Editorial

Shein is taking over the global e-commerce fashion brand and here’s why

Our love for fashion is something that we can’t get rid of. In this increasingly digital age, fashion is now available on our smartphones, desktops, and tablets instead of just in brick-and-mortar stores.

It’s now easier to shop for our favorite shirts and other clothing items online via easy-to-use eCommerce websites and apps, which bring in a wide variety of products from many categories and ensure delivery to our doorsteps with minimal fees. There are several international B2C quick fashion brands like Shein, which offers a wide range of fashionable clothing and accessories for women, men, children, and infants.

According to Euromonitor, as of May 18, 2021, Shein has emerged as the most popular shopping app for iOS and Android users in the United States.

WHAT DO WE KNOW ABOUT SHEIN?

What we do know about Shein is:

The founder, Chris Xu, founded the company in 2008 with a background in marketing and SEO. He got his start selling wedding gowns on the internet. In 2012, he began selling women’s clothing and changed the company’s name to Shein.

Image Source: startuptalky.com

About 10,000 people work for this Chinese-founded corporation, which has locations in China, Singapore, and the United States.

There are now roughly 3,000 new styles on the site every week, with production times slashed in half and prices much lower than competitors. It’s redefining fast fashion. Furthermore, Shein now sells apparel for children and men, and ships to 220 countries worldwide.

Shein is said to have raised between $1 billion and $2 billion in private finance as recently as April. Fast-fashion giants H&M and Zara, as well as any private firm in the world except SpaceX and Byte-Dance, the owner of TikTok, were valued at a combined $100 billion by the corporation.

THE BECOMING OF SHEIN

Shein, like many start-ups, has a history, including some less than flattering tales.

AS SOON AS THE MID-2000s HAPPEN, FAST FASHION BECAME THE DOMINATING PHENOMENON OF REGISTRATION. Because of China’s rapid rise as a clothes manufacturing hub following its entry into the WTO, many Western clothing companies relocated their operations there.

The name of Shein’s CEO, Xu Yangtian, first emerged in Chinese corporate records around this time in 2008. He and Wang Xiaohu, and Li Peng were named as co-owners of a newly established company, Nanjing Dianwei Information Technology. According to the documents, Xu and Wang both control 45 percent of the company, with Li holding the final 10 percent.

Since 2008, Wang and Xu have been running a marketing and cross-border online business, which they started after meeting at work. In terms of business development and economics, Wang was in charge, according to Wang, while Xu was responsible for a slew of more technical tasks, such as SEO marketing.

While in Nanjing that year, Li also spoke about his experiences with web marketing.

Xu invited Li to work as a part-time consultant for him and Wang. When the three of them set up shop in Nanjing, China, they had only enough room for one big table and a few workstations for about a dozen people, so they rented a small low-rise building. They tried selling everything from teapots to cell phones at first. According to Wang and Li, the apparel line was added subsequently. To create garments for customers in other countries, foreign corporations may have been able, but a Chinese-owned company could undoubtedly do so more effectively.

The wholesale clothes industry in Guangzhou began sending buyers to buy specific samples of clothing from various suppliers, according to Li. When a product started selling, they placed a tiny bulk purchase with a certain wholesaler, utilizing various domain names, and publishing rudimentary English-language posts on blogging platforms like WordPress and Tumblr to boost SEO.

As a result of their research, they were able to anticipate which new styles would be popular, and they were able to place orders ahead of time. They even used a site called Lookbook.nu to discover small-time influencers in the United States and Europe, and began mailing them free clothing.

He put in long hours, frequently remaining late after everyone else had left the workplace. The only thing Xu would say about his personal life was that he had grown up poor in Shandong province and was still trying to make ends meet.

It used to be that their average order was only $14, but they were selling 100 to 200 products a day at the time; on a good day, they may sell more than 1,000 items. The clothes were intended to be inexpensive, which was the whole objective. Li answered my question: “We were going for low margins and enormous quantities.” As a result, he said, the low costs lowered expectations regarding the product’s quality. When the company reached its peak of about 20 employees, they were all compensated fairly well. Xu gained weight and grew his clothing collection.

Wang found Xu AWOL after over a year in the company. Seeing that some company passwords had been changed frightened him. According to Wang, he called and texted Xu but got no response, so he went to his residence and train station, but Xu left already. He also accessed the company’s PayPal accounts for overseas payments. After telling Li, Wang paid the company’s bills and fired the staff. Xu defected, and e-commerce continued without them.

In March 2011, SheInside.com was registered. This website claims to be “the largest wedding dress company globally.” This “mega international retailer” at the end of the year brought “the freshest street fashions from London, Paris, Tokyo, Shanghai, and New York to the shop floor.”

In September 2012, Xu started a firm called Nanjing Dianshang Information Technology. His partner owned 30% of the company. Li is glad Xu never contacted Wang or him again. “You never know when a shady character will hurt you, right?” Li’s response. “If I avoid him at the start, he can’t hurt me.”

CB Insights says Jafco Asia financed $5 million in Xu’s startup in 2013. SheInside “began as a website in 2008,” the same year Nanjing Dianwei IT was founded.

Another $47 million was invested in the business in 2015. It changed its name to Shein and relocated its headquarters from Nanjing to Guangzhou so that it could be closer to its supply base of manufacturers. Located in an industrial area of Los Angeles County, it opened its doors to the public in stealth. It also bought Romwe, a company that Li had co-founded with a girlfriend years previously but had abandoned before the purchase was made. According to Coresight Research, Shein made $4 billion in sales in 2019.

The epidemic wiped off the apparel industry in 2020. As a result, Shein’s sales grew steadily, reaching an expected $15.7 billion in 2021. No one knows if the company is profitable or not. We’d expect Shein to be a pandemic clothing brand if some god wanted to design a brand for a time when public life was compressed into a phone or computer screen’s rectangle.

WHAT’S THE SECRET TO SHEIN’S SUCCESS?

Recently, several of the world’s major fashion corporations have been under increasing pressure to make minimal reforms. While some “ultrafast-fashion” companies have emerged, many are doing little or nothing to improve their practices. Shein is by far the largest of the bunch.

Several of its executives highlighted a business plan that is fundamentally different from that of typical shops. Each style may have thousands of parts produced by the company’s manufacturers, as opposed to the hundreds of styles the company designs internally each month. These items are available for purchase both online and at physical retail locations.

Shein’s online-only business allows it to avoid the costs of running and staffing physical stores, including the management of racks full of unsold items at the end of each season, unlike its largest fast-fashion competitors. The use of software and suppliers for design expedites and improves productivity. As a result, a never-ending flood of apparel emerges. Shein adds an average of 6,000 new styles to its website daily, which is staggering even in the world of fast fashion. They have something for everyone at a very reasonable price. Customers can find whatever they want on Shein.

The practice of placing small first orders with suppliers and then re-ordering as sales go well is not unique to Shein. That model was pioneered by Boohoo. Although many Western companies, such as Boohoo, rely on Chinese suppliers, Shein’s proximity to the country and its people give it an advantage over its competitors in the West.

When it comes to marketing, how do they do it?

After doing some research, I concluded that Shein was a brand that only catered to those in their late teens and early twenties.

Ads for the firm frequently appear on social media, as do “haul” videos in which customers talk about large purchases (for a relatively small amount of money) they’ve recently made on TikTok where they have 2.8 million followers. They also have 21.9 million Instagram followers. This is free advertising for the company and a significant factor in its social media success.

In addition to the quality, the low cost is a major selling feature. I can’t believe it’s so low. You can accessorize your Shein ensemble for as little as $1 with accessories and a dress or sweater for as little as $10. Crazy, right?!

As of this writing, Shein hasn’t been able to stop itself from being the most popular teen clothing brand.