Traffic alone cannot hit the world.
Wen | Zheng Yijiu
TikTok's urgent need for commercialization and monetization is still repeatedly bumpy, and after its internet celebrity food takeaway campaign was accused of false marketing leading to the departure of its global marketing director Nick Tran, Monstudio, which is regarded as a quick copy of fast fashion e-commerce SHEIN, has also recently been exposed to have officially announced the closure of the station.
According to the website operation shutdown announcement released by The Official Website of Dmonstudio, the specific closure date is February 11, 2022, but it did not explain the reason for the shutdown, but said that it will continue to provide after-sales service for the products purchased by consumers on the website.
In fact, It took more than three months from the birth of Dmonstudio to the shutdown, it can be said that this rapid online and continuous iteration of the play, is still the practice of ByteDance as an application factory before, but the implementation of this tactic into the physical business model is more uncertain, especially the SHEIN itself is also known for its "fast".
For TikTok, which has nearly a billion young users around the world, the failure of a Monostudio may not be a big deal, but for Byte, which is eager to accelerate the monetization of overseas traffic, the repeated failures of cross-border e-commerce may also sound the alarm for the giant that carries traffic to sweep everything - traffic alone cannot hold the world.
01
Shein,
Behind it is still the triumph of China's speed
If you're a heavy user of YouTube, TikTok, and Instagram, you'll probably be familiar with these videos over the past two years — a teen blogger threw a bunch of clothes from SHEIN on his bed and tried them on in turn to get likes and attention.
During the COVID-19 pandemic, the Guangzhou-based fast-fashion company has exploded, with annual sales even surpassing Zara and H&M combined.
On the one hand, the fast-fashion sales giant's business is only online, and they target consumers who pay attention to hot searches and costs, adding a staggering 6,000 new products to their product lineup every day. On the other hand, its price is surprisingly low, and it also gives young people who are not rich enough to get new opportunities to try fashion.
Image source: Network
Compared with other competitors, large volume and low price are the biggest characteristics of SHEIN.
At any given time, there are as many as 600,000 products on shein.
The company, which started making wedding dresses, relies on thousands of third-party suppliers near its Guangzhou headquarters, as well as about 200 contract manufacturers. According to Bloomberg Businessweek, SHEIN requires contracted manufacturers to be no more than 5 hours away from its Guangzhou sourcing center and have the ability to ship in 10 days.
Matthew Brennan, a columnist focused on China's tech industry, calls the company's sales model "real-time retail," where small companies along the supply chain can get information about trends or product performance from their internal systems.
According to these data, they produce between 50 and 100 items per style. If it works well, SHEIN will place more orders. If not, stop production immediately. SHEIN can complete the sale of a new item in about 25 days. For many retailers, this can take months.
SHEIN has further accelerated its already fast", "test and repeat" model, which was once famously promoted by H&M and Zara's owner, Inditex. According to the Wall Street Journal, only 6 percent of SHEIN's inventory lasts more than 90 days. They ship directly to users, with most of the goods coming from huge warehouses on the outskirts of Guangzhou.
SHEIN's marketing expenses may account for a huge portion of its cost expenditure, from student "campus ambassadors" to reality TV stars such as Made in Chelsea's Georgia Toffolo, SHEIN actively uses the influencer army, aggregating more than 250 million followers on multiple social media platforms.
SHEIN launched a partnership with Farah Al Hyda, an influencer with 5.6 million followers
At the same time, the brand needs to target ads on YouTube, Instagram and TikTok and sponsor influencers to attract enough young users and maintain influencer.
At one point, the company worked with about 2,000 influencers in the country alone before she was banned by the Indian government last year.
Clearly, the investment is worth it, according to Similarweb, which alone had 150 million visitors to its website in August last year, 40% of which came from search engines, compared to 4% of Zara's.
However, fast and inexpensive manufacturing comes at a cost, especially when the companies outsource production to thousands of workshops scattered across China.
As SHEIN's reputation grows louder, whether it is for the sustainable development of the fast fashion industry or about the data security of users, the Chinese company dedicated to the global market is gradually being targeted by governments, and at the same time, it also needs to face positive competition from Chinese peers such as ByteDance and Ali.
02
TikTok God Assist SHEIN,
But it is easy to copy the brand and difficult to do
In 2021, ByteDance has a lot of exploration in the field of cross-border e-commerce.
TikTok has expanded its advertising, overseas e-commerce and live streaming teams, and the total number of employees has grown from less than 4,000 in early 2020 to nearly 20,000.
Based on Tiktok's own huge traffic entrance, Byte launched Tiktok Shopping, which is similar to the small shop in Douyin. After activating the TikTok Shopping feature, creators will be able to add a shopping tag to their profile, and consumers can complete their purchases without exiting TikTok.
However, in the entire e-commerce link, Tiktok Shopping is only responsible for front-end drainage, and the collection and logistics links are responsible for e-commerce independent station partners such as Shopify and Ecwid.
The launch of TikTok Shopping is undoubtedly Tiktok's action to enhance its e-commerce attributes and seek traffic monetization.
But Byte's ambitions go far beyond that.
At the end of last year, Byte's independent overseas e-commerce platform Fanno was launched, and it once again cut into e-commerce with an independent model from TikTok. Preempting users at low prices, this familiar way of playing makes Fanno considered to be the "Pinduoduoduo" in cross-border e-commerce.
Fanno adopts two modes of domestic delivery and overseas warehouse delivery, the main goods are clothing, jewelry, toys, beauty, etc., and the price takes the people-friendly route. But Fanno is only focused on the European market, which is obviously not enough for ByteDance, which aims at globalization.
Finally, almost completely benchmark SHEIN's fast fashion women's clothing station, Monstudio, went online.
Benchmarking "SHEIN", Dmonstudio is undoubtedly one of the important links in ByteDance's cross-border e-commerce, and the Dmonstudio team even dug up a group of nearly 100 backbone personnel from SHEIN, but did not make too much splash in the market before closing.
This fast fashion independent station Dmonstudio, which is online and closed, has a very similar overall style style to SHEIN, with bold bold logo, navigation bar, cover image and event theme. Its introduction content also serves more than 100 countries, focusing on women's fashion clothing and accessories.
Official website of Dmonstudio
The difference is that Dmonstudio's price is not as affordable as SHEIN's, and the brand has not been established at all.
In terms of traffic and algorithm-based user preference recommendation mechanism, even with the huge traffic of TikTok, Dmonstudio does not seem to have received much consumer attention, at least before the shutdown, most people did not know its existence.
In fact, in the past year or so, there have not been too many projects benchmarking SHEIN.
Alibaba's "quietly" online fast fashion independent station brand AllyLikes, Antarctic E-commerce's cross-border e-commerce project Fommos, and Zhang Xiaopei, CTO of the original car, founded at full speed. And that doesn't include a dozen or so separate platforms like Cider, Urbanic, ChicV, Doublefs, Cupshe, JollyChic, and more.
SHEIN is becoming a "reference" for domestic Internet companies to catch up. But to catch up with SHEIN, even the giants still have a long way to go.
According to estimates by global consultancy Deloitte, SHEIN and its imitators will have sales of between 15 and 200 billion yuan ($2.35 billion to $31.4 billion) in 2021. Pu Qinglu, a deloitte partner and one of the authors of the 2020 China Fashion E-commerce Global Report, also said that the second echelon of the industry currently has a general sales scale of about 1-5 billion yuan, and GMV accounts for the majority below 1 billion.
Before Tiktok's Dmonstudio independent station was shut down, its new number was not more than 1,000 per week and the unit price was much higher than that of general fast fashion brands, and the delivery time was promised to be 5-15 days, that is, it may take more than half a month for consumers to get the goods across the ocean; Alibaba's AllyLikes independent station, the new category weekly update is about 100-200, and the delivery processing time is 5-7 days;
The Official Website of Dmonstudio announced that the operation of the website will be shut down from February 11
SHEIN's women's category alone can update nearly 40,000 pieces per day, and orders can be processed and placed in 1-3 days.
Behind this reveals two major gaps between latecomers and SHEIN -
The first is the control of the supply chain.
"Faster than fast fashion". One of the biggest reasons for SHEIN's success in the U.S. market is the integration of commodity supply chain resources and close ties with many domestic manufacturers, who can produce relatively high-quality products quickly, on a large scale and at low prices, and support SHEIN's fast fashion play.
The second is brand recognition, which may be the killer of SHEIN.
In nearly a decade of layout and iteration, SHEIN has customized as a technology company, not a clothing or fashion company, whether the outside world pays for it or not, but its brand recognition has been formed.
SHEIN began to lay out mainstream social media in the United States as early as 2014, and in the past decade, it has seized the dividends of Google, Facebook and YouTube wave after wave of overseas social media explosions, coupled with precision marketing strategies to bring a large amount of traffic and conversion to its official website and APP.
A bloomberg Businessweek report last year noted that the U.S.-China trade war over the past few years has actually helped create a giant. In 2018, China introduced tax relief and concessions for cross-border e-commerce, which greatly reduced its cost on the export side.
On the import side, its large sector orders can also enter the United States duty-free. Because SHEIN is sold directly to consumers and its own value is low, MOST OF SHEIN's packages are within the $800 tax exemption, which makes it unaffected by the US tax increase policy during the trade war.
It can even be said that TikTok's popularity among young people in Europe and the United States in the past two years has further expanded SHEIN's advantages through influencer marketing, especially in reaching young consumers, even last year because of the design plagiarism incident, TikTok set off a wave of "boycott SHEIN" trend, but also failed to reduce its advantages.
The hashtag #shein on TikTok
SHEIN's supply chain and social media layout for many years have long formed a good positive cycle between its users, brands and products - good user experience, large quantity and low price of products, and finally formed a high repurchase rate.
For a long time, ByteDance's advantages have still focused on algorithm recommendation mechanisms, flows and funds. However, in the e-commerce industry, the ability to ensure the supply of goods and open up logistics is more important than the ability of algorithms and content supply, but when byte's domestic e-commerce business is still in the development stage, it is obviously too difficult to quickly make up for the shortcomings of cross-border e-commerce at the same time.
Although it has a huge traffic pool of TikTok, the more transparent and full competition in overseas markets makes it more difficult to simply rely on traffic to support its new set of businesses.
More importantly, SHEIN has been making a fortune for so long by relying on the muffled voice of the "Chinese label", and now it has begun to fall into controversy, and bytes and TikTok, which have always been carefully examined under various magnifying glasses, actually have no chance to achieve "obscene development" and curve overtaking, which is probably one of the original sins that the giant cannot escape.