In addition to turnover and valuation, SHEIN‘s other business figures are impressive. The company has more than 150 million app downloads, over 70 million active users and high user adoption. As of 6 May 2021, videos with the hashtag “shein” on TikTok have been played more than 7.4 billion times, and the campaign video “sheinhual” (Unboxing) alone has been played more than 2.1 billion times. In October 2020, these figures were 2.3 billion and 150 million respectively. On 17 May 2021, SHEIN overtook Amazon as the most downloaded shopping app on iOS in North America.
Today, there is hardly a young person in the world who does not know the company. The company is present in almost all social networks that people can reach, such as pop-up stores, online stores, social media, etc. SHEIN’ success can be considered by many as a legend in the clothing world. Next, lets explore the six factors that make SHEIN a sudden rise.
SHEIN is a Chinese fast-fashion retailer founded in 2008. It was previously known as ZZKKO, a wedding dress company based in Nanjing, China. In less than 15 years, it has grown its value to $100 billion. What is the concept of $100 billion? This figure is already more than the combined sales of the European and American fast fashion brands H&M and Zara.
On Demand Businesss Model
The company’s business model determines its growth. Shein’s business model is data-driven design, providing customers with a fashion experience that meets their needs through the speed of new product launches. The entire model revolves around customer needs. It uses Big Data to predict new product trends, launch new products quickly and add or remove products in a timely manner based on customer feedback.
SHEIN’s product update speed is much faster than other fast fashion brands. SHEIN uses a daily update model with an average of 40 to 50k pieces per week, which is much faster than ZARA, which has a shorter cycle.
SHEIN’s inventory turnover rate is above the low turnover rate level for the industry. In 2019, SHEIN’s inventory turnover ratio reached 4.62 times, surpassing Inditex (ZARA’s parent company), which has a higher turnover ratio, and the inventory level of the Chinese casual wear industry.
The speed of SHEIN’s supply chain can also be seen in the number combination “14+7”. It is assumed that SHEIN takes only 14 days from product design, sample creation and shelving, and only 7 days after shelving for production and distribution to consumers. This figure continues to decrease.
Social Media Marketing Strategy
SheIn’s target customers consist mainly of female employees between the ages of 20 and 35 who are interested in fashion. This group has an significant impact on other groups. This generation would like to create their own looks by taking inspiration from social media platforms.
SHEIN has picked up on the marketing opportunities that existed before the commercialisation of international social media influnencers, and for an influencer in 2010, when you could collaborate with her for a $20 commission or give her a clothing sample, it’s $50,000 in 2018.
SHEIN’s best social media performer is tiktok. They cooperated with thousands of small influencers and then let them to promote many discount coupons to get more sales. This explosion of social media traffic has inevitably led to a buying culture where teenagers are proud to buy many of SHEIN’s cheap products.
And there is a psychological impact, i.e. people might become addicted to frequently updated products and discounts. This can cause more social media free marketing.
SHEIN has an absolute advantage over its competitors in terms of prices. If we take the skirt category as an example, SHEIN products are priced between US$6 and US$25, which is an absolute advantage over fast-fashion brands like Zara and H&M. For example, a women top costs only 7 US dollars at SHEIN, while the price at Zara is still 12.99 US dollars after deducting the discount. In terms of price range, SHEIN’s lowest retail price for each product line is US$2 to US$3, which is the lowest price among its peers.
Unique Supply Chain
In recent years, Guangdong Province has gathered a large number of garment textile enterprises, among which, China’s largest garment textile fabric supplier Zhongda textile business circle is located in Guangzhou. 2015, SHEIN moved its headquarters to Guangzhou. All suppliers use SHEIN’s supplier management software, while SHEIN provides suppliers the best invoice discount and payment speed, and guides suppliers in the growth process of bulk and stable orders, thus gradually forming a positive cycle of long-term cooperation. In addition to establishing a supplier management system, SHEIN has also made great efforts to improve the digitalization of warehousing and logistics management, and has reduced the logistics cost ratio by relaxing the refund and exchange policy to improve customer orders.
SHEIN’s success depends on its decision-making and strategies as well as its absolute technical and product superiority. SHEIN did a lot of market research before selecting the target group. Moreover, leading a new consumer culture through the power of social media is worthy of reference for any apparel brand. Finding out what the essence of consumption is sometimes can bring more return than the product itself, don’t you think? I hope this article can inspire you about how to boost your fashion business, anything, feel free to discuss with us.