In Panyu, Guangzhou, there is such an industrial cluster. Hundreds of clothing factories surround the headquarters building of a cross-border e-commerce company. They are strung together into a rapidly rotating line. The production line designs, proofs, and mass-produces clothing two to three times faster than ZARA. It is SHEIN. On May 10, SHEIN was listed among the top 50 global brands in China.
SHEIN, who is it?
“SHEIN, who is it?” This is the reaction of most people when they hear about this company.
In 2008, SHEIN founder and CEO Xu Yangtian established a company called Nanjing Dianwei Information in Nanjing, which was the original form of SHEIN. In 2009, Xu Yangtian glimpsed the business opportunities of cross-border e-commerce and began to turn to cross-border e-commerce. In 2012, it gave up its original cross-border e-commerce wedding dress business, acquired the domain name Sheinside, and began to focus on the overseas fashion single product market. This is where the story of SHEIN begins.
SHEIN was still very small at that time. In January 2013, the company with nearly 10,000 employees had just acquired its 50th employee. Starting in 2014, SHEIN’s original external supply chain began to be unable to meet its huge stocking needs. Therefore, SHEIN decided to move from Nanjing to Panyu, Guangzhou in 2015 to establish its own supply chain.
In the same year, SHEIN entered the Middle East market, and sales soared. In 2016, SHEIN’s global sales reached approximately 4 billion yuan, and by 2017, sales had exceeded 10 billion.
AppAnnie news, on May 11, local time, SHEIN became the most installed shopping app on Android in the United States, and also topped the list on iOS 6 days later. As of May 17, SHEIN ranked first among iOS shopping apps in 54 countries around the world and among Android devices in 13 countries. However, SHEIN did not make any comments even on the podium at Google. .
Currently known investors include Jifu Asia, IDG Capital, private equity giant Jinglin Capital, Sequoia Capital, TigerGlobal, Shunwei Capital, etc. In August 2020, SHEIN completed Series E financing with a valuation of more than US$15 billion.
The real surge will come in 2020. Compared with other fast fashion brands, SHEIN has no offline stores. The emergence of the epidemic has dealt a fatal blow to the offline stores of fast fashion brands. However, SHEIN, which specializes in online shopping, nearly tripled its sales in March last year compared to the same period last year. In 2020, SHEIN’s annual revenue will be close to US$10 billion (approximately 65.3 billion yuan), which is the eighth consecutive year that SHEIN’s revenue has achieved more than 100% growth.
On May 17, this “little-known” fast fashion cross-border e-commerce platform surpassed Amazon, whose GMV in 2020 was US$490 billion.
SHEIN’s success
Zara’s success lies in its use of “Quick” subverts the rules of the fashion industry. The support behind this is ZARA’s fast supply chain system based on global store openings, as well as designers’ professional grasp of global fashion trends.
It is reported that Zara’s supply chain covers Asia, Europe, South America, Africa and other places. It generally produces basic models outside Europe, while popular models that need to be updated quickly are produced in Europe because they are close to the headquarters and can quickly implement production decisions based on popular trends. At the same time, Zara’s terminal retail stores are also iterating rapidly. Since the goods in a store may come from all over the world, Zara is very sensitive to the sales of a single store, because the inventory backlog will directly lead to an increase in costs, so once the turnover cannot reach the target, Zara will choose to close it. Therefore, over the years, news of Zara closing and opening stores has never stopped.
SHEIN has learned from Zara’s strategies in new model discovery, design and manufacturing. Because it has no stores and relies entirely on online sales, every aspect of SHEIN is basically faster than ZARA. Behind it is China’s strong clothing production and manufacturing capabilities, coupled with global instant distribution regardless of investment (SHEIN’s distribution mainly relies on freight forwarders and international transportation companies, and all uses air transportation, in domestic central warehouses, overseas transit warehouses and overseas The global distribution task is completed with the joint efforts of the operation warehouses).
On the backend, SHEIN’s way of ensuring speed is to do “heavy” work. On the one hand, it leaves the inventory pressure to itself to reduce the pressure on suppliers, but it also places higher requirements on suppliers, such as “delivery within 40 hours for spot goods and delivery within 5 days for stocking” (the industry’s average delivery rate for stockings) Delivery lead time is usually 15 to 20 days), etc.
“After SHEIN places an order with us, it will take the goods away directly, and there will be no returns if there are no quality issues.” A SHEIN supplier mentioned that although SHEIN’s requirements for suppliers It is relatively high, but if the goods sell well, you will make money along the way. Suppliers have no inventory pressure and payment is quickly collected, which are all important reasons why everyone is willing to follow. “Because of this, the prices of goods supplied to SHEIN by many suppliers are about 10% lower than those supplied to other customers,” he said.
On the other hand, SHEIN has basically built a back-end supply chain ecosystem, with three main departments: commodity center, supply chain center and system R&D center. Among them, the supply chain center team has more than 5,000 employees in 2019. “All foundries and suppliers must access SHEIN’s system, and SHEIN can realize real-time tracking of all aspects of each order.” The above-mentioned suppliersFactories may worry about unsalable products due to excessive production. This problem has become a chronic problem in the apparel market over the past few years.
What is the future of SHEIN?
How to escape the “low price attraction”, SHEIN certainly knows very well about the low-end brand image and the supply chain problems it brings.
After the news of SHEIN’s latest E-round financing and preparation for IPO listing, an obvious signal is that SHEIN is trying to tear off the label of low price and high volume, with more Development layout is carried out through two routes: category expansion and platform model.
In terms of multi-category expansion, SHEIN launched the independent beauty station SHEGLAM at the beginning of this year, with website building support provided by Shopify. Product prices range from US$1 to US$13, still focusing on cost-effectiveness. The products include foundation, lipstick, blush, brushes, false eyelashes, tools, etc., a total of 259 kinds of beauty products. At the same time, we are also developing new product lines in household and pet products.
In terms of platform model, SHEIN is also opening up more manufacturing processes to clothing factories. In addition to the “FOB” model mentioned at the beginning, SHEIN also announced the recruitment requirements for three major suppliers: “ODM suppliers” and “secondary process plants.”
For ODM suppliers with design and manufacturing capabilities, SHEIN requires potential cooperative suppliers to have a factory area of no less than 1,000 square meters, a workshop parking space for at least 50 people, and a delivery cycle of 10 to 15 days, during which they need to complete all work from design, plate making, production, and delivery.
The potential cooperation “secondary process factory” also has several conditions for entry. For example, the area of washing and dyeing factories needs to be 1,000 square meters, the area of printing, embroidery, and laminating factories needs to be at least 500 square meters, and the area of other secondary processing factories such as quilting, cloth wrapping, and burning flowers must be at least 300 square meters.
“SHEIN’s idea of building a platform is actually very clear. They hope that domestic women’s clothing factories can go overseas through SHEIN.” An industry insider analyzed to Baoge that the core problem is , whether SHEIN’s brand can take on clothing factories that cater to different markets and different needs. SHEIN’s rise is due to the right time, place and people. It remains to be seen whether it can successfully build a platform in the future.
In fact, SHEIN launched a MOTF Premium series in June last year in an attempt to build a high-end brand and create a high-premium product line. Foreign media Essence commented that there has never been a precedent in the industry for a fast fashion brand to turn to a high-end luxury brand. In fact, not only in the fashion industry, compared with the domestic market, the process of Xiaomi, which started from cost-effectiveness and moved to high-end, has shown the difficulty.
According to the introduction of MOTFPremium on SHEIN’s official website, “MOTFPremium hopes to provide clothing made of high-quality sustainable fabrics, focusing on quality and craftsmanship, so that customers can enjoy it without paying high prices. Enjoy high-end clothing at no cost.”
In other words, SHEIN is essentially still doing a big-name replacement business. Therefore, SHEIN’s high-end series still maintains specific pricing between US$25 and US$99.
SHEIN high-end series MOTFPremium</p
