What is Shein, the online store that surpasses Amazon as the most downloaded shopping application in the US.
When you think about buying something online, the inevitable reference is Amazon, but lately a company called Shein is managing to become a singular threat for the e-commerce giant.
Some they call it “the TikTok of e-commerce”, and the truth is that this company has a strong relationship with this social network and with Instagram, where micro-influencers and even some celebrities recommend it non-stop. Among other things, because the products sold there (especially clothes) are extraordinarily cheap.
Knocking down prices and bragging about it on TikTok and Instagram
Shein (pronounced “shi-in”) has become the fashion store among micro-influencers, especially in those cases in which they talk about fashion. Clothes are staggeringly cheap, and as Packy McCormick said in his deep analysis of this phenomenon in Not Boring, those prices “make Amazon look expensive”.
The anticipation that Shein has created has made become the number one app in the “Shopping” category from the App Store in 56 countries. In Apptopia They describe it not as an app, but as a “super app”.
According to data from App Annie and Sensor Tower, Shein It is in fact the most downloaded app in the field of electronic commerce in the United States for both iOS and Android. It has in fact ousted Amazon, and has become an unusual “unicorn.”
Online revolution that threatens Amazon … and Zara
In fact it is a “great unicorn”, because after several rounds of investment its valuation is already situated on nothing less than 15,000 million dollars. According to these data, in 2019 it sold products worth almost 4,000 million euros, which represents 1/7 of Inditex’s sales and 2.5 those of H&M.
Shein’s approach is totally online, and thus tests the model of groups with a strong physical presence such as Inditex, which due to the pandemic had to close 1,200 stores worldwide.
Founded in 2008 and headquartered in Nanjing, Jiangsu Province of China, Shein’s progression has been slow and very, very quiet: It is one of the few companies that tries not to appear too much in traditional media, neither for good nor for bad.
Su CEO Chris Xu (o Xu Yangtian) He does not appear to grant interviews, and in one of those requests he replied to the editor that they could publish whatever they wanted, but if it was not true, “he would definitely sue them.”
Our colleagues from Jared -another of the vertical media of Webedia- were already unveiling their strategy of “clone and throw away the prices“at the end of 2013, and the truth is that that strategy seems to be working.
The era of real-time commerce
As explained in an analysis on the Chinese website LatePostIt seems that in Shein they have had as a reference the philosophy of Zara for try to overcome it in all areas.
While traditional brands have “created” fashion themselves by almost guessing what to wear, Zara has followed a model that does not guess what the public wantsInstead, you study trends and data from various sources to combine them into your own designs.
Despite Zara’s polished design, production and distribution processes, Shein goes one step further and makes extensive use of trends at Google to find out which colors, fabrics and styles are most popular.
As noted in Not Boring, “Shein does not have his own style. He does not try to impose his tastes on his consumers globally. They do not even have their own tastes. They are a reflection of the style of each country, in real time, based solely on data“.
From testing to production, only 7 days pass —for Zara’s 14, which was already a surprising achievement— and the absence of physical stores also allows us to be more dynamic when it comes to put those clothes up for sale. According to that analysis Shein can try 30 garment styles for the 5 or 6 that Zara can try at most before putting your products on sale.
Thanks to this strategy, these analysts assure, they manage to be more efficient, get more right and put the products on sale faster, thus threatening the traditional business of brands like Zara, but also from giants like Amazon.
From fast fashion —with which Inditex became a reference— or ultra-fast fashion, we have moved on to a model that some have already dubbed real-time fashion or commerce.
The stranger will stop being a stranger very soon
Shein’s march seems overwhelming. In 2020 achievement revenue of $ 10 billion (compared to $ 4.5 billion in 2019), and while traditional brands fell due to the pandemic, Shein was only making money.
Its behavior is impressive not only when we compare it with other large e-commerce platforms but even with companies in other segments.
In a recent analysis of the most promising Chinese brands, Shein managed to position itself ahead of Tencent in 11th place, and in its investment rounds it attracts not only Chinese capital, but also very strong investment funds in the United States such as Sequoia Capital. They have all seen something special in Shein … or so it seems.
Shein has been able to take advantage of the fact that TikTok is the fashionable social network
Another key to Shein it was their interaction on social media. Although it was not by far the first to take advantage of these means of dissemination. They make a significant investment in advertising on Facebook and Instagram – where their fashion products appear constantly – but they have also extensively used the channels offered by influencers.
TikTok is one of Shein’s massive promotional channels. The influencers of this platform often make videos in which not one, but dozens of clothes and fashion objects are tried on they get from Shein’s store, which ends up being a multiple promotion of their products.
That becomes clear from taking a look at the tag #sheinhaul, what currently shows no less than 2,500 million views for those little videos in which especially TikTok users try on the clothes they buy there.
Those micro-influencers post those videos for free because they expect take advantage of high affiliate commissions: 10-20% of the purchases that others make through their links end up in their pockets, a truly spectacular percentage compared to the commissions of approximately 2 to 4% (in some cases more depending on the type of product) that are usually achieved on other platforms such as Amazon.
They not only feed off less popular influencers, but also of the so-called KOL (Key Opinion Leaders, key opinion leaders), who are famous people who promote their products. Even Addison Rae, one of TikTok’s brightest stars, has promoted their products. The technique, as explained in The Telegraph, works.
That success contrasts with a singular reality: the firm is based in China, but does not sell there: instead it sells in other 220 countries around the world, and although delivery times are usually much longer than what they can offer other competitors, their low prices end up being a devastating argument for their customers.
In Shein they also make massive use of that strategy already known from other Chinese e-commerce platforms in which offers, coupons and points reward those who spend the most. Low prices often cause “a kind of ‘Primark effect’: since you see it so cheap, you buy a lot”, as Patricia de la Torre, director of Jared
Shein’s departure is truly amazing, and now it remains to be seen how far they can go and if they really end up becoming that giant of electronic commerce that competes from you to you even with Amazon.