This secretive $100B Chinese retailer sells to the whole world, except China.
It dethroned Amazon with 177M downloads, quickly dominated the US market, and is worth more than Zara and H&M combined.
How it eclipsed American brands with these 4 crazy business strategies: 🧵
It dethroned Amazon with 177M downloads, quickly dominated the US market, and is worth more than Zara and H&M combined.
How it eclipsed American brands with these 4 crazy business strategies: 🧵
1/31
Shein is known as "China's most mysterious billion-dollar company".
In 2021, the app had over 177 million downloads, with over 43.7 million users worldwide, with 10 million monthly active users in the US alone.
On TikTok, the hashtag #Shein has garnered over 32.3B views.
Shein is known as "China's most mysterious billion-dollar company".
In 2021, the app had over 177 million downloads, with over 43.7 million users worldwide, with 10 million monthly active users in the US alone.
On TikTok, the hashtag #Shein has garnered over 32.3B views.
2/31
The scale of Shein’s operation is bewildering. Their growth represents a 250% year-on-year increase in revenue.
It:
- Sells in more than 150 countries
-Already has a near-stranglehold on the US market, 2nd only to Amazon, & is fast catching up in the UK.
The scale of Shein’s operation is bewildering. Their growth represents a 250% year-on-year increase in revenue.
It:
- Sells in more than 150 countries
-Already has a near-stranglehold on the US market, 2nd only to Amazon, & is fast catching up in the UK.
3/31
In the UK already, it sells about 30,000 items a day – more than 10 million a year – and spends more on advertising than any other fashion retailer.
This chart below illustrates just Mexico as an example.
In the UK already, it sells about 30,000 items a day – more than 10 million a year – and spends more on advertising than any other fashion retailer.
This chart below illustrates just Mexico as an example.
4/31
The company grows like a wild creeper. Even during the pandemic, it generated an estimate of:
- $9.8B in 2020 then,
- $15.1B in 2021
That same year, it overtook Amazon to become the most downloaded shopping app in the US.
The company grows like a wild creeper. Even during the pandemic, it generated an estimate of:
- $9.8B in 2020 then,
- $15.1B in 2021
That same year, it overtook Amazon to become the most downloaded shopping app in the US.
5/31
While it's so famous, the brand is notoriously secretive. The CEO -Chris Xu - has been seen only a couple of times, and the company maintains a super low profile.
It's a Chinese brand, but doesn't even sell to customers in China 🤷♂️
While it's so famous, the brand is notoriously secretive. The CEO -Chris Xu - has been seen only a couple of times, and the company maintains a super low profile.
It's a Chinese brand, but doesn't even sell to customers in China 🤷♂️
6/31
Fast fashion is such a dense market. For Shein to achieve what it did, it had to do what nobody else in the retail industry had thought of doing yet.
Here's a breakdown of how Shein became a $100B company in such a densely competitive market:
Fast fashion is such a dense market. For Shein to achieve what it did, it had to do what nobody else in the retail industry had thought of doing yet.
Here's a breakdown of how Shein became a $100B company in such a densely competitive market:
7/31
1. Shein only produces what it knows will sell. UK mail calls it a 'fast-fashion spy machine'.
With huge inbound traffic, its powerful algorithms predict demand based on tracking its users’ online behavior.
It hunts websites like Etsy, Instagram & Google for trends.
1. Shein only produces what it knows will sell. UK mail calls it a 'fast-fashion spy machine'.
With huge inbound traffic, its powerful algorithms predict demand based on tracking its users’ online behavior.
It hunts websites like Etsy, Instagram & Google for trends.
8/31
Shein has the first-movers advantage. It's been gathering data through customers since 2012.
Today, it has built a gold mine of big data that helps them identify viral trends early. That’s how they stay ahead in the competition.
Shein has the first-movers advantage. It's been gathering data through customers since 2012.
Today, it has built a gold mine of big data that helps them identify viral trends early. That’s how they stay ahead in the competition.
9/31
2. Pioneered 'Real Time Retail'
Brands like Zara and Uniqlo are standard names in 'fast fashion'.
They're called so because they're able to produce, display, and start selling new apparel within 3 weeks.
2. Pioneered 'Real Time Retail'
Brands like Zara and Uniqlo are standard names in 'fast fashion'.
They're called so because they're able to produce, display, and start selling new apparel within 3 weeks.
10/31
Shein took that 2 steps ahead and created “real-time fashion”.
A business model that takes the “fast-fashion” model to its extreme by identifying fashion trends quickly and minimizing manufacturing cycles.
They're able to produce new apparel in 3-5 days!
Shein took that 2 steps ahead and created “real-time fashion”.
A business model that takes the “fast-fashion” model to its extreme by identifying fashion trends quickly and minimizing manufacturing cycles.
They're able to produce new apparel in 3-5 days!
11/31
How does it do that? All its manufacturers are located no more than a five-hour drive from its sourcing hub in Guangzhou.
All shipping happens right from China.
So they control operations, manufacturing and shipping all from within China.
How does it do that? All its manufacturers are located no more than a five-hour drive from its sourcing hub in Guangzhou.
All shipping happens right from China.
So they control operations, manufacturing and shipping all from within China.
12/31
On top of that, Shein sells the trendiest of things at rock-bottom prices, with its average selling price at just over $6.
Thus, it casts a wider net (selling worldwide), and then motivates teens to buy more quantities by keeping margins low.
On top of that, Shein sells the trendiest of things at rock-bottom prices, with its average selling price at just over $6.
Thus, it casts a wider net (selling worldwide), and then motivates teens to buy more quantities by keeping margins low.
13/31
3. Works with a 'lean-order' model
Unlike brands like Zara who produce an average of about 10k pieces of clothing at once, Shein only produces about 300-500.
It then analyses demand and is able to tailor production accordingly.
3. Works with a 'lean-order' model
Unlike brands like Zara who produce an average of about 10k pieces of clothing at once, Shein only produces about 300-500.
It then analyses demand and is able to tailor production accordingly.
14/31
Its reputation for paying manufacturers on time made it a favorite in the industry.
Many manufacturers wanted to work with Shein and were even ready to take orders in super small quantities, something they wouldn’t do for anyone else.
Its reputation for paying manufacturers on time made it a favorite in the industry.
Many manufacturers wanted to work with Shein and were even ready to take orders in super small quantities, something they wouldn’t do for anyone else.
15/31
4. Aggressive social media marketing
It's nearly impossible not to encounter the brand on social media - either via its ads or customers making TikTok "haul" videos,
4. Aggressive social media marketing
It's nearly impossible not to encounter the brand on social media - either via its ads or customers making TikTok "haul" videos,
16/31
Its focus on micro-influencer marketing lets teens earns actual money by signing up for Shein's referral programs.
Its focus on micro-influencer marketing lets teens earns actual money by signing up for Shein's referral programs.
17/31
It has more than 26 million followers on Facebook, & about 24 million on Instagram.
Then there's Shein Hauls: influencers unpacking their deliveries, trying on clothes & sharing how they feel on camera, have become viral hits with billions of views on TikTok and YouTube.
It has more than 26 million followers on Facebook, & about 24 million on Instagram.
Then there's Shein Hauls: influencers unpacking their deliveries, trying on clothes & sharing how they feel on camera, have become viral hits with billions of views on TikTok and YouTube.
18/31
It has incredible social climbing and chooses markets carefully.
For example, it doesn't sell in China because the market is already dense.
Plus, unlike in the west, where no one can compete with its efficiency, within China, many others are doing exactly what Shein is.
It has incredible social climbing and chooses markets carefully.
For example, it doesn't sell in China because the market is already dense.
Plus, unlike in the west, where no one can compete with its efficiency, within China, many others are doing exactly what Shein is.
19/31
Its algorithm-driven design process has also led to some major mishaps in the past.
And over the years, things have gotten messy for Shein.
The industry calls Shein the 'Idea stealer.'
Its algorithm-driven design process has also led to some major mishaps in the past.
And over the years, things have gotten messy for Shein.
The industry calls Shein the 'Idea stealer.'
20/31
In 2018, Levi Strauss accused the fast fashion giant of copying a stitch pattern trademarked by Levi’s.
It wasn’t long before the case was settled.
In 2018, Levi Strauss accused the fast fashion giant of copying a stitch pattern trademarked by Levi’s.
It wasn’t long before the case was settled.
21/31
And then AirWar International – the company that makes Dr Martens – filed a suit against Shein for infringing IP.
And this was followed up by Ralph Lauren who sued Shein’s for using an image that was “confusingly similar” to its signature polo player logo.
And then AirWar International – the company that makes Dr Martens – filed a suit against Shein for infringing IP.
And this was followed up by Ralph Lauren who sued Shein’s for using an image that was “confusingly similar” to its signature polo player logo.
22/31
In 2021, it caused controversy for selling a necklace with a swastika charm, which it later said was meant to show a Buddhist symbol, not a Nazi swastika.
It was also called out for listing Muslim prayer mats on its site, which were advertised as "decorative rugs."
In 2021, it caused controversy for selling a necklace with a swastika charm, which it later said was meant to show a Buddhist symbol, not a Nazi swastika.
It was also called out for listing Muslim prayer mats on its site, which were advertised as "decorative rugs."
23/31
And it's frequently called out by smaller designers and brands for creating copycat products.
Basically, Shein raked in profits that could have been going to smaller brands and independent designers.
And it's frequently called out by smaller designers and brands for creating copycat products.
Basically, Shein raked in profits that could have been going to smaller brands and independent designers.
24/31
And some more calling out
And some more calling out
25/31
A new investigation by the U.K. broadcaster Channel 4 has uncovered shady details about Shein's business practices.
They sent an undercover worker to film inside two factories in Guangzhou that supply clothes to the fast fashion giant.
A new investigation by the U.K. broadcaster Channel 4 has uncovered shady details about Shein's business practices.
They sent an undercover worker to film inside two factories in Guangzhou that supply clothes to the fast fashion giant.
26/31
In one factory, workers receive a salary of 4,000 yuan/month (roughly $556) to make 500 pieces of clothing per day.
Their first month’s pay is withheld from them.
In another factory, workers received the equivalent of four cents per item.
In one factory, workers receive a salary of 4,000 yuan/month (roughly $556) to make 500 pieces of clothing per day.
Their first month’s pay is withheld from them.
In another factory, workers received the equivalent of four cents per item.
27/31
Implementing a new paradigm of real-time fashion required optimizations at every level of the supply chain. Design, Manufacturing, Cashflow, Warehousing.
Shein did all that but it came with a fair share of problems.
Implementing a new paradigm of real-time fashion required optimizations at every level of the supply chain. Design, Manufacturing, Cashflow, Warehousing.
Shein did all that but it came with a fair share of problems.
28/31
Channel 4 released a documentary with their full investigation in October last year. Available to be watched here:
channel4.com/programmes/ins…
Channel 4 released a documentary with their full investigation in October last year. Available to be watched here:
channel4.com/programmes/ins…
29/31
However, these issues are not stopping it from growing.
As the ultra low prices and latest trends keep Shein from losing its dominance in the Fast Fashion category.
However, these issues are not stopping it from growing.
As the ultra low prices and latest trends keep Shein from losing its dominance in the Fast Fashion category.
30/31
In this thread, you learned:
1. How big is Shien?
2. Strategies it used to destroy legacy competitors
3. The problems it had to overcome
In this thread, you learned:
1. How big is Shien?
2. Strategies it used to destroy legacy competitors
3. The problems it had to overcome
31/31
Retweet the first tweet if you learned something new.
I've bootstrapped several successful companies, follow me @ValKatayev as I share stories on entrepreneurship.
Retweet the first tweet if you learned something new.
I've bootstrapped several successful companies, follow me @ValKatayev as I share stories on entrepreneurship.
https://twitter.com/ValKatayev/status/1615085142443429888
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