Guest Business Founder Wu Ting: How did SHEIN, which is valued at $400 billion, beat Amazon?

A Chinese e-commerce APP has quietly defeated the multinational e-commerce giant Amazon overseas, and this result may be beyond the imagination of many people. In the first half of 2022, it has been the top of the retail category in terms of downloads worldwide, surpassing Amazon and Walmart.

You may have never used it, or even heard of its name, today I want to tell you its story, it is SHEIN, in the recently released Hurun "2022 Global Unicorn List", it with a valuation of 400 billion US dollars, and Douyin, SpaceX ranked among the world's top five unicorn companies.

If you just look at the data in the United States, it is even more scary. In the first few months, it has been the number one number one of all apps downloaded in the United States, with one in every 20 American women buying and buying on SHEIN.

A Chinese e-commerce company that only does fast fashion pendants, surpassed Amazon in about 10 years, crushed ZARA, HM, and Uniqlo, and became the world's most popular retailer. So what did SHEIN do, and how did he shoot those fast fashion giants on the beach?

Guest Guest: Wu Ting, founder of Business

First, it is insisting on doing cross-border private labels. SHEIN was founded in 2008, during the period when China's local e-commerce competition was at its worst and bloody, and its founder Xu Yangtian set his sights directly overseas. In fact, over the years, with Alibaba to do overseas bulk business together many enterprises, but basically use B2B supply or OEM manufacturing, Xu Yangtian did not, he directly chose to do B2C, establish an official website, rely on China's supply chain to do global mail order, and gradually support a piece of his own brand.

Second, target female consumers to do the ultimate cost performance. Even if we don't know SHEIN, we can tell by the name, She in, which is obviously a girl's thing. In fact, Xu Yangtian originally founded the company to make cross-border wedding dresses, and in 2012 acquired a website called she in side.com, and finally changed its name to SHEIN. After the name change, its products quickly destroyed in the European markets such as Spain, France, Germany, and Italy with the ultimate cost performance. A skirt costs $10 and a T-shirt costs $3, girls in developed countries have never seen such a good product with cost performance. In 2017, SHEIN's sales exceeded 10 billion, and last year's total revenue exceeded 100 billion US dollars.

Third, and very important, is rapid iteration. I talk about many cases of fast companies, students can take a look at the previous Heytea, and the rebirth of Luckin Coffee, in fact, they all rely on strong product update and iteration capabilities. And how fast is SHEIN? When analyzing this company, I was surprised myself. In contrast, as a fast fashion company, ZARA, once invincible all over the world, relying on the update speed of more than 80 new products every day. As for SHEIN, in 2019, the number of new models is 600 every day. This is already terrifying, and this year, its new speed peaked at 6,000 models per day. The iteration speed of this single-brand product is undoubtedly unique in the history of human business.

How can a brand that is 100 times faster than ZARA's new speed but only one-fifth the price of ZARA, not have a crushing advantage over the latter?

So the question is, these all seem to be the right strategies, how did SHEIN do it? Help me like and forward first, and then I'll take you to know it and know why.

First of all, in terms of supplier cooperation, SHEIN adopts the model of "small single fast reflection and flexible customization". This is a value chain model that has only become a reality in recent years, based on agile production capacity and R&D capabilities. Traditionally, the cost of opening molds and ordering raw materials in bulk is high for manufacturing enterprises, requiring large order quantities and production cycles, but now more developed supply networks and manufacturing technologies ensure that clothing companies can produce small batches. SHEIN has seized the window of this value chain and cooperated with suppliers to order only 200 to 300 pieces of a new product. Through a large number of small orders continue to be updated, once there are explosive products, then increase the number of orders. In order to complete this cooperation model, SHEIN works deeply with suppliers to provide them with technology, channels and even financial support. It's a bit like Apple's initial model of nurturing suppliers. Through this cooperation, SHEIN has established its own efficient supply network, accumulating more than 2,000 suppliers.

Then, the problem arises, 2,000 suppliers, thousands, if not tens of thousands of items, to manage every day. Moreover, as a non-standardized product, clothing production has many processes and different nodes, how does SHEIN manage these supply chains?

This is the second key point, the use of Internet office tools, intelligent supply chain management. SHEIN makes full use of the advantages of the network WeChat and puts more than 2,000 suppliers under one address book, so that the cooperation with more than 2,000 enterprises is like internal cooperation, breaking through the communication barriers between enterprises.

Then, there are more than 2,000 factories and 10,000 products per day, tens of thousands of processes, how to achieve real-time communication and control of progress? Based on the open ecology of enterprise WeChat, SHEIN has developed a set of intelligent process feedback and management system, so that every worker on the production line can feedback the production progress in real time, and at the same time, use intelligent customer service to communicate with the factory, and the feedback problems will be summarized into data, and only a few need manual coordination. This drastically reduces management costs and allows everyone to operate efficiently together.

When the product is done, the third key is network marketing. This is also the aspect of Chinese companies in this era that understands the Internet more than other competitors. In terms of traffic management, SHEIN has an excellent Internet celebrity marketing growth strategy. As early as 2010, when China began to incubate the first batch of Internet celebrities with goods, SHEIN grasped the logic of traffic growth and invited a large number of Internet celebrities, KOLs and KOCs to try on the mainstream Facebook, Instagram and Youtube platforms in the European and American markets. As long as you post relevant topics or video image content, you can get free items or commissions.

The commission system drives the fan economy, and fans imitate KOC to further share, and old users drive new users, forming a positive user circle interaction and expansion. That's why SHEIN's social network data looks so good. Then, based on user feedback, we conduct word frequency big data analysis and design and produce again according to user preferences.

Through this set of business logic, we can see that SHEIN is an enterprise that will take advantage of the Internet to the extreme, and it is precisely because of this that they have achieved the ultimate cost performance and rapid growth.

This is the case of SHEIN, from the extremely forward-looking strategic design to the extremely fine management efficiency, creating such a fast-growing giant. Ask yourself, is your product developing in a global layout? What kind of experience and playing style can you learn from the SHEIN development model? What species do you think might be the next to beat SHEIN? Say what you think in the comments section.