SHEIN re-listing, revealing the most secret cross-border e-commerce unicorn

Screenshot of SHEIN's official website.

SHEIN has once again spread rumors of listing.

Recently, foreign media quoted sources familiar with the matter as saying that SheIN, a cross-border e-commerce brand of Fast Fashion, is restarting its listing plan in the United States. Sources say SHEIN has hired Bank of America, Goldman Sachs and JPMorgan Chase to head the IPO effort. It's unclear how much money the company intends to raise after going public in New York.

But SHEIN denied it.

This is not the first time that SHEIN has heard listing-related news. In May 2021, SHEIN was also rumored to be preparing for listing. At that time, for the rumors in the market, SHEIN said in a statement that the company had no plans to conduct an IPO in the short term, and had not raised any financing in the near future. Some media reports about SHEIN's valuation and financing plans are "inaccurate." The company's focus for some time to come will continue to be on developing and growing the brand.

SHEIN is known in the industry as the representative of "making a fortune in a muffled voice". What has really aroused widespread concern in China is that its APP download volume has twice surpassed that of international e-commerce giant Amazon. One is in May 2021 and the other is in January 2022.

According to another person familiar with the matter, in 2021, SHEIN achieved about 100 billion yuan ($15.7 billion) in revenue due to the epidemic shifting global consumption online.

As the largest unicorn in the fast fashion e-commerce field, SHEIN has truly aroused the interest of the capital market.

KOLs are used to "plant grass" to attract traffic, and about 1/3 of the supply chain in Guangzhou is supplied

On instagram, Youtube, Facebook and other platforms, some large and small Internet celebrities in Europe and the United States often display SHEIN's swimwear, skirts, trinkets, casual wear online... After the show, they can get these goods for free. For overseas female consumers, in addition to fashion, the most attractive thing about these clothing is the price, the list price of a beautiful dress is only a dozen US dollars, often only one-half or even lower than the similar goods of fast fashion brands such as ZARA.

Zhang Lin (pseudonym), a person close to SHEIN, previously told Shell Financial Reporter that the model of SHEIN's rise and development is mainly KOL (key opinion leader) + supply chain. Zhang Lin said, "SHEIN will find some Internet celebrities to promote in the early days, when the price of Internet celebrities is relatively cheap, it is slowly done, and the company is profitable, and it has always had a relatively large budget in terms of Internet celebrity cooperation." ”

In 2016, Pei Xuan, then the general manager of SHEIN Mobile, said on a forum that SHEIN was a cross-border e-commerce internet celebrity very early, "In 2011, I began to do Internet celebrities, and in 2011, 100% of SHEIN's traffic came from Internet celebrities." At that time, the ROI was 1:3, which was a very profitable era. ”

SHEIN has also placed a large number of ads on Google, Facebook and other channels. "We will pay more attention to doing accurate delivery based on big data and other systems." Zhang Lin said. It is reported that in the United States, the number of Google search users has also reached more than three times that of the global fast fashion giant ZARA.

Open SHEIN's official website, and people can see a $3 T-shirt, $7 pants, and $13 dresses and suits... Most of the clothes are around a dozen dollars, "sometimes when the warehouse is cleared, one or two dollars, and even a few cents", some insiders told reporters.

The SHEIN platform can upload about 1,000 new SKUs per day. LatePost previously reported that SHEIN launched more than 150,000 new products in the whole year of 2019, catching up with Zara's annual new volume in only one to two months.

Zhang Lin said that the shipment cycle of SHEIN is generally about 5 days.

According to industry analysts, SHEIN starts from a very small (generally 100 to 200 pieces) order, if the sales trend is good, it will immediately return the order, if the sales do not meet expectations, then suspend production. At the same time, SHEIN uses its advantages in informatization and technology to help manufacturing plants and suppliers upgrade and improve, and realizes large-scale automated applications of small single fast reaction mode.

"Guangzhou's apparel supply chain is basically supplying SHEIN," Zhang said.

Internet celebrities with goods + fast fashion + low price, which is reminiscent of live broadcasting, vibrato, pinduoduo. These three are also the largest network traffic combinations in China. SHEIN began to be known as the TikTok (Douyin) of the e-commerce industry and the international version of Pinduoduo.

SHEIN revenue in 2020 was nearly $10 billion, an increase of more than 100% for eight consecutive years. SHEIN has also expanded from its focus on women's clothing to men's wear, children's wear, beauty, home and so on. In addition, foreign media reported that the company took advantage of the trend of global consumption shifting to the Internet during the epidemic in 2021, generating about 100 billion yuan ($15.7 billion) in revenue.

The unique way of playing has allowed SHEIN to grow rapidly in overseas markets, thus gaining the favor of investors. According to public materials, on December 1, 2013, SHEIN received a Series A financing of $5 million. On July 12, 2016, SHEIN received a Series B financing of RMB 300 million. On July 3, 2018, SHEIN received a series C financing of hundreds of millions of dollars. On December 1, 2019, SHEIN received a $500 million Round of D financing. On August 4, 2020, SHEIN raised hundreds of millions of dollars in Series E financing, at a valuation of more than $15 billion.

The investment institutions behind SHEIN are also strong. Several rounds of financing involved JAFCO Asia, IDG Capital, Jinglin Investment, Sub-Capital, Sequoia Capital, Tiger Global Managerment and other institutions.

The founders have been low-key, doing dimensionality reduction blows through algorithm optimization

The founder of SHEIN is an extremely low-key person.

According to the enterprise investigation data, the main company behind SHEIN is Nanjing Lingtian Information Technology Co., Ltd., and the legal representative is Xu Yangtian. Born in 1984, he graduated from Qingdao University of Science and Technology in 2007 and went south to Nanjing the following year to work for SEO (search engine optimization) at a foreign trade online marketing company.

Zhang Lin told reporters that Xu Yangtian is like a programmer who is usually seen by everyone, carrying a backpack and wearing a plaid shirt, very ordinary, not conspicuous at all in the crowd, "even if it is so successful, he will never go out to give some speeches."

In the eyes of the outside world, the founder's style has also influenced the development path of SHEIN. Science and engineering thinking and algorithm optimization of traffic are its important characteristics.

Cui Lili, executive director of the E-commerce Research Institute of Shanghai University of Finance and Economics, said that China's manufacturing has a strong accumulation in the field of clothing, and in recent years, domestic digital transformation has been in full swing, which basically provides a good soil for Chinese enterprises to be able to respond quickly overseas. "I feel that SHEIN's approach, whether from the spread, the new or from the product, is a kind of dimensionality reduction blow to foreign fast fashion and e-commerce."

In Cui Lili's view, SHEIN's inspiration for Chinese companies is how to attract their attention in a more "international" way, and use domestic innovation and extreme e-commerce operations to lay down overseas markets. "At present, under the fierce competition in the domestic consumer field, the key to SHEIN's success by taking the overseas route is worth thinking about and learning from."

Zhang Zhouping, director of the cross-border e-commerce department and senior analyst of the E-commerce Research Center of the Network Economic Society, also said, "The traffic and supply chain advantages owned by SHEIN can become the infrastructure for cross-border connection of China's fashion industry through open resources, providing overseas support for more brands, and even brand incubation." ”

Since 2021, SHEIN has launched a number of projects to incubate young designers, including the "SHEIN X Designers" designer joint program launched in January of that year. According to SHEIN, nearly 1,500 designers and artists have already participated in the SHEIN X project in 2021.

Li Chengdong, an e-commerce expert and founder of Dolphin Society, told Shell Financial Reporter that the core of SHEIN is that the supply chain advantage is relatively large, the supply chain efficiency is relatively high, and the richness of goods is high. This makes the retention rate and repurchase rate of its users relatively high. "With the same user cost, SHEI's user value is several times greater, so it can also afford more customer acquisition costs." In addition, from the perspective of traffic cost, compared with the opponent, SHEIN force is relatively early, and the cost of obtaining users in the early stage is relatively low. When it has a reputation and the brand influence gradually increases, the cost of customer acquisition will also be reduced.

"SHEIN's logistics service system should also be the best, including delivery, returns and other aspects of the experience." Li Chengdong said.

In Cui Lili's view, SHEIN's model can be summarized as "content recommendation + flexible supply chain", attracting potential customers through content, and then attracting customers to continuously repurchase and recommend through the ultimate experience of cost-effective products and worry-free return and exchange, as well as mechanisms that motivate interaction.

Fast fashion e-commerce hidden worries: infringement, quality and brand breaking

While SHEIN is developing rapidly, there is no lack of hidden worries.

First of all, if a large number of traffic elements of products on the market are collected and injected into their own product development, will SHEIN involve infringement risk?

Zhang Lin said that because SHEIN's products are new very quickly, the magnitude is also very large, so it is difficult to avoid involving some infringement issues, SHEIN has a special legal team, if you receive relevant complaints, after verifying the situation, will give the original person a certain compensation, or pay the other party's copyright to buy, or tell the buyer not to use the designer's money. "In fact, this is also a problem that every fast fashion brand will encounter."

SHEIN has tried to get into the high-end field. In June 2020, SHEIN launched its first high-end series, SHEIN Premium. In April 2021, SHEIN announced that it would rename SHEIN Premium to MOTF and launch a separate website to further strengthen the mid-to-high-end market.

However, Zhang Zhouping analyzed that the brand image of SHEIN's low price is rooted in the hearts of consumers, although the company is also laying out the high-end market, but there is a certain difficulty in expanding new groups.

Cui Lili feels that when other brands also use their extreme digital capabilities to imitate and learn shein's model, and penetrate downward from the mid-to-high-end market, it may squeeze shein's share.

In Li Chengdong's view, shein's model itself is not too much of a problem. "The main drawback may be at the logistics level. Because it is shipped from China, it may be because the performance cost of logistics is relatively high due to the epidemic, affecting the operating profit of the entire company. In addition, he feels that as a local Chinese company, SHEIN's risks may be mainly in terms of policies.

Cui Lili said that SHEIN has taken the data-driven operation to the extreme, using the advantages of Chinese manufacturing to achieve a grasp of the european and American fast fashion market under the premise of data empowerment. "However, whether SHEIN can sustainably maintain control of the market and whether it needs to break the circle on the basis of the existing low-line customer base may be strategically considered." Because in the past, the change of head enterprises in the field of fast fashion was also a common phenomenon. ”

"For SHEIN, it is still necessary to maintain the attractiveness of the brand to the core users." Cui Lili stressed that especially due to the rapid increase in the complexity of supply chain management due to the increase in models, coverage areas and market share, it is a relatively big challenge for SHEIN. "It is necessary to ensure the product and reputation of the women's clothing category in the main target market first, and then the expansion of the category and the expansion of the coverage area." This is probably the most pressing issue at the moment. ”

Beijing News Shell financial reporter Sun Wenxuan Editor Xu Chao Proofreading Liu Baoqing