attention.
Source: SHEIN Japan ins account
"SHEIN" also highlighted the promotion of "SHEIN X ROCK THE RUNWAY" on the social media of its Japanese website, according to Onesight data, the official account of "SHEIN" for Japanese consumers began to push event warm-up posts from September 22 to September 27, and the number of post interactions of the account reached up to 1w+ times in a single day. The only other post that reached more than 1w engagements was a set of dog graphics on October 13.
In terms of details, some adjustments have also been made to the shopping preferences and habits of Japanese users, such as providing a wealth of stationery products, using bright colors in the website design and using design methods such as small illustrations and multi-color blocks that Japanese consumers love.
Although these marketing methods are not new, they do take into account the aesthetic preferences of Japanese consumers and their love for traditional fashion windows. The method is not new, it is easy to use.
epilogue:
Japan is a big consumer country, but the e-commerce industry is not developed, even so, its scale is also in the global top 5, if online shopping can get education, so close to China's big market, will inevitably release more dividends. However, in view of the previous closedness, overseas enterprises can only be deterred. But in the past two years, from games, to pan-entertainment, to beauty, Chinese companies have broken through the Japanese market on multiple lines, although many experiences are not the same, which also provides valuable experience for other categories.
From the perspective of "SHEIN" itself, seizing the opportunity of Japan's economic downturn and changes in the pattern of the clothing market to enter the Japanese market with two strategies of low price and branding is currently a good choice in the author's opinion, but whether it really takes a certain share in the Japanese market, we will continue to pay attention to it.