eCommerce success: Shein (1)
Laia Ordoñez
17/06/2021
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Today we are going to go through the story of Shein: who they are and how they have become a reference and a different way of doing things.
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Despite being a large company in terms of turnover and sales volume, and having such a massive online presence, it is striking that not much is known about what lies behind this standard bearer of real time fashion.With Shein, we are facing an unprecedented success story that is worth analyzing, especially due to its ability to transform an entire sector and even e-commerce globally.Shein is perhaps the bearer of a way of understanding eCommerce that we are seeing more and more widespread in its many branches: real time, extreme speed, same-day delivery, delivery in two hours, in 10 minutes…Shein wants to take the concept of fast fashion further and turn it into real time fashion: production in real time thanks to the immediate feedback from customers through technology (social networks), to the extraordinary productive capacity of the Chinese industrial network and to the fact that the quality of the garments' manufacturing and raw materials does not require, let's say, a lot of care.And all this seasoned with an alleged environmental awareness, since one of the premises that the actors of real time fashion claim is that this model minimizes or even eliminates the typical overstocking -and not very eco-friendly- of the fashion world. Is it true that this has a positive environmental impact or is it mere greenwashing?We will see in this series of posts starting today.
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Chris Xu: the founder Shein
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Whenever we analyze the growth of a company, we like to start with the people behind. It is a very good way to understand part of the values and vision that are then transferred to the project.While Jeff Bezos (Amazon) or Jack Ma (AliBaba) are true celebrities who fill the front pages of the world's media, Chris Xu's profile is much less known. Little or very little is known about him (and everything is shrouded in mystery).Born and educated in China, Xu graduated from a technology degree program in 2007 and, a year later, he joined a local marketing consultancy. There he specialized in SEO and it was there that he made a click to set up his own business.
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INSIGHT: It is not necessary to have specific training to be an entrepreneur. In fact, in the case of Shein we can see an interesting example of how you can adapt what you know to do to what you need. Chris Xu enriches his technical profile with a more marketing-oriented one, and little by little he is finding his way.
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She Inside: the real grounds of Shein
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While working in the fashion industry, Chris Xu discovered the potential of selling internationally to other markets. China's production capacity (and costs) represented a huge opportunity to try to place garments in the Americas and Europe at very high margins.
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This is not the same as inventing the wheel. Any entrepreneur with a modicum of intuition can see that. The real key is, in fact, another one that has to do with the motivations and obstacles to online sales.
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INSIGHT: She Inside was fully aware from the beginning that, for selling outside China, currency exchange was a problem and solved it immediately. Users do not know what a price expressed in Yuan equals in dollars and this frustrates many of the conversions. Xu offered foreigners a website adapted to their culture, something that may seem obvious but is not common in China.
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That is how she decided to dive headfirst into selling Chinese wedding dresses in the United States. Lots of searches, high demand, very high margins, orders for which a longer lead time is usually not critical... what more could you ask for? At the time they were called She Inside.
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INSIGHT: When it comes to entrepreneurship, it pays to be ambitious but cautious in some aspects. From the start, it is difficult to fight with the totems of the segment, so you can always do like Shein: look for an eCommerce niche and scale up the business later.
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Moving beyond the niche
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As they consolidated their numbers and validated the business model, the idea of She Inside seemed obviously exportable beyond wedding dresses and they decided to work on a broader catalog.They jumped from wedding dresses shipped from China to general fashion for women with the same origin. In fact, they already had the suppliers and even took a very transcendental step further: they began to make the business vertical with their own designs and production chain.This would allow them to grow faster and faster. So much so that they invented the concept of Fast Fashion 2.0 or Real Time Fashion even without being fully aware of it.
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INSIGHT: How did Shein build supplier loyalty in a market as aggressive as China's? By doing something that is not usual there: paying fairly and in cash. Chinese manufacturers are so used to working in this way that when She Inside moved to a new province... they moved their factories with them!
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All this is the preamble to the real success story of Shein and everything that happened when it changed its name from its original name to the one it now uses. In the next post we will analyze what Shein is today, how much it sells, its marketing strategy and what its reputation is. I would not miss it.
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What do you think of the success story so far? Interesting, isn't it? Well, do not miss the next post because the best part of Shein's story is coming.
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Images | Unsplash, She Inside.