If a consumer retail brand describes themselves as the following:

“Established in Tokyo, MINISO, the Japanese fast fashion designer brand. MINISO pursues a “simple, natural and quality” life philosophy and a brand proposition.

And has a logo like this:

Where does this brand originate from?

Many of you might have come across a Miniso outlet, with its wide range of consumer products from towels to soft toys to power banks.

We asked some friends of ours, and most of them said “Japanese of course, just like Daiso”.  (Disclaimer: none of the friends we asked works in supply chain or sourcing).

Well, as some of you might already know, MINISO is founded by Chinese, run by Chinese, and headquartered in Guangzhou, China.

Its branding looks like a combination of Muji, Daiso and Uniqlo. From the goods they sell, to the design of their stores, even down to their logo, they have a very Uniqlo look to it.

Miniso themselves has seen their fair share of shops finding “inspiration” from their way of operating:

Mini Good: “A high-quality Korean brand, and aims to provide worldwide consumers with simple, pleasant daily necessities of good designs at affordable prices.” But the website is registered to Alicloud in China – only Chinese busineses registered with Alicloud back in 2014.

Mumuso, notice the KR in the O. The web site says “MUMUSO is a Korean retail brand with the focus on fashion”. Well, the company is registered to a .kr email address but a Chinese postal address.

Ximiso is “a Korea-based designer brand that is a fast fashion department franchised store, locates at Guangzhou International Finance Center.” So definitely Korean….but Chinese.

So, how do they do it?

It’s not surprising that there are so many copycats when the market (and margins) are so huge. Providing Japanese and Korean inspired products, in an environment that is also reminiscent of stores from those countries, but with products that are made in China, has the potential for massive profit.

So, how did Miniso go from approximately US$770 million in revenue it 2015 to US$1.5billion just a year later?

We look at the key factors:

  • Master the whole supply chain: It’s no secret that the Chinese have the supply chain process nailed down (for example, I got a home battery tester – made of plastic but with electronic components – delivered to my house in Singapore all the way from China for a measly $2, and someone’s making money out of that!). Getting goods from the factory to the store, through as few hands as possible, in the cheapest and quickest way is now a standard game. A reduction of a few cents per item can mean millions of dollars in profit a year. Goods don’t sit in warehouses or loading bays but go straight to stores. Multiple deliveries per day enable them to keep inventory as minimal as possible.
  • Spread risk across their stores: As they expand, they are able to control stock more efficiently and thus spread the risk of something not being as popular as they expected.
  • Fast to market: By mastering the supply chain process and working with reliable manufacturers, they are able to quickly get new products in the store to meet market demands. For the same reason, it also means they do not have to manufacturer so many items in advance, and so don’t have the issue of overstocking. They can also rapidly increase production should an item sell much better than predicted.
  • Work on a franchise model: Allowing them to expand at a rapid rate and take further advantage of the economies of scale.
  • High gross margin: All this ties into the objective of getting small profits (in absolute values) but on lots of items. With stores selling tens of thousands of items a day, these small profits quickly add up.

Figuring out supply chain is NOT easy, it requires hard, and often, dirty work (you have to get down to the factory floors quite often).

It also takes time to build trust with factory owners such that they give you good credit terms and prioritise your orders. You often have to build that trust with hundreds, if not thousands of factories. It is not rocket science, but it takes time.

If you have all those figured out, designing brands, opening shops, finding franchisees, and selling – all become a breeze.

Thanks for reading The Low Down, insight and inside knowledge from the team at Momentum Works. If you’d like to get in touch with us about any issues discussed in our blog, please drop us an email at [email protected] and let us know how we can help.

Thanks for reading The Low Down (TLD), the blog by the team at Momentum Works. Got a different perspective or have a burning opinion to share? Let us know at [email protected].