Author |Chenwen
** Insight into Shinkensha
Carrying the aftermath of the "Black Friday" victory, the rumors that cross-border e-commerce giant Shein will go to the United States for an IPO have spread in the industry again.
Financial investment reported that the valuation of SHEIN's IPO may reach $90 billionShanghai ** Daily said that SHEIN has issued a roadshow invitation to investors and secretly completed the submission to the US Securities and Exchange Commission.
Similar to the attitude of responding to rumors many times before, Shein officially replied with "no response" or "not very clear".
For a long time, SHEIN has created a low-key and mysterious image in the outside world, starting from Nanjing in 2008, and then moving to Guangzhou, relying on its own ** brand, with a lower **, faster than ZARA new speed, popular all over the world.
At its peak, SHEIN was valued at more than $100 billion, and in the statistical list of market research firm CB Insights, SHEIN was the third largest unicorn company in the world after ByteDance and SpaceX.
It's just that under the background of the current downturn in the global consumer market and the economic recession in Western countries, SHEIN has come to a crossroads in its career development before the various rumors of SHEIN's IPO are settled.
Shein is first and foremost a first-class brand, and then a cross-border e-commerce platform, which can run out, largely relying on the "small order quick return" model.
In a nutshell, the "small order quick return" model is to produce a variety of products and styles in small batches, and then quickly return orders to best-selling styles through market feedback on products, that is, the first order in small batches, and multi-frequency replenishment orders, so as to adjust inventory.
In this mode, creating a hit is no longer a "metaphysics" resigned to fate, but a probabilistic event supported by data.
In fact, "small order quick return" is not unique to SHEIN, before that, ZARA and H&M relied on "small order quick return" to grow into the two giants of the fast fashion industry, and SHEIN has completed the transcendence of its predecessors through a more extreme "small order quick return".
Specifically, the perception presented at the end of the market is that SHEIN is faster, newer, and cheaper than ZAR and H&M.
Statistics show that SHEIN has 2,000+ new products every day, 20,000+ new products every week, and more than 1 million new products every yearFor comparison, Zara is only updated 2 times a week and 1 per year20,000 models, the gap between the two is obvious.
With the same style of play, why is shein's efficiency so high?Here we have to mention SHEIN's management ability of the ** chain.
In the traditional garment manufacturing model, a single style of 10,000 pieces is the minimum threshold for foreign trade orders, after receiving the order, the factory then relies on Excel, mail and other traditional ways to arrange production, the current season of clothes from the design to the final display to the store sales cycle is as short as 3 months, long to go through half a year.
SHEIN breaks all the above processes and runs them on digital means - online monitoring trends, planning and development, ordering, manufacturing, warehousing, ......
The management granularity of the production process is very fine, and while the efficiency is improved, the industrial chain has also become resilient, and SHEIN's *** can complete the entire process from design to production to container delivery in 3-5 days at the earliest.
Based on on-demand**, SHEIN can reduce the brand's inventory rate to the low single digits, while the average unsold inventory of other brands in the industry is above 30%, after H&M pointed out in its 2018 financial report that its total inventory once reached $4 billion, accounting for 31% of total sales9%。
The speed of new products is faster, the efficiency of production is improved, and the first is naturally cheaper.
CICC report data shows that the same ordinary white shirt costs $13 for Shein and $24 for H&MFor $99, the zara costs $45$9. Shein is half as cheap as H&M and less than a third of its ** compared to Zara.
Relying on the research and development of industrial chain technology, SHEIN has built a very solid competitive barrier by establishing a flexible first-chain system for on-demand production.
Some people in the industry even believe that while SHEIN promotes the upgrading of the domestic clothing and fashion industry, it has also begun to become a driving force to promote global fashion change, which is an important manifestation of the global influence of China's fashion industry, and SHEIN's Chinese flexible chain system is expected to become the maker of global industrial rules and an important opportunity for the rise of China's fashion industry in the world.
The "small order quick return" model can allow SHEIN to run out, but with the deepening of market expansion, SHEIN has gradually touched the ceiling of performance growth, and its revenue and profits have begun to come under pressure.
Statistics show that SHEIN's revenue growth in 2021 was 60%, a significant slowdown from 250% in 2020.
In 2022, SHEIN's revenue will be US$22.7 billion, a year-on-year increase of 54%, the growth rate will slow down further, the net profit will decrease by 36% year-on-year, and the net profit margin will also increase from 75%, down to 3. in 20222%。
Therefore, if you want to go further, SHEIN also needs to tell a grander story.
The solution given by SHEIN is to transform to the platform and empower more small and medium-sized sellers with its flexible chain capabilities.
In May this year, SHEIN launched the "Hope Gravity" Million Seller Program to help 10,000 merchants around the world, including China, in the next three years, with annual sales exceeding one million US dollars and helping 100,000 small and medium-sized merchants reach annual sales of 100,000 US dollars.
In addition, SHEIN has also launched the "500 City Industrial Belt Plan" to extend and spill over the flexible chain model of on-demand production of "small single quick response" from the apparel industry to more industries, which will help the industrial belt to go overseas while helping more industries to upgrade the digital flexible chain to help the long-term development of the industry and improve market competitiveness.
Focusing on the direction of platform transformation, starting from 2022, Shein has carried out a large-scale recruitment, successively recruiting Liu Xiuyun, the former president of Lazada with third-party brand management experience, and Donald Tang, a former investment banker at Bear Stearns, as executive vice chairmen.
Entering 2023, SHEIN has recruited executives from Amazon to lead the category expansion strategy;Later, Son's former deputy Marcelo Crow was recruited to serve as the chairman of the Latin American company, and a few months later he was promoted to the vice chairman of the group to help Shein expand globally.
Subsequently, it "buy, buy, buy" and acquired a large number of third-party brands around the world.
In mid-August 2023, SHEIN announced on its official website that the company acquired SPARC Group, the parent company of the fast fashion ** brand Forever 21, and obtained one-third of the group's equity.
At the end of October 2023, SHEIN reached a long-term cooperation agreement with the Forever 21 brand, SHEIN will design, manufacture and sell a series of clothing and accessories products of the Forever 21 brand with a flexible on-demand production model, including casual sportswear, swimwear and other categories.
In addition to the above cooperative brands, SHEIN also acquired Missguided, a fast fashion brand under the British fashion retail group Frasers Group, at the end of October, as well as all the intellectual property rights of the brandNot long ago, it was rumored that SHEIN had taken a fancy to another British brand, TopShop......
Finally, SHEIN has accelerated the construction and layout of logistics and warehousing infrastructure in domestic and overseas markets.
With a total investment of 10 billion yuan, Guangzhou Shein Bay Area ** chain project, and an investment of 3.5 billion yuan Zhaoqing Shein Bay Area Western Smart Industrial Park project are in full swing construction, in SHEIN's plan, in order to shorten the performance time, the Europe, Middle East and Africa market headquarters will be built in Dublin, the capital of Ireland, and three large distribution centers will be established in the United States in the future......
The above actions have obviously paid off, and foreign media The Information quoted sources familiar with the matter as saying that SHEIN's revenue in the first three quarters of this year (January-September 2023) reached $24 billion, an increase of more than 40%.
If this growth rate is maintained, SHEIN is likely to achieve its full-year sales growth target of 40% in 2023, and its revenue will reach $32 billion to $33 billion by the end of the year.
Standing on the industrial side, SHEIN does have a strong competitive advantage by virtue of its flexible ** chain system, but from the perspective of cross-border e-commerce industry, SHEIN is facing the siege of many friends such as Temu, AliExpress, and TikTok.
AliExpress is the old face of cross-border e-commerce, backed by Alibaba, AliExpress has rookie cross-border logistics to support the user service experience, and it is also the only service platform in the industry with self-built logistics, and its core advantage is that its business has built a very complete ecology under the Ali system.
Therefore, the development speed of AliExpress is not very fast, but it is better because of its deep roots and comprehensive health. For example, in Poland, AliExpress's cumulative number of users and user scale have been ranked first among cross-border e-commerce platforms for many yearsIn terms of market share, AliExpress is also second only to the local e-commerce platform Allegro.
ByteDance's TikTok and Pinduoduo's Temu are different, the former is built by "content + algorithm" to build a moat, which has a great impact on Facebook and Instagram, and the latter is wielding a "** stick" to harvest the overseas market.
Temu, in particular, was detonated after its overseas launch in September last year, and topped the overall list of free apps in the App Store in the United States in November of the same year.
Unlike SHEIN, which picks profits from its own production and operation links, Temu relies on the seller resources accumulated by Pinduoduo for many years to directly face factory sellers.
Through the first advantage in the United States, Temu has attracted more factories and sellers, the competitiveness of products has been continuously strengthened, stimulating the consumer side, and the platform traffic and the number of users have risen rapidly.
Like a snowball, temu is rapidly replicating in other countries, and more markets are constantly being opened, successively entering Europe, Oceania, Southeast Asia, and the Middle East is also in the layout.
Like SHEIN, TEMU is also speeding up to make up for the shortcomings of logistics and warehousing infrastructure.
According to the report, as of October, TEMU has more than 40 warehouses, and the location has also radiated from Guangzhou to the surrounding areas, expanding to Dongguan, Foshan, Qingyuan, Zhaoqing and other places, in order to support a large number of warehouses, TEMU has hired about 50,000 outsourced sorting workers to work around the clock.
At the same time, temu has started cooperation with shipping giants such as Matson, ZIM, CMA CGM, Maersk, and COSCO Shipping to solve the logistics problems of cross-border e-commerce through the form of shipping clippers.
From the Nihon Keizai Shimbun and the U.S. research company DataAI's joint survey data shows that the total number of users of Temu and SHEIN in the United States reached 1100 million people, more than 9% of the largest e-commerce platform Amazon. Among them, Temu's U.S. users account for about 41% of the world's total, and Shein accounts for about 18%, both of which exceed Amazon's.
Today's SHEIN has ushered in the moment of letting go.
In the past, SHEIN was more based on itself, telling the story of becoming a "better Zara";Today, SHEIN is faced with a grand narrative of how to become a "global company", with more complex business relationships, fiercer competition, and more unpredictable changes.
The key to how to go in the future depends on whether SHEIN will play against the wind.