Posts Tagged "MHE"

SHEIN doubles its sales for the eighth consecutive year.

It manages to replace  Amazon as the most downloaded shopping app in USA during May 2021

 

Shein home web june 2021

 

Last May 2021, SHEIN managed to replace Amazon as the most downloaded shopping app in the USA. (IOS and Android). This first place in the ranking had been occupied by Amazon for 152 consecutive days.

  • SHEIN was founded in 2008 by Chris XU, an American student of Chinese descent. It has managed to double its sales for 8 consecutive years to achieve an annual turnover close to 10,000 million USD in 2020 (higher than Primark).
  • After drastically reformulating its initial business of selling wedding dresses in the USA from China, SHEIN has focused mainly on the ultra-low cost women’s fashion segment for Generation Z customers and young women online, especially through its app.
  • Unknown brand in China (does not sell in its domestic market), has as main markets USA, Mexico, Europe and Middle East. In total, it distributes to more than 200 countries mostly from its distribution centers in China.

 

 

App Downloads SHEIN

 

The SHEIN business model has three clear levers:

  • Accessibility
  • Choice
  • Addiction

Accessibility
The prices of its products are significantly lower than other competitors. For example, in the women’s dress category, SHEIN offers an average RRP (€15) -50% lower than Zara or Mango and +10% higher than Primark.

Pricing Index SHEIN Dresses

 

Vestidos Escalados Pvp SHEIN

Vestidos rango Pvp SHEIN

Choice
Every day it incorporates about 2,000 new SKUs in Fashion and accessories. Amount far above that of its competitors. The very fast supply chain and flexibility achieved with its local suppliers allow it to make initial runs of 100 units per SKU to later validate the results obtained and expand those products with better acceptance by market.

Addiction
More than 70% of its sales are channeled through its mobile app with all that this entails. Very high frequency of visit to know the news and an average duration of 8 minutes per visit.
From the first moment of registration, the customer receives a chain of promotions and offers that can also be linked to a program of reward points to redeem in the purchases.
TikTok, along with other social networks such as Instagram, especially suitable for mobile are used as a communication support for user content (UGC). Strong involvement with micro influencers.

SHEIN Mobile Home

Strengths

  • Supply chain. They have achieved a strong integration with their local cluster of suppliers with flexibility and agility.
  • Differentiation from other Marketplace platforms. Very focused to date on customer segment and limited product categories.
  • Recommendations instead of searches. Low cost of customer acquisition.
  • Simple and very effective photographs and videos.
  • Sexy. In itself an attribute and product category with strong presence in its assortment and communication.
  • Opportunistic use of external conditions such as U.S. tax/tariff exemptions for small orders

Shein Home Site Junio 21

Weaknesses

  • Delivery issues that impact the customer experience. Delivery lead times of several weeks.
  • Quality and fitting problems. Returns with cost from the second garment per order.
  • Clones and forgeries. Incidents and legal claims of some brands such as Dr. Martens and Levi’s
  • Sustainability and social responsibility. They are not part of the brand’s values until the present.
  • Lack of transparency. Characteristic of Chinese culture
  • Lack of cultural sensitivity for various markets. For instance, controversies generated by the introduction of earrings with the swastika cross or carpets for the home with religious-Muslim motifs.

 

Retail Strategy>>

 

Perspective

New product categories and segments. It is testing and developing new segments such as:

  • SHEIN X. Market place for External Designers.
  • SheGlam. Cosmetics and perfumery. Incorporating more current values of sustainability and well-being.
  • Motf. Product quality upgrade with less emphasis on fashion trend.

Progressive geographical expansion without losing the concentration of efforts in its priority markets such as USA.
Attempts into physical stores. Already present through Pop-up stores (Mexico, London, Paris …) and potential acquisitions eg Top Shop chain.
The lack of proactivity in values and commitments (sustainability, transparency, social responsibility) will have to be reviewed to avoid possible rejections of the Brand.
Persistent rumors of near IPO with record valuation potential.

SHEGLAM SHEIN

 

A commitment to differentiation does not always imply higher costs and higher prices.
Who said extremes were never good?

 

 

Más info: carlos.dominguez@mheconsumer.com

www.mheconsumer.com

 

New business model. Bring together and accelerate consumer product brands in Amazon FBA environment (Fulfilled by Amazon)
Helix Amazon HO building Arlington Virginia Campus

Strong growth of the Amazon FBA segment

Around Amazon, with an annual sales volume of about 400 billion USD and growth of +38% vs. last year, it is normal that new business models be generated. “He who a good tree is still, good shadow shelters him.”
Amazon’s segment of third-party services achieves its highest growth and profitability. Thousands of small businesses offer their specialized products by leveraging Amazon’s commercial and operational coverage that receives a commission for its services in return.
In many cases, it is successful small entrepreneurs who are behind these companies and who encounter sustained growth and profitability issues from some billing thresholds. Their revenue is often concentrated on a class-leading, privately branded individual product with 90% of the sales through Amazon.

Amazon Sales per segment Percentage

 

Amazon Sales Evolution per segment Data Table

Sales LFL AMAZON

Thrasio. Growth and profitability for a unicorn. Unusual

Thrasio, created in 2018, is a clear example of a company growing at high rates and with positive operating results. Unusual exception in unicorn typology with a valuation of more than USD 1 billion. It is focused on identifying, acquiring, and improving consumer product brands marketed primarily through Amazon FBA.
Thrasio does a detailed job of identifying and selecting candidate brands for their acquisition and subsequent commercial and operational improvement thanks to their super specialization in the Amazon environment.
In its first two years of existence it has acquired 40 brands with incomes between 1-40 million USD in categories as disparate as home, kitchen, leisure. Among these brands are: Angry Orange, Best Gear, Creative Space, Maxim Fitness, Coffee Gator, Trail Buddy Poles…

 

Trailbuddy Thrasioangryorange Thrasio

Massimofitness ThrasioCoffegator Thrasio

 

Apply effective business and operational improvements after acquisitions.

To materialize these acquisitions Thrasio has reviewed 400 candidate brands with an advanced and well-shot Due Diligence process.
Once within their portfolio, their own marketing and operations teams make improvements by applying a proven tool kit in just 35 days in areas such as:

  • Positioning within Amazon, consumer ratings and comments
  • Content and visual communication tailored to the Amazon environment
  • Packaging
  • Product design
  • Range reduction
  • Product Sourcing
  • Expansion to other international markets where Amazon has a significant presence such as the UK, Germany, and Japan

The results are there and Thrasio already has a total annual revenue of more than 500 Million USD doubling every 73 days its turnover. Still far from the size of large consumer product conglomerates such as Procter & Gamble and Unilever that through acquisitions of individual brands and supported by strong traditional advertising investments managed to occupy end caps in large retail chains.

Omnichannel Retail >>

Replica effect. Clones in action

Thrasio currently has 700 employees and its high growth rate generates a wide range of vacancies (+240 positions in February 2021). The type of functions and profiles required are revealing the company’s priorities and contrast with the current structure of many retail chains. We recommend visiting their WEB Thrasio Jobs.
Thrasio’s acceptance among investors has been very good (including Advent as the main player), achieving a total of USD 900 Million in 6 rounds of funding.
The replica effect is fast and there are already clones of this type of business in both the USA and Europe. Among them are: Perch, Heroes, 101 Commerce, Razor, Seller X, Brands United….a whole new generation.

 

Selling on Amazon is “easy”. Growing and doing it profitably is difficult. Looks like Thrasio is in a good position to achieve it. Like any challenge, it is not without difficulties ahead including the heavy dependence of an innovative giant like Amazon.

 

Más info: carlos.dominguez@mheconsumer.com

www.mheconsumer.com

 

Large-scale personal styling. With sales over 1.500 million € it is not a niche market

Product customized by stylists with the support of data that matters. Artificial intelligence and personal touchStitch Fix Home Personalizacion

Growth and large size. It is not a niche market

  • Stitch Fix individually personalizes the looks (5 pieces) of clothing and accessories that it sends to its clients thanks to a large number of stylists (5,100) and with the support of the detailed information that its clients provide. It is not a subscription service and the customer returns, without obligation, everything that is not to your liking. It has no physical store.
  • The business started its activity in San Francisco (USA) in 2011 and has been publicly traded since November 2017.
  • With annual growth of over 25%, it has achieved sales of USD 1,577 million in the last fiscal year of 2019. Unlike other companies in its segment, it obtains operating benefits.

Stitch-Fix-Evolución-Ventas-English-

  • The gross margin with which he works is 45% and he obtains an excellent inventory turnover greater than x6 per year. The investment in communication is high (10% of sales).
  • The assortment is aimed at women, men and children with an extensive portfolio of external brands, exclusive (medium / high level) and a small number of private brands.
  • It has 3.4 million active clients distributed in a wide range of ages, being the most important segment of 30-50 years.
  • He is focused on USA and has recently started his activity in the UK (2019).

Grafico-ventas-Stitch-Fix-English-

Customer experience differentiation. Data that matters

The great differentiation of Stitch Fix is the detailed information available:

Customer (initial set of 90 detailed attributes)

  • Socioeconomic profile and context
  • Size and fit
  • Product types and categories
  • Styles Colors. Prints
  • Prices. Marks Purchase Guidelines

Relevant detailed product attributes
Specific customer feedback at the individual product level received and planned (85% of customers participate)

 

Set-de-Data-Stitc-h Fix

  • The stylists have the support of this model that facilitates the selection of the looks for each client that receives in 3 days.
  • These proposals have a 63% probability of success that is gradually increasing by incorporating the real feedback from the client (+ 21% to the sixth look the client receives).
  • It began with Women, later joining man and child.
    Direct actions with good acceptance are being incorporated, such as the proposal of an additional color for a garment that the customer has previously acquired and extra accessories to the look already sent.

 

Competitors with different origins and channels

The list of competitors is increasing with different origins and approaches among which are:

  • Trunk Club Belonging to the Nordstrom chain of department stores
  • Personal shopper. Amazon Ward Wardrobe subscription service extension
  • Le Tote. With an alternative rental component. On-line
  • MM Lafleur. Showrooms and online

 

Trunk Nordstrom

Mhe Services

Retail Strategy and Operations >>

rganization and structure adapted to the business

  • Stitch Fix has 8,000 employees, among which the 5,100 stylists who work part-time and remotely stand out.
  • These stylists are supported by a strong Artificial Intelligence department that has more than 125 analysts and a team of 280 people managing the client experience.
  • They have a total of 7 distribution centers (Usa and Uk).

Stitch-Fix-Staff-English-

 

Retail Impact

Stitch Fix is pointing the way to customize, on a large scale, a fashion business based on the advice of stylists with the support of artificial intelligence fueled by continuous feedback from its customers.
Retail chains have before them the challenge of incorporating in a relevant way for each business and sector, this approach that flees from a mass and indiscriminate volume of product that the client considers less and less attractive.

Artificial intelligence and personal touch (large scale)

More Info: carlos.dominguez@mheconsumer.com

www.mheconsumer.com

 

“Not much ado about something “

ULTA Beauty. High Performance Retailing Mirror

ULTA interior

  • Founded in 1990, it is in the stock exchange and currently has almost 1,200 of its own stores, all of them in the USA, with an average area of 1,000 sqm. They have scrupulously fulfilled their plans to open 100 stores / year in the last five years. The estimated optimal potential for Usa is a total of 1,700 stores. Further, you will have to start an expansion in other geographic markets.
  • All its stores have a hairdressing salon (100 sqm) with more than 10,000 people working only in this service.
  • They are especially strong in cosmetics (above 50% of their sales). They offer an assortment with 25,000 references, 500 brands and top 10 suppliers represent 2/3 of the business. They also have their own brands and some external brands such as Kylie – digital natives – exclusive for their physical stores.
  • Its authentic machine room is its loyalty program with 32 million members and they contribute 95% of its sales.
  • With a strong omnichannel vocation, ecommerce already accounts for more than 11% of its sales and those customers who use more than one channel have an x3 expense higher than what they only buy in physical stores.

 

ULTA Exterior

Talking numbers

ULTA, as the leading chain (sales of USD 6,716 million) in the USA specialized in perfumery and cosmetics, has a discrete business card and the analysis of its results generates a special satisfaction when it is verified how a company of that size has doubled its turnover in just 5 years in an organic way and with an operational efficiency without frights or “big headlines”ULAT Evolution 5 yearsULTA-sales-evolutionULTA-Income-Evolution-

 

Operating model with proven track record of real benefits

  • The growth in sales has been achieved maintaining the solid profits (before taxes) of 13% on sales. Vital constant of this business and in clear contrast to the “Unicorn” business models that occupy the main comments in the current economic news.
  • Traditional retail KPIs such as sales productivity per meter (USD 6,000 / m2), inventory turnover (x5 per year), LFL growth to comparable surface … coexist with selective investment initiatives in artificial intelligence and virtual reality start-ups that are incorporated Gradual way in business.

And all this is being achieved with a board of directors made up of 11 members with an average age of 60 years. Experience, good work and a culture open to innovations that work

 

ULTA-attributes-EN-

Mhe Services

Retail Strategy and Operations >>

 ULTA vs Sephora

  • There is strong competition in this sector in the different existing channels including department stores, consumer generalist and specialists such as Sephora.
  • The boundaries between the mass market segment and the selective “Prestige” have become blurred and in the case of ULTA customers, ¾ they are both mass market and Prestige.
  • The cornerstone of ULTA’s progress has been the continuous improvement and upgrade of the half-accessible brands to match them in their store setting and attention with the selective channel.
  • With a wide range of age / socio-economic level of its customers there is a gradual convergence between the two leading operators ULTA-Sephora

ULTA Brands

ULTA ¡They have a Plan… and know how to execute it!

Always with changes not abrupt but that occur and are executed with a clear purpose.
Sephora and ULTA, two different paths that converge over the years. Nike and Adidas, Sephora and ULTA … the binomials work.
Health and beauty is clearly a mirror where to look for other retail sectors

¡High performance and profits do not go out of style!

More info: carlos.dominguez@mheconsumer.com

www.mheconsumer.com

 

Casper. Native Digital Vertical Brand. Direct to Consumer

Improve customer experience as a starting point

  • Casper, with only 5 years of existence in the USA has generated a new segment in the rest sector selling mattresses online and delivering them at home in a box.
  • Its starting point was to improve a mediocre shopping experience on the part of the customer that compared it with the purchase of a second-hand car.
  • Getting a company valuation over USD 1 billion at this time has not been an easy task.
  • Among the investors in this Unicorn company are profiles as diverse as Private Equity, the TARGET retail chain and some famous people such as Leonardo di Caprio.
  • Since its start, Casper has developed a very simple and easy to communicate assortment, fleeing the crowd of alternatives available in the sector of materials / specifications / measures similar but different.
  • The price range starts at USD 300 up to USD 2,750.
  • It has its own production.
  • It has always led to the testing of its products (100 nights) and facilitated its possible return at no cost.

Casper Interior

Strong sales growth but still losses

Casper’s sales went from USD 373 million in 2018 to an estimate of more than USD 550 million in 2019. Still in losses (USD 64 million in 2018) has consumed the usual 5-year grace period granted to Unicorn companies.
It is currently in the expansion phase in new markets such as Canada, UK, Germany and Asia.Attributes-Casper

 

Numerous competitors replicating the Casper model

  • Casper is no longer alone in this segment. Among its most direct competitors are Brands like Tuft & Needle, Purple, Nectar Sleep, Leesa Sleep, Allswell (Walmart), Evesleep (UK), Simba (UK) … There is a substantial increase in revenue but it is still a business model With operating losses. Most of these brands, being digital natives, already have selective distribution agreements through some existing retail chain (home specialists, department stores …).
  • The downside is in the difficulties encountered by more traditional specialist chains such as Mattress Firm that had to close more than 700 physical stores in the USA in 2018.

 

Retail Strategy and Operations Specialists

MHE Services >>

 

Differentiation and creativity

Creativity, humour and innovation have always been present in Casper’s marketing. They highlight co branding campaigns such as the one carried out for the business class of the American airlines or the successful campaign based on hieroglyphs for the NYC Metro network.

Amercian-airlines-and-Casper-collaboration

casper-subway-puzzles

Retail Approach

Native digital brand, opened its first own store in 2018 in NYC. It currently has about twenty stores of its own and are present with corners / linear in more than 1,000 Target stores in the USA.
Its main channel is its own Online and they also sell through Amazon.

Casper y Target

Elements in common of the “DNVB” (Digital Native Vertical Brands)

The new Direct Consumer Marks (DTC) tend to have a number of common characteristics:

  • Digital natives
  • Focus on the relationship with your customers. Obsessed in the Customer experience
  • Disruptive in its sector. They generate a new competitive environment in their segment
  • Intensive use of social media
  • They use the content as a differentiating element of their Marketing and with a clear Story to tell
  • Own retail very limited
  • Agreements for selective implementation in other existing retail chains

The performance results also tend to converge:

  • Strong growth of their  income (35-50% per year)
  • High customer acquisition costs (CAC)
  • Significant operating losses in the first 4-5 years
  • Difficulties when they start to go public (IPO)

Even if they are not easily consolidated as a viable business model, they have a strong impact on their more traditional operators who are incorporating some of their characteristics spurred by a consumer, who logically embraces the new commercial approach without entering those “little ones” profitability details.

More info: carlos.dominguez@mheconsumer.com

www.mheconsumer.com

 

Unicorn with a contagious smile

Smile direct club store front

Breaking Moulds

The health sector is not inmune to digital transformation and improved customer experience. Smile Direct Club has identified as an opportunity to facilitate a smile with well-aligned dentures without having to go through the brackets, frequent visits to the orthodontist and with a 60% smaller budget.

In just 3 years it has already  more than 300 stores of its own in Usa, and it has recently started (3T 2019) its expansion in Canada, UK and Australia.

It makes the experience more accessible. The customer chooses how and where to start it: at home or in one of its stores

The innovation focuses on making an orthodontic treatment easier and more accessible by means of invisible moulds, made using 3D printers that the customer changes without having to go to the physical consultation of the specialist. Using an initial kit that is received at home or on a visit to its stores, the treatment is initiated and it is monitor by the specialists remotely used an app on the mobile. The duration of treatment has been reduced by half (6-8 months) of the traditional and cost by 60% less.

doctor-directed-SDc-Rempte-controlled

Sales growth and astronomical losses

Belonging to the “unicorns” league (start-up with a valuation of over USD 1 billion) listed since this September 2019 on the Nasdaq. As appropriate, it has been doubling annually its income and losses over the past 3 years. Customer experience at the stroke of a talonary.

Sales-SMD-compressor

losses-sdc-compressor

 

Specialists in Strategy and Retail Operations

MHE >>

 

Initial challenges. Their main supplier and corporativism of specialists

Not everything has been pink in their way. After a frustrated initial collaboration with its Invisalign supplier, it has currently  the largest existing global plant of moulds made using HP 3D printers (produces 20 million moulds per year).

The main challenge it faces now is the corporate struggle undertaken by the collectives of orthodontic professionals who are trying to stop their expansion.

Lab-ed

Extreme Omnichannel

Its website, with more than 5 million visits, feeds its store network  in shopping centers and urban centers. It also has a fleet of travelling buses to bring the experience to new places before the opening of new shops.The channel with the highest growth is the progressive opening of up to 1,500 “implants”  corners with reduced dimensions within CVS pharmacies/drugstores in the USA.

The management team has already extensive experience in this type of situation. They have previously developed similar businesses in:

  • Contact Lenses (1-800 contacts)
  • Diabetes Care (Simplex Health)
  • Hearing Aids (Hearing Planet)

standard-bus

Retail Implications

In all these cases they have applied the same recipe:

  • Simplification of product/service range with the implementation of technological innovation
  • Competitive priced
  • Elimination of friction points in the customer experience
  • Greater self-control by the customerl of the process Omnichannel
  • Selective use of a physical network of stores, own and third parties

With an initial overvaluation (like good Unicorn it is) and downward stock exchange quotation , Smile Direct Club is an example of the current transformation taking place in Retail.

There are no exceptions. Which subsector will be next one?

More info: carlos.dominguez@mheconsumer.com

www.mheconsumer.com

 

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