There has been so much interest around SHEIN lately, especially with media reports stating that SHEIN might be going public. Back in 2017/2018, a common refrain from many investors was, “SHEIN is growing too slowly, and the founder is prioritising the wrong things – supply chain instead of growth.” How the tables have turned!
It has gone on to become the second most downloaded app in the US, overtaking Amazon, and it recently raised Series F funding at a $100 billion valuation! Its revenue, approaching US$20 billion in 2021, is fast catching up with Zara, the classic case study of fast fashion.
However, the company remains mysterious. Many analysts have analysed extensively about the company in recent months, but most of the images on the internet of “Chris Xu, the founder of SHEIN” are actually not him!
So who is SHEIN? How did it become so successful?
We also share some perspectives in the report on the billion dollar question: “Is SHEINs success a one-off or can it be replicated?”
Here is a small sneak peek:
The emergence of Chinese cross border ecommerce in the 2010s caused a stir in fast fashion
Players like H&M, Zara, Uniqlo were leading players in the fast fashion industry for quite a while before it was disrupted by the emergence of Chinese cross border companies like SHEIN, JollyChic, LightintheBox, etc.
China’s massive fashion supply chain, availability of ecommerce and marketing platforms and improved logistics and payment infrastructure worked in these cross border companies’ favour.
SHEIN VS Zara
SHEIN is an online-only platform that ships to over 150 countries across the world. The US and Middle East are SHEIN’s major markets. Zara on the other hand is a combination of offline and online – it has over 2,000 retail stores across 88 countries in the world.
SHEIN’s agile and fast turnaround time works in its favour
SHEIN’s logic is to communicate with consumers, test it, make errors, and polish it till it is successful. They reiterate by launching new products every day.
SHEIN also constantly improves its app’s user interface, establishes a professional photography team, promotes customer ordering through various marketing activities, and improves the efficiency of product distribution by establishing an independent logistics system.
SHEIN’s “small order, quick reorder” model is a strategic advantage
SHEIN adopts the production mode of “small order, quick reorder”. Around 100 pieces of each product are produced and tested in the market. Positive feedback from consumers is identified with large reorders sent quickly to the factories. This enables SHEIN to list more than 1000 designs every day.
Reasons for SHEIN’s success
SHEIN’s early initiatives in influencer marketing, as well as Google & Facebook marketing, have allowed it to acquire customers and gain traction at a low cost. With the volume of customers it has acquired in the early days, SHEIN reformed its supply chain and made it flexible and scalable.
Ultimately, the ‘small order, quick recorder’ agile supply chain has enabled SHEIN to respond to evolving consumer demand, by providing good product selection, reliable fulfillment and marketing, which helped it retain more customers and differentiate itself from competitors.
Analysis of SHEIN’s People, Organization, Product and Leadership
SHEIN’s success can be attributed to its People, Organization, Product and Leadership. The POP-Leadership is a strategic framework created by Prof. Guoli Chen of INSEAD and Jianggan Li in their new book, Seeing the Unseen: Behind Chinese tech giants’ global venturing. The book analyses the experiences, challenges and lessons learnt from Chinese tech companies through the POP-L lens.
To understand more about SHEIN and the fast fashion industry, check out our ‘Who is SHEIN?’ report. Download a copy here.