This mysterious domestic brand with a valuation equivalent to SpaceX is the future of fast fashion

There is a saying in the PR world that if you don't talk about yourself, other people will talk about you.

SHEIN, a fast fashion brand from China and sold overseas, is one of them.

SHEIN has a style of "making a fortune in silence" and rarely speaks out publicly. It is known as "the most mysterious unicorn company in China."

But it has firmly occupied the wardrobe and attention of overseas Generation Z, with a valuation of up to 100 billion U.S. dollars, and the speed of new releases is beyond the reach of traditional fast fashion.

In the past 12 months, SHEIN surpassed fast fashion head Zara, defeated sportswear giants Adidas and Nike, and became the fashion brand with the most Google searches in the world.

How did the "mysterious power" from the East conquer overseas?

China's most mysterious unicorn becomes the most popular fashion brand in 2022

According to the latest data from , Google, SHEIN was elected as the most popular fashion brand in 2022, and it has the highest Google search ranking in 113 countries/regions including Australia, France, and Ireland.

It was followed by last year's winner Zara, which this year topped Google searches in 26 countries, including Greece, Japan and Turkey, as well as its home country of Spain.

The strength of SHEIN "Tu Bang" is more than that.

In May 2021, SHEIN's app topped the US App Store's shopping list for the first time, surpassing the e-commerce giant Amazon for a while.

"Time" magazine selected the 100 most influential companies in the world in 2022, and only 4 fashion-related companies were selected, and SHEIN occupied one of them.

What does SHEIN rely on to win an increasing share of the fast fashion market? Simply put, it is low prices and constant freshness.

SHEIN sells a variety of clothing and lifestyle products, and its e-commerce business covers more than 150 countries and regions around the world. Although it is a brand from China, it does not sell domestically. The United States and Europe are its main markets, and it also sells to the Middle East and Southeast Asia. .

Open SHEIN's official website, pictures of European and American simple styles come oncoming, and there are tens of thousands of products in different categories. Wearing suggestions and keyword recommendations can save the difficulty of choosing, and there are discount information in capital letters to make the price even more discounted. The necklace is $2.3, the short sleeve is $9, and the knitted top is $19… If you are tempted, click in and get the same style.

The most attractive thing is nothing more than the low price. According to Bloomberg statistics, the average price of a piece of clothing at SHEIN is $13, lower than H&M's $29.99 and Zara's $49.90.

Also because it is cheap, it is common to order many pieces of SHEIN clothes at one time. On TikTok and YouTube, many bloggers open SHEIN packages, try on clothes and share their feelings. This type of video has billions of views, allowing people on and off the screen to share the "shopping addiction" brought about by the algorithm.

In fact, social media has always been the core of SHEIN's business model, allowing it to capture the earliest traffic dividends.

SHEIN has been cooperating with fashion bloggers since 2012. Sending a few clothes can be exchanged for free goods. You must know that Instagram was born in 2010, and the Internet celebrity economy was still a new thing at that time.

Such emphasis on social media traffic is related to SHEIN's positioning.

In the first few years of SHEIN’s development, many cross-border e-commerce companies did OEM for foreign brands, or went overseas with the help of Amazon and AliExpress. SHEIN chose to learn from overseas clothing brands, established an official website, and started an app. These direct-to-consumer self-operated channels need to use social media and other marketing channels to divert traffic.

To put it simply and crudely, when other cross-border e-commerce companies do short-term business, SHEIN wants to build itself into a brand , and in the end it really became a brand that is closest to the platform.

I thought it was the Chinese version of Zara, but it was actually TikTok in the fashion industry

I understand the truth, why can SHEIN be so cheap? This starts with the fast fashion model.

Traditional clothing companies often design new products half a year in advance, such as developing the next spring and summer products in the third quarter of each year . In the 1990s, Zara abandoned the concept of fashion seasons and launched new models every few weeks, creating a fast fashion business. model, followed by brands such as H&M and Forever 21.

The late 2010s saw the emergence of “superfast fashion” brands such as Asos, Boohoo, Fashion Nova, etc., which placed less emphasis on brick-and-mortar retail spaces and directly reached millions of young consumers through social media, relying on search traffic and Customer data can predict trends more accurately, and the cycle from product design to shelf is shortened to 2 to 3 weeks.

Behind the speed is a strong supply chain. SHEIN, which learned from its predecessors, has a shorter production cycle, which is called "real-time fashion" by analyst Matthew Brennan. It usually takes 5-7 days from design to production.

Why is SHEIN faster than its big brothers? It combines an ultra-fast supply chain with extremely fast market research, and "on-demand production" runs through every link from design, production to delivery.

First of all, SHEIN predicts what colors, fabrics and styles may be popular based on a large amount of data from its own website, as well as web searches and social media behaviors from specific countries and regions, and then the global design team quickly creates a large number of new styles based on this, with high efficiency. Far more than traditional fast fashion brands that rely heavily on offline channels.

It can be said that the way SHEIN captures fashion is by crawling the real-time fashion elements of the entire network, and then "arranging and combining".

According to a report by China Business News , SHEIN disassembled the elements of clothing in great detail, such as necklines, cuffs, hems, colors, and other modules. A slight change in an element is a SKU, and a mid-collar is replaced by a V-neck to become a new model.

In contrast, Uniqlo generally predicts fashion trends one year in advance, and the proposal and preparation of Zara products are two months. If traditional fast fashion is following the trend, then SHEIN is following the trend.

Second, SHEIN produces ultra-small batches of 100 to 200 pieces for each new style and gauges market response. If the response is good, it will quickly produce more, otherwise it will stop the loss in time, which is the "small order and quick return" model, which reduces production waste and avoids excess inventory. For comparison, Zara's production center in Spain has a minimum output of 500 pieces.

Under such a model, SHEIN can release more than 3,000 new styles every day. According to later reports, SHEIN's new listings within one to two months have caught up with Zara's annual new listings. But while pursuing extreme speed, innovation is placed in an awkward position. Similar to Zara's "borrowing" from big names, SHEIN has also been involved in the controversy of plagiarizing independent designers.

Before SHEIN, no clothing brand could "upgrade thousands of times a day". Its production efficiency comes from the mature domestic textile industry.

SHEIN has spent years building relationships with domestic garment factories and manufacturers, and is working more with small and medium-sized factories because they are more flexible and often more efficient. Interface Fashion reported that as of August 2021, there are 300-400 garment factories in Nancun Town, Panyu District, Guangzhou City, which are the core suppliers of SHEIN, and there are more than 1,000 small suppliers in addition.

After cooperating with suppliers, SHEIN will also find ways to improve efficiency, introduce a supply chain management system (SCM), and manage all production processes digitally and transparently, so that suppliers know what they are going to do when they receive an order.

But the strict supply chain management mode will also bring enormous pressure to suppliers. According to a research report by Zhongtai Securities in December 2021, SHEIN sets up KPIs in four aspects: the timely rate of urgent purchase and delivery, the timely rate of stocking and delivery, the rate of defective products, and the success rate of new listings, and divides them into S, A, There are five grades B, C, and D, and adopt the system of survival of the fittest for suppliers.

Every item of SHEIN from design to production is not original, but every item is interlocking and strictly implemented, and entered the game early enough to enjoy the bonus of fast fashion going overseas. In a few years, SHEIN has pushed the market sense, low price and speed to the extreme, and formed a scale advantage.

In April of this year, Bloomberg reported that SHEIN was valued at $100 billion, comparable to Musk's SpaceX, and more than the combined value of H&M and Zara.

Judging from SHEIN's emphasis on algorithms, data and supply chain, it is indeed more like an Internet company than a traditional clothing brand.

The future of fast fashion is faster

The saying that "fast fashion is dead" has been around for a few years now, and this year it feels more pronounced:

In June, H&M's first store in China was closed ; at the end of July, Zara's three sister brands closed their Tmall flagship store; in August, some GAP stores announced the clearance and closure of stores.

But this does not apply to SHEIN, which has been boosted by the weak economy in the post-epidemic era.

Late financial reports, this year SHEIN is likely to achieve 24 billion US dollars in revenue, which is only one step away from Zara's 27.6 billion US dollars in fiscal year revenue as of January this year.

SHEIN even started environmental protection this year, which sounds very contradictory, because fast fashion is often the opposite of sustainable, and they are one of the most resource-intensive industries in the world, which essentially encourages excessive consumption, and then Bringing a lot of carbon emissions and landfill waste, SHEIN is the same.

In October, SHEIN launched a resale platform, Shein Exchange, to buy and sell second-hand SHEIN clothing, first piloting it in the US and then expanding to other markets. But whether the quality of the clothes can withstand repeated wearing may be a question mark.

SHEIN is most often criticized for product quality issues. Although the price has made people take the initiative to lower expectations, there are still many comments about thread ends, heavy smell, thin fabric, small size, and poor texture.

In addition, at the beginning of this year, SHEIN launched its green brand evoluSHEIN, which uses recycled polyester fibers and other environmentally friendly fabrics. Compared with virgin polyester production, the recycled polyester process consumes less raw materials and less water and energy.

Will the more environmentally friendly series bring any changes to the fast fashion industry?

As fashion reporter Zofia Zwieglinska said: "Many supply chain issues depend on the business model." The fast fashion business model has determined that brand competitiveness is extremely dependent on cheap prices and style diversity. At present, SHEIN's sustainable production method is limited to a very small product line, and still profits from a large number of unsustainable products, so it is a temporary solution, not a permanent solution.

This is like a game of environmental protection that you know and I know. You can't change anything for the time being, but first put your posture right. Many choices and low prices are still the reasons for consumers to choose SHEIN. As for how many times their clothes can be worn, they don't care too much.

From fast fashion to ultra-fast fashion and then to instant fashion, the fast fashion industry has completed upgrades again and again.

As a new generation of fast fashion, SHEIN accurately captures consumer demand through algorithms, realizes rapid production through digital supply chains, and pushes the advantages of fast fashion to the extreme. Faster, more personalized, more choices, one-time consumption and excessive consumption are encouraged in disguise.

Of course, what it inherits is not all its advantages, and its negative impact on the environment and society has also been magnified in the spotlight, but it is one thing to be criticized, and another to choose consumers.

Zara and H&M have each spent decades making fast fashion a global business, and now they may be overtaken by SHEIN, which has only been established for ten years. The success of SHEIN also shows that the future of fast fashion is not to be more environmentally friendly, but to satisfy people's shopping desires at a faster speed and at a lower price. Just like putting "fast" before "fashion", fast fashion is still a business of competing for speed.

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