Why can SHEIN achieve such significant success in overseas markets? This is inseparable from the creation of SHEIN's own supply chain, The marketing method of Internet celebrities and other factors. However, in the overseas fast fashion market, SHEIN also faces many competitors. The author of this article has made an interpretation of the development of SHEIN, let's take a look at it.
What exactly is SHEIN?
Revenue in 2020 is close to $10 billion (equivalent to 1.5 UNIQLO), which has grown at a rate of more than 100% per year over the past 8 years; the number of single-day downloads of apps has once surpassed Amazon; and in the US fast fashion market, SHEIN's market share jumped from 7% in January 2020 to nearly 30% in June 2021.
For this business, most people feel "mysterious". In fact, it was not until the data such as its valuation and daily life flowed out and was rumored to be about to go public in the United States, that the "stories and secrets" about this company gradually emerged.
To put it simply, it is "Pinduoduo in the clothing industry", "Douyin-style e-commerce", and a replica of China's mobile Internet marketing overseas.
I. "Clothing Industry Pinduoduo"
Before the emergence of SHEIN, consumers' impression of fast fashion was cheap, style, and new and fast. But SHEIN takes these features to an unprecedented level.
$10 skirt, $7 bag, $2 necklace.
It's about half as fashionable as Walmart's hypermarket and cheaper than cheap fast fashion brands.
(Screenshot of SHEIN website)
Shein relies on the strong industrial chain discourse power built over the years and also creates a price advantage. With more than 600,000 products on its platform, the average unit price is only $7.90. The data shows that only Two companies, Primark in Europe and Forever 21 in the United States, can always match the price.
In the early days, SHEIN sold wedding dresses with extremely high gross profit margins, and later sold women's clothing from Guangzhou Thirteen Wholesale Women's Clothing to the United States to earn the difference between the Chinese and American markets.
In 2012, SHEIN used the domain name of SHEINSIDE.COM to transform into cross-border women's clothing and build its own platform. In 2015, it was renamed SHEIN and entered a period of rapid development. As the scale grew, SHEIN began to build and upgrade the back-end supply chain ecosystem.
In 2014, SHEIN established a supply chain center in Guangzhou, which has the world's largest garment industry cluster, according to "Delay".
At that time, in actual operation, a garment had to invest in high typing costs before production, and the workers in the early stage of production also had to spend time to produce skillfully, so the small single was thankless, and almost no factory was willing to undertake it.
To this end, the SHEIN factory has given corresponding support, for example, to make the account period the shortest in the industry, shortening the account period from 90 days in the industry to 30 days or even a week; for the "typing" of this expensive but necessary step in the garment process, subsidies, to bear the cost of plating, and even provide loans to manufacturers to buy factories.
Therefore, the factory is willing to undertake small orders from SHEIN, which makes SHEIN extremely competitive.
"Delay" said that SHEIN has developed more than 300 core garment factory suppliers in the area of two hours drive from panyu headquarters. More than 2,000 suppliers.
Industry insiders have said that "about one-third of the domestic garment production capacity has been given to SHEIN". This will not change in the short term.
According to data from China Customs and the National Bureau of Statistics, in 2020, 13,300 garment enterprises above designated size in the country will achieve a cumulative operating income of 1,370 billion yuan. In 2020, China will export a total of US$137 billion (about 870 billion yuan) of clothing and clothing accessories.
At the same time, according to data from a 2019 research report by BOCI Securities, the number of employees in the textile and apparel industry at the beginning of the year was about 6 million.
Bringing a large number of suppliers into the arms" and assisting the output, SHEIN can also achieve so fast and so many styles. In terms of the fast fashion industry's design, plate, production, and shelf cycle, Uniqlo, which focuses on long-term sales of basic models, is half a year, Zara, which focuses on popular models, is 14 days at the fastest, and SHEIN only needs 7 days.
SHEIN added more than 10,000 new pieces in January, and Zara won't reach that number in a year.
Today, it is understood that the number of registered users on the whole site is about 120 million, and daily active users account for half of the world's top ten fast fashion apps.
In 2020, SHEIN received Series E financing, with a valuation of $15 billion. In May last year, it was revealed that shein's valuation reached 300 billion yuan and was about to IPO.
SECOND, "vibrato-style e-commerce"
The new speed is so fast, the style is rich, what other secrets does SHEIN have?
The answer is data and algorithms.
Strong data and algorithm capabilities, forming a trend and demand forecasting advantage. SHEIN uses a variety of trend search tools and real-time refinement tracking keywords to predict the trend of the trend, through years of data feeding, not only help SHEIN predict demand faster and more accurately, but also difficult to replicate.
First of all, SHEIN collects extensive third-party data and mines more secretive, real and more essential demand information through data. It uses Google's Trend Finder and web crawler to track the products of various clothing retail websites on the Internet, and crawls their patterns, colors, price changes, fabrics, styles, etc. for analysis. They also track changes in key search terms related to colors, fabrics, and styles.
Based on this, SHEIN can make a lot of accurate judgments, such as accurately predicting the popularity of lace in the United States in the summer of 2018.
Secondly, when it is new or displayed, SHEIN recommends through algorithms, just like "vibrato-style e-commerce". The APP constantly captures the user's dynamic information and makes personalized recommendations.
At the same time, after the product is launched, SHEIN can obtain first-hand data, that is, user behavior data, such as how many people have browsed the product details and how many people have added the product to the shopping cart. After receiving these most authentic user feedback, SHEIN automatically adjusts the yield. Even for some cold models, SHEIN will readjust the details and then launch them for testing.
Just like we brush vibrato, it will recommend more styles and styles that may be of interest to us, and so on, and eventually SHEIN will become a clothing expert who understands consumers.
It is said that SHEIN has a digital intelligence center with a scale of several hundred people in Shenzhen, and one of the main responsibilities of the department is SHEIN's personalized recommendation algorithm, and such a team size is not small.
SHEIN, which understands consumers more and more, has also precipitated a stable traffic pool for itself. Similar Web data shows that SHEIN standalone direct traffic accounts for 37.12%, and nearly half of search traffic (40.13%) is organic traffic. That is to say, SHEIN has been deeply recognized by consumers and has many of its own "old customers".
Third, reproduce the Internet celebrity playing method overseas
Influencer play is another important factor in SHEIN's success.
Since 2010, SHEIN has begun to look for influencers on overseas platforms Instagram, Youtube, and Facebook, exchanging free clothes or business cooperation for promotional traffic and sales conversions.
Some insiders have mentioned that SHEIN's social media strategy has gained widespread attention through its "Reds Alliance Program".
This internet celebrity economic model under the incubation of social media + e-commerce platforms has been developing in China before SHEIN. Perfect Diary, Huaxizi and other enterprises are the first to taste the sweetness from it. The industry also generally believes that SHEIN is to move the domestic set of Internet celebrities in the Internet mobile era to do it overseas again.
This sensitivity of SHEIN is also related to the experience of founder Xu Yangtian.
According to public information, after graduating from Qingdao University of Science and Technology in 2007, he was responsible for SEO (search engine optimization) work in a foreign trade online marketing company. The focus on overseas traffic and the emphasis on the efficiency of marketing make them choose to connect with influencers and consumers.
Back in 2011, SHEIN began using social media. In 2016, Pei Xuan, then general manager of SHEIN Mobile, provided data on a forum showing that "in 2011, 100% of SHEIN's traffic came from Internet celebrities. ”
Between 2013 and 2014, SHEIN was the first to use Pinterest, which had a large number of female users on the platform and became SHEIN's main source of traffic at the time.
In 2020, SHEIN is once again ahead of the curve, being the first brand to use TikTok for marketing.
It is understood that on TikTok, the video under the #SHEIN has only 6.2 billion views, and SHEIN-related content is not the only one tag, so shein-related content is far more than 6.2 billion views.
Click on such topics to see TikTok masters trying on SHEIN costumes, which are short videos with dynamic music and interesting clips that attract many overseas Generation Z fans.
Fourth, SHEIN's hidden worries
Under the scenery, hidden worries are also being highlighted.
As SHEIN moves from a niche to an Internet celebrity, problems such as poor clothing quality and difficulty in returning goods have gradually attracted criticism from overseas users.
To this end, SHEIN began to try to develop high-end in 2020, launching SheIn Premium and launching the first high-end series in June.
Its marketing model is also to spread the look of wearing SheIn Premium clothing on social media to create a fashion trend.
However, although it is SHEIN's high-end series, its price point remains between $5 and $75. The official website introduces this as "customers can enjoy high-end clothing without paying a high price".
Can the so-called low-cost high-end get SHEIN rid of the label of too sinking, quality and other issues?
In addition, SHEIN also has to face many competitors.
For example, in November last year, taka original, a fashion brand, received tens of millions of yuan of angel round investment, and Ali also recently launched an APP called "allyLikes".
With other competitors catching up, it is still unknown whether SHEIN's supply chain system can withstand competition. At the same time, the giants represented by Ali want to copy SHEIN, and there are great opportunities.
Recently, perhaps to consolidate its brand power and further build a moat, SHEIN has begun to do something else.
For example, in 2021, SHEIN invited American reality TV star Kloe Kardashian and Laurel Pantin, stylistic director of the fashion magazine InStyle, to the likes of the "SHEINX 100K" design challenge.
It can be seen that SHEIN wants not only traffic, but also labels and positions in the industry.
Perhaps it knows that a new round of challenges belonging to SHEIN has just begun.
References:
- Geek Park: Can hidden e-commerce giant SHEIN be copied?
- Xiaguang Agency: Behind shein's 300 billion valuation: 6 million assembly line workers and the internet celebrity economy copied overseas
- Moby Dick Goes to Sea: SHEIN's aura is not to surpass Amazon, but to win half of the global fast fashion brand's mobile DAU
- U.S. Stock Research Agency: It has been reported that the IPO in the United States, what is the value of the cross-border e-commerce unicorn Shein?
Author: Tang Bohu; public number: Bohu Finance
This article was originally published by @Bohu Finance on the part of everyone who is a product manager, and reprinting without the permission of the author is prohibited.
The title image is from Pexels, based on the CC0 protocol.