Media: Lianhe Zaobao
Capable of surpassing AMAZON in e-commerce app downloads for a while and possibly going public against the market, SHEIN comes from China and was founded in 2008. The company initially operated primarily in a B2B (business-to-business) model, providing clothing wholesale production services. Over time, SHEIN gradually transformed into an online retail platform mainly based on B2C (business-to-consumer) transactions.
In the Western English-speaking world, SHEIN challenges Zalora and Amazon. In the Chinese-speaking world, competitors include Taobao and Tmall. SHEIN successfully attracts the attention of young consumers worldwide through extremely low prices and fast fashion adaptation. Its low prices, diverse product selection, and global market strategy have led to success in international markets. The company actively promotes itself through social media, fashion bloggers, celebrity endorsements, and utilizes advanced supply chain management and data analytics technology to improve production efficiency and meet market demand.
Although SHEIN has gained a large number of users globally, it also faces some controversies, including issues such as sweatshop labor and the use of Xinjiang cotton. However, the company has still achieved significant development in the fiercely competitive fashion e-commerce field and has become one of the largest fashion e-commerce platforms globally.
SHEIN's success can be attributed to three prominent factors:
1) Flattening the world through logistics: The factories located in strategic locations such as Guangzhou, Jiangxi, and Hunan are very close to various clothing raw material suppliers. Exaggeratedly, they can replenish goods within a dozen minutes of shortage. In addition to the geographical advantages of the locations, the use of automation, segmented transportation, and fully intelligent control make the logistics flatten the world, pushing the delivery supply speed to the extreme and leading the industry.
2) Lowering quality requirements and focusing on extremely low prices to seize the market: Fast fashion has become mainstream in the past two decades, emphasizing rapid turnover. The least important aspects of garment material quality and durability, as long as they are cheap, new, and fast enough, are favored by consumers. According to new styles each season, consumers rush to buy. To compete for the largest market share between brands, it is necessary to reduce brand storytelling and concepts. Instead, it is necessary to continuously strive for faster innovation and follow trends. The abandonment of product differentiation. From a marketing and environmental protection perspective, this approach may not be ideal. However, under the current trend, SHEIN uses artificial intelligence to detect fashion trends early and produces different styles of products in small batches for market testing. By analyzing sales data feedback, it determines what designs to focus on. This cycle takes only one or two weeks, truly leading the industry with speed.
3) SHEIN's website and app use the "long-stay" mode: E-commerce platforms have been around for a while. In terms of design, both the Western/English-speaking world and the Chinese world have their own typical styles. It is not easy to change the user experience. In recent years, many websites and mobile applications have tried the "long-stay" mode—a marketing strategy for user experience. It guides people to perform certain operations on the website or application to keep users longer. This user experience strategy uses users, especially young people in SHEIN's core target group, to use persistent notifications (to remind users of available discounts), gamified rewards for multiple logins (to provide personalized discounts), personalized recommendations, and gift discounts to reward users who scroll through the website and application quickly for a long time, increase stickiness, and give up content that is not directly related to shopping or payment.
After talking about the reasons for SHEIN's rise for so long, the focus is on the outlook for 2024. When the global economy is worried about recession and downturns, Singapore's development in 2023 is not bad, but it is necessary to be cautious and prepare for market changes in the face of economic downturns.
First, when the market is bad, the first to be affected are the middle class and professionals with certain spending power (the rich are not affected, and the spending habits of the poor cannot change much). However, the worse the economy, the more people want to prove themselves and fill the desires of their insecure minds. Shopping behavior, especially among the middle class, will shift from buying high-quality and durable goods to buying low-priced, basic goods to reward themselves. The fast fashion-style low-price, fast delivery model will only become more popular.
Secondly, under a wave of large-scale layoffs, with more time spent online killing time, when all online shopping platforms use the long-stay mode strategy on websites and applications, more people will scroll through like they do with TikTok/IG short videos, aimlessly, staying on e-commerce platforms without seeking content.
Furthermore, lowering quality requirements, low prices, and de-differentiation are the trend. When companies see Chinese manufacturers entering e-commerce and achieving success by de-differentiating, emphasizing low quality, and making small profits on large sales, coupled with the need to cut expenses due to economic downturns, advertising will naturally decrease, and resources will be concentrated on direct sales, especially in the Asian and Singapore markets. In Europe, there has always been a focus on brand stories, and in the US and Canada, there has been a focus on concepts in recent years. In Asia, being cheap and beautiful is the way to go. For many years, in the local market, marketing, advertising, and design have not focused on beauty, brand stories, emotional connections, creativity, or humor, but on discounts and foreign trends, which can make a lot of money. Under the current situation, such basic quality, de-differentiated cheap sales will only become more obvious."
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