A list of the “Top 50 Chinese Overseas Brands” released by Google and global communication giant WPP unexpectedly benefited the clothing industry: SHEIN appeared at the same time as Huawei, Xiaomi, Bank of China, and DJI. brand – online “Zara” from China.
SHEIN women’s clothing has crushed similar fashion brands online globally, and even left fast fashion leader Zara with “no way out.”
▲ From the online platforms of Zara and SHEIN, we can see that Zara’s discounted swimsuits for similar styles cost US$20 a set, while SHEIN’s original price is only US$13. Grabbing a large number of overseas consumers with the ultimate price. In terms of quality, when searching for Zara dupe (affordable alternative) on Google, the first association word that pops up is SHEIN. According to the trial experience of bloggers, there is indeed not much difference between SHEIN and Zara products.
▲The epidemic caused foreign friends who were browsing Facebook and Twitter at home to see an outfit post posted by a blogger they followed and glanced at it twice I found it to be pretty good, so I clicked on the link and fell into the vast sea of SHEIN fast fashion without realizing it.
▲Advertising shot by Madelaine for SHEIN
Platform factory cluster-SHEIN’s success
Similar clothing materials and workmanship mean similar unit costs, so how to explain the pricing difference between SHEIN and Zara? Obviously it is not “the Zara brand does better so it can sell it at a higher price”, otherwise it should be Zara, not SHEIN, who is making a lot of money now. In fact, it is precisely because SHEIN has the ability to set lower prices and shorter delivery times through factory clusters that it can grab a big piece of meat in the mature market from Zara.
▲ Near SHEIN’s headquarters, dozens of clothing factories, large and small, are operating at full capacity to produce SHEIN orders. These large and small factories support SHEIN’s hundreds of thousands of SKUs. SHEIN’s garment delivery cycle averages 11 days, with seven or eight days being common. If there are additional orders for popular items, SHEIN suppliers can deliver the goods within 3 to 5 days at the earliest. The average delivery cycle of outstanding suppliers in the same industry is 15 to 20 days, and the delivery time of most foreign trade orders is even as high as 30 days. Days.
▲For fast fashion, the most troublesome cost is not the labor and materials that China’s cheap manufacturing can solve, but inventory. The strategy SHEIN chooses to overcome the inventory problem is “small orders and quick response”. It produces small quantities and quickly decides whether to follow orders depending on the sales situation. This is also the production method that many small brands hope for; but in actual operation, a piece of clothing is in production. The high cost of plate making is required beforehand, and the proficiency of workers in the early stage of production is limited. Small orders are thankless, and almost no factories are willing to undertake them.
▲In 2015, SHEIN opened the company to Guangzhou, backed by the world’s largest clothing and textile market, and sitting in the clothing processing base in the suburbs of Guangzhou. In order to persuade the factory to cooperate, SHEIN was not only very generous in terms of accounts, but also took the initiative to subsidize funds for the factory and undertake the costly work of pattern making. In return, the factory is willing to accept a small order of 100 pieces for SHEIN, which brings huge competitiveness to SHEIN: Zara’s supplier requires a minimum order of 500 pieces, so with the same initial investment of 3,000 pieces, Zara can only launch new ones. There are only five or six models or even less, but SHEIN can test 30 new products.
▲ On January 25, 2020 alone, SHEIN launched more than two thousand new products, so the probability of SHEIN betting on hot products is as high as 50%; Zara sells at its original price The rate has reached an astonishing 85% in the industry, but SHEIN can still increase it by 5%, with less than 10% of its products experiencing unsaleable conditions.
▲Fabric reserve is another difficulty in the small order quick response model. Conventional clothing factories have to order 6 months in advance and produce 3 months in advance. If If you don’t stock up on fabrics, you won’t be able to quickly repurchase the orders after the sales go out; if you stock up on fabrics, you won’t be able to bear the consequences of new models being cold. However, SHEIN’s speed in releasing new products is designed to overcome the problem of stockpiling. Once a certain style is out of stock, SHEIN can change a few printing or tailoring details, use the same fabric to launch new products and continue testing until they become a hit. Therefore, under the favorable conditions of stable orders, reasonable profits, and sufficient fabric supply, the factory voluntarily bound firmly to SHEIN.Together, it ensures SHEIN’s strong front-end supply chain.
In the back end of the supply chain, that is, in terms of logistics services, SHEIN has also achieved the goal of no one being involved. I have it, and others have it in me. In order to optimize logistics services, SHEIN’s founder team once stayed in overseas countries for two months, conducting on-the-spot investigations on which European countries had the highest customs clearance efficiency and where overseas warehouses were set up for the fastest delivery. Achieving ultra-fast speeds at the cost of ordinary express, and what you get from such intensive efforts is a real reduction in freight costs. </p
