Shulou(Shulou.com)11/24 Report--

Unicorns rank fifth in the world, with a valuation of 400 billion, but little is known to domestic consumers.

Author: Fei Fei |

Editor: Tang Shi |

SHEIN, which may be rarely known to domestic consumers, is the fifth largest unicorn in the world after Douyin, SpaceX, Ant Group and Stripe, with a valuation of 400 billion yuan.

Since its inception, SHEIN has kept a low profile in the industry. Its founder, Xu Yangtian, a graduate of Qingdao University of Science and Technology, has been rarely interviewed for a long time, and there are relatively few public reports about SHEIN and Xu Yangtian, so it is not too much to call it the lowest-key unicorn company in the world.

As going out to sea has become a necessary choice for Chinese enterprises to seek the growth curve, as a dark horse for Chinese overseas enterprises, SHEIN brings together a variety of characteristics such as going out to sea, cross-border e-commerce and fast fashion.

01. What is the running logic of SHEIN?

SHEIN attaches great importance to social media, and SHEIN began to promote it on foreign social media around 2010, when the launch price was still relatively low. However, after entering 2013, the launch costs of the platforms represented by Google and Facebook began to rise. After SHEIN chose to promote ins, it seized the dividend of ins development and accumulated a lot of data.

Unsurprisingly, with the first batch of traffic and data accumulation, SHEIN successfully attracted the attention of capital and successively won the favor of IDG, Sequoia and other institutions. It is with the investment of these institutions that SHEIN has the foundation to expand its territory.

Then SHEIN gradually formed a B2C operation mode, one side is B end, connecting suppliers and manufacturers, the other side is C end, connecting consumers and users, SHEIN itself establishes the middle platform system, through App and website connection, this way can timely and quickly respond to the needs of users.

As a result, we will see that as long as the user issues the order payment on the platform, the user's purchase data will send the demand to the manufacturer through the middle platform, and then the manufacturer will produce it, and finally transport the goods to the consumer through logistics.

In addition, SHEIN will first produce a variety of styles in small quantities, conduct market tests on different products, and then quickly return orders for styles that sell well according to the data feedback of the terminal. Moreover, SHEIN sets up a large number of social accounts through social media at the front end, predicts consumers' favorite popular styles, and then transmits the data to downstream manufacturers to achieve relatively accurate production and style updates.

This "small order quick return" operation mode, even if there is no factory at all, SHEIN can achieve good operation, at the same time, there will be basically no inventory pressure, borrow the traffic and data advantages of social media, through the Taiwan system, and finally achieve light assets operation.

02. Data to build core competitiveness

As you can see, behind the operation mode of SHEIN, a large amount of data base is needed at the front end. In fact, this ability to obtain and apply user data precisely forms the core competitiveness of SHEIN.

From the initial launch and promotion of foreign social media to the completion of data accumulation by seizing ins dividends, SHEIN constantly adjusts its movements, all in order to obtain data support. After collecting user data, and then through big data analysis, we can accurately understand the needs of users and invigorate data resources. At the same time, the parsed data is then transmitted to the manufacturer through the mid-Taiwan system, and then the goods are updated and sold.

When this system runs, we can see that there is a strong supply chain support behind it. There are a large number of small and medium-sized producers around SHEIN, and commodity trade is very developed. In this environment, it is easier to form supply chain advantages. According to public information, SHEIN has more than 4, 000 suppliers, which provides a basis for timely response to user needs.

Now what the outside world is most interested in talking about is the small order quick return of SHEIN, which is generally recognized by the industry, this effect is inseparable from data and supply chain support, from market measurement to design, and then to return order production and sales, user data is constantly transmitted in the Taiwan system, resulting in the advantage of SHEIN updating thousands of items every day.

This advantage will also further feed SHEIN, the reason is not difficult to understand, the platform updates thousands of items every day, this update frequency will greatly stimulate suppliers to optimize the design, so as to improve the stickiness of users to the platform and ensure that the platform and products are concerned by users.

Of course, in addition to small batch testing and supply chain advantages, SHEIN is also good at marketing. This is not difficult to understand, after all, SHEIN has long been promoted on overseas social media. Of course, the marketing here is not traditional advertising, but the accumulation of raw data-oriented promotion.

03. There is no inventory pressure, but there are hidden quality worries.

From the perspective of front-end traffic acquisition and social media promotion, SHEIN seems to be the way to build a brand, but from a supply chain perspective, from market measurement to design, to production organized by manufacturers, and finally delivered to users through the platform, there is almost no sign of the brand in the whole process.

SHEIN's own factory can produce a small number of goods, at the same time, SHEIN attracts a large number of brands, and more than 4, 000 suppliers provide a continuous supply of goods, so SHEIN is both a brand and a platform.

There are many angles to focus on SHEIN. There are too many stories worth digging about in this global unicorn with a valuation of 400 billion yuan. In just a few years, it has entered the fifth place on the list of global unicorns, which is enough for SHEIN to lie down and win. But in addition to these positive results, there is also no lack of negative comments on SHEIN.

According to the comprehensive evaluation of the industry, some people in the industry think that the supply of SHEIN is lack of quality, and even some people think that the quality of its supply is poor. In other words, SHEIN does not have inventory pressure, which is a visible advantage, and SHEIN's GMV will be as high as $10 billion in 2021, but there are concerns about products on its platform.

At present, SHEIN has grown into the fifth largest unicorn in the world by virtue of e-commerce business, but from a global perspective, China's e-commerce industry has gone through more than 20 years. Although it leads the world in terms of payment, logistics and supply chain, it is still a fact that China still lacks a world-class e-commerce platform in cross-border e-commerce trade or in overseas markets.

It is not so easy for e-commerce to go out to sea

In addition to SHEIN, domestic AliExpress, pinduoduo and other platforms are also laying out overseas e-commerce business, but without exception, objectively, these cross-border e-commerce platforms are hardly world-class platforms, and almost all e-commerce platforms adopt low-price strategies when they enter overseas business.

For example, in the case of pinduoduo, inviting friends to help with group buying has become a unique move for pinduoduo to capture the market, so pinduoduo still used this kind of group buying when he went out to sea. The essence of this kind of play is low price, attracting consumers with the lowest price. Domestic e-commerce platform in the layout of sea business, still copy the domestic style of play, in the early stage indeed gained a certain advantage.

It is worth mentioning that for e-commerce platforms, traffic is the core factor that determines success or failure. Those who have traffic and data base are most likely to take the lead in the market competition. Therefore, we will also see that, in addition to the tacit low-price play, almost all platforms are investing money on traffic, at the expense of heavy investment in order to flow.

However, it is a pity that in the cross-border e-commerce industry with a large market scale, although China leads the world in e-commerce and payment, and relies on the huge advantages of the supply chain, it still does not run out of the world-class e-commerce platform. There are many reasons, whether platform or brand, for consumers, the factors that affect the purchase behavior are diverse, not only the price factor, but also the quality is the core factor.

At a lower cost, to provide users with better quality products, so that users spend the least money to buy the best quality goods, this is the goal of cross-border e-commerce platform development. When you have a user base, profitability and growth are natural.

This article is from the official account of Wechat: new Research (ID:chuxinyanjiu), author: Feifei

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