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
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.
The SHEIN business model has three clear levers:
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.
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.
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.
- 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
- 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.
• 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.
A commitment to differentiation does not always imply higher costs and higher prices.
Who said extremes were never good?
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