Image source @ Visual China
Text | Blue Ocean Billion View Network egainnews
According to Reuters, SHEIN will restart plans to list in New York, and has hired Bank of America (BAC. N), Goldman Sachs and JPMorgan Chase and others serve their IPOs.
As early as two years ago, SHEIN began to prepare for the first time to go public, but due to the uncertain market situation at the time, the plan was shelved for a while.
For the news that the listing will be restarted, a spokesperson for SHEIN denied it.
A Shenzhen analyst revealed to "Blue Ocean Yiguan Network Egiannews" that in view of the fact that shein's founder Xu Yangtian has always been known for his low profile, SHEIN's Chinese name "Xiyin" (or taken from LaoZi's Tao Te Ching "Dayin Xisheng") has the meaning of pursuing quiet and low-key. Therefore, even if SHEIN does restart the listing plan, it is likely to pursue the principle of "things are secretly done, words are leaked", and the details will not be disclosed until the last step.
Sources told Reuters that SHEIN's revenue will already reach 100 billion yuan ($15.7 billion) in 2021, and its valuation will reach $50 billion (316.086 billion yuan).
SHEIN was valued at $15 billion in 2020 when it was reported by media such as "Delay", and now, this valuation has more than tripled, which can be described as very rapid.
But the valuation is, after all, the estimated value, with a lot of room. SHEIN is currently a private company and will not disclose its financial data. Chris Xu, the founder who has always kept a low profile, generally does not support disclosing data before going public.
Founded in 2008, SHEIN, together with Anker, is now the "two poles" of China's cross-border e-commerce and is often compared.
SHEIN focuses on women's clothing, with independent stations and independent Apps as the main position, Anker focuses on 3C electronics, with Amazon and other third-party platforms as the main sales channels, while taking into account Walmart, Best Buy and other offline stores.
In 2020, Anker finally stepped into the "10 billion club" (9.35 billion), and this achievement was achieved by SHEIN two years ago.
SHEIN's valuation has reached more than 300 billion yuan, revenue of more than 100 billion, Anker's market value is around 36.1 billion, although its revenue will continue to rise on the basis of 10 billion, but overall has been far behind, close to 10 times the gap.
(Source: Oriental Fortune Network 2022/1/26)
A Shenzhen analyst told "Blue Ocean Billion View egainnews" that the core of Anker is a manufacturer driven by research and development, the e-commerce platform is only its sales channel, it is not a typical cross-border e-commerce company, SHEIN is an e-commerce company driven by traffic and intelligent supply data system, in the strict sense, the two can not be directly compared.
However, as two benchmarks for cross-border e-commerce, SHEIN and Anker Innovation are compared and can never be bypassed.
If SHEIN is successfully listed, how many Ankers will its market capitalization be?
What are Anker's main assets with SHEIN?
Why is Anker, driven by innovation, inferior to SHEIN, which sells "low-priced" goods?
01 What makes SHEIN more valuable than Anker is not its higher revenue
Anker is known for its innovation and SHEIN for its "low price". Theoretically, Anker should have had a "higher value", why is there such an "abnormal" situation?
Overall, shein's "value" lies not only in its revenue, but also in its "private domain traffic pool" and "independent ecological closed loop".
Let's start with a rough comparison of revenue.
SHEIN's revenue will already reach 100 billion yuan ($15.7 billion) in 2021.
Anker has not yet released its 2021 financial report, and its revenue in 2020 is about 9.353 billion. In the first three quarters of 2021, Anker's revenue was about 8.425 billion yuan.
According to the situation and previous years, it is speculated that in 2021, Anker's annual revenue will exceed 10 billion yuan, which should not be too much of a problem, but there may be a big gap to reach 15 billion yuan. In terms of revenue, SHEIN is 6-9 times that of Anker.
From the perspective of product unit price, the price of Anker's products is mostly higher than that of SHEIN's products. On Amazon, with the exception of a few products, Most of Anker's products sell for more than $20.
Some products with higher technical content even sell for 200-500 US dollars.
IN CONTRAST, SHEIN'S PRODUCTS HAVE ALWAYS BEEN KNOWN FOR ITS "LOW PRICE". Most of the products sell for less than $13, and clothes for $3-4 can be found everywhere. Even the Moft, which is ready to develop in the high-end direction, is generally priced between $30-40.
SHEIN generates nearly 10 Ankers revenues at an average price of less than half of Ankers' products.
Although the reason for this result is not clearly proven by data, there are only two situations: one is that SHEIN's user base is much larger than Anker's; the other is that SHEIN's user repurchase rate is much higher than That of Anker. Or, both.
If you want to carry out "ultimate attribution", it is mainly because of the huge gap between the two models and the "moat".
SHEIN has stored huge traffic on independent stations and APPS, forming its own "private domain traffic" and even "private domain ecology". Anker, on the other hand, still relies on the platform and uses the traffic distributed by the platform to achieve sales.
In essence, the difference between SHEIN and Anker is not the difference in traffic and sales at this stage, but in the difference in "moat".
The so-called moat is a river that "peers must cross when they want to catch up with you".
Anker, which invests hundreds of millions of yuan in research and development every year (567 million yuan in 2020), has indeed built a moat of technology, supply chain and brand, and its depth and breadth exceed the many peers in Shenzhen who sell tens of billions of yuan a year.
However, the depth and breadth of anker moat is generally inferior to SheIn.
(Anker financial report: 567 million yuan of R&D investment in 2020, accounting for 6.07% of revenue)
In essence, Anker is a research and development-driven, product-driven manufacturing enterprise, and Amazon is only one of its sales channels, its store on Amazon, just like the "counter" rented in the big mall, the goods sell well, it may be "removed" by the mall at some time.
(In 2020, Anker opened 20 stores on third-party e-commerce platforms, 14 on Amazon)
In summary, Anker has a strong product force, but it has no sense of security, and relies heavily on third parties such as Amazon in terms of traffic and channels. Crucially, Anker has failed to establish its own ecological closed loop, which is a manufacturer and export trader, rather than a "self-built ecology" and "data-intensive" Internet enterprise.
Shein, by contrast, is one such existence.
Compared with Anker, who "focuses on product development and gives the lifeblood of traffic to Amazon", SHEIN has a real Internet kernel and has built its own traffic and data ecology.
SHEIN has built at least four moats:
1. An independent website and App that has been operating for many years and has hundreds of millions of users (private domain traffic pool, 190 million App downloads in 2021);
2. A "Tik Tok-style e-commerce ecology" that is "fed" with countless long-tail goods and user behavior data, addictive to users and constantly repurchased (Note: Tik Tok is the overseas version of Douyin);
3. An intelligent supply chain platform that connects 100 million-level end users with domestic high-quality factories and updates and adjusts order data in real time;
4. A fast fashion brand that occupies the minds of consumers in Europe and the United States.
(SHEIN ranks second in the world in shopping app downloads with 190 million downloads, surpassing Amazon))
(SHEIN's 100 million-level visitors compared with fast fashion brand websites such as ASOS and ZARA)
Of course, having traffic doesn't mean everything, and the "low-cost and efficient conversion" of traffic is the most important. In this regard, SHEIN has a large advantage over companies that rely on third-party e-commerce platforms such as Anker to sell to a large extent.
SHEIN is an intelligent system that has been "fed out" by years of data, achieving "low inventory" and "high conversion".
SHEIN connects its website and app to its ERP manufacturing end. A dress goes live, how many people browse it, how many people add to the shopping cart, and how many people end up buying it again.
All browsing, clicking, and sales data is collected, processed by algorithms, and quickly synchronized into the system, and then SHEIN issues instructions to the factory to quickly adjust its output.
SHEIN can run small test runs, simultaneously producing and testing thousands of different pieces of clothing, ordering only a small batch or even just a few dozen pieces each, and then putting it on the website (App) to see how consumers react (massive automated testing and reordering (LATR model).
Even with such a small number of orders, the factory is willing to cooperate. Even if some styles may not sell well and are quickly removed from the shelves, some styles may quickly run out and become a big hit. Then, the factory can eat a large mouthful of sweet cake.
In this way, SHEIN, which controls hundreds of millions of active traffic (users), has flexibly and quickly met the consumers' almost greedy demand (desire) for styles by forming an "intelligent supply chain alliance" with small and medium-sized factories.
SHEIN has more than 10,000 new models every month and more than 100,000 new models a year, as long as your finger slides, there are endless outfits to choose from.
Compared with the large R&D investment in Anker's front, the huge cost of mold opening and product testing, SHEIN has achieved the lowest cost of "small order fast return", without backlog inventory.
In this way, SheIn controls the private domain traffic pool by itself, coupled with the deep penetration of the upstream supply chain, forming its own "independent ecological closed loop".
Therefore, it can be said that the reason why investors have given such a high valuation is not only to shein's revenue, but to its independent ecology.
02 SHEIN, which has no innovation dilemma, is safer than Anker
Another noteworthy problem is that the moat on which Anker is famous - technological innovation has also made Anker "tired of running". In this regard, SHEIN has an "advantage" that Anker does not have.
Anker was highly innovative, but was quickly imitated.
In 2012, the Anker team developed a small chip to achieve a fast charging function that is compatible with Android and Apple systems; in 2014, the Anker team developed a lipstick-shaped mobile power supply, becoming the first explosive product with sales of more than 1 million; in 2018, Anker pioneered the PD fast charge (charger) produced by "Gallium Nitride" material.
Such innovative technologies are relatively high, difficult and costly, but they are quickly imitated. Some even say that Anker used his creativity to "feed" the top sellers in the industry, including competitors.
For example, after its "gallium nitride" charger was sold, some of the head 3C sellers in Shenzhen immediately launched a charger of the same material in more than a month.
The products that have been developed with great efforts are not only quickly imitated, but the bigger problem is that the life cycle of 3C consumer electronics is very short, and it is a category of "fast life and rapid death".
In general, the life cycle of consumer electronics is only about 10 years. For example, the MP3, point-and-shoot digital cameras, feature phones, and tape Walkmans that we are familiar with were once very popular and swept the world, with many companies and brands emerging.
However, they were quickly replaced by a new generation of technologies and products, and soon declined or even disappeared.
Anker's main products, mobile power, Bluetooth speakers, intelligent projectors, driving recorders, etc., all have the attribute of "fast life and fast death".
In fact, Anker has personally experienced the "quick death" of several types of products. Anker's first product was a notebook replacement battery, and before a few years, the category disappeared; the second category was the replaceable battery of the mobile phone, and then disappeared again. Later, it was replaced by chargers, charging cables, wireless charging and other products.
This is the cold reality that consumer electronics, killing each other, one generation eating one generation at a time, leaving no room. In the words of Anker founder Yang Meng, doing consumer electronics is like building a house on an active volcano.
Even if it is limited to this dilemma, If Anker wants to ensure that he has always been ahead of his peers, he still needs to continue to "harden his scalp", increase R&D investment, accelerate the pace of R&D, and deal with "infinite imitation" and "ruthless intergenerational elimination" with limited "innovation ability".
In fact, Anker's R&D expenses are indeed growing year by year, and the increase is constantly increasing.
But technology research and development is never-ending, "Kwa Father Day by Day" will eventually have a "tired" day. Therefore, it can be said that the technical research and development has achieved Anker, and it has also put a shackle on Anker.
Relatively speaking, SHEIN does not have such troubles. Although SHEIN also does "innovation", it catches up with the trend in the style and popular elements of clothing, and it is new at a very high speed.
But SHEIN's innovation, unlike Anker's, requires "always keeping a high level of commitment." There is no need to spend a lot of money on technology research and development every year.
As mentioned above, its independent sites and APP have precipitated a huge amount of user data for it, and at the same time, the continuous addition of fans has also provided it with massive data, as long as a set of effective systems, these data will filter and predict the latest trendy and most popular elements.
At the same time, SheIn serves ads on Google, Pinterest, Facebook, Tik Tok, etc., precipitating a large number of clicks, stays, conversion data, and its SEO data team constantly studies the data of competitor websites.
User behavior data continues to increase, eventually snowballing larger and larger. All the data, brought together, forms a clear user portrait and serves as a reference basis for design, optimization and transformation.
SHEIN only needs to reorganize these elements to achieve "innovation".
In the process of such a cycle, SheIn's system has been "fed" by data, and the more it is "fed", the more "smart" it becomes.
Strictly speaking, Anker is innovating with his own "small team", while SHEIN is using the entire consumer group and even the massive users of the entire Internet to "innovate" for it.
Moreover, the "elements" and "styles" are innovative, and the cost is almost zero. However, material and technological innovation need to be constantly tried, continuously developed, and the cost is high.
In this case, Anker's innovation naturally appears more difficult and heavier. The data can also be spied on one or two.
As of 2020, Anker's R & D staff has a total of 1,010 people, accounting for 47.11% of the number of employees, which is the result of two consecutive years of decline in proportion.
SHEIN, on the other hand, employs more than 7,000 people worldwide.
However, as of 2021, the number of designers mainly involved in "innovation" is only 200, accounting for less than 3%.
According to industry insiders, many of SHEIN's designers graduated from Guangdong Textile Vocational and Technical College and other types of colleges and universities.
However, among Anker's 2144 employees, only 289 have college degrees or below, accounting for about 13.48%. The rest are bachelor's, master's and above.
In terms of employment costs in terms of "innovation", Anker is significantly higher than SHEIN.
But from the conclusion, SHEIN has thousands, sometimes tens of thousands, of new SKUs every day. However, 3C products have always been known for their fast iterative updates, and Anker's product update rate is far from keeping up with the speed of SHEIN.
This is a technical barrier caused by different products, and Anker is powerless to change this situation.
If you can't get out of the "innovation dilemma", Anker's ceiling will become more and more solid, and it will be more and more difficult to break the ceiling.
This is also shein, which has no "innovation dilemma", has embarked on a new volume, while Anker is still trapped in the important factors of tens of billions of revenue and 50 billion market value.
epilogue:
What makes SHEIN more valuable than Anker is not its higher sales, but the "independent closed-loop ecology" behind it.
Essentially, SHEIN is no longer a $100 billion annual super seller, but a super connector.
At both ends of the connector, one end is a highly viscous, highly repurchased hundreds of millions of users, generating countless browsing, clicking, and placing order data, while the other end is a supplier factory that rotates 360 degrees and adjusts the production progress in real time.