The sold-out rate is as high as 98%! The 100 billion dollar unicorn is "encircled and suppressed"

By leveraging the country's powerful supply chain and establishing a direct-to-consumer platform model, SHEIN has become popular around the world , has been rooted overseas for more than a decade, and has successfully entered the top three of the world's most valuable unicorns. It has also become a reference script for domestic e-commerce companies to explore overseas markets .

Now , Pinduoduo is conquering the United States with its cross-border e-commerce platform Temu , which is similar to SHEIN , hoping to get a share of the world's largest consumer market . The war between SHEIN and it has also started invisibly, and the air is filled with smoke.

Temu and ZARA are besieging SHEIN, which is struggling

Since Temu was launched, SHEIN has been inevitably compared. As Temu gradually captures the hearts of consumers, SHEIN's sense of crisis becomes stronger.

On a certain social platform, many SHEIN consumers expressed that they were about to "rebel" under the various inducements of Temu : " If SHEIN doesn't provide free shipping, I will switch to Temu " , " The price of the same product on SHEIN is more than four times that of Temu . I am going to give up SHEIN because they make so much money from me " ... There are countless such voices.

Since its launch, Temu has positioned itself not as an intermediary between sellers and buyers, but as a retailer like SHEIN , selecting products from suppliers and then selling them. Through this strategy, Temu systematically manages supply, logistics, fulfillment and other links , providing excellent services to win the trust and support of consumers .

Foreign media reported that Temu is SHEIN 's " apprentice " , but it is clear that Temu 's ambitions are not limited to this .

In terms of categories, Temu has provided a wide variety of products since its launch on the first day , including women's clothing, men's clothing, pet supplies, accessories, household items, cosmetics, etc. In contrast, SHEIN gradually extended its tentacles to other categories after gaining a firm foothold in the women's clothing field .

In terms of pricing , although SHEIN has more than 3,000 supply factories, Temu's parent company 's resources and advantages in the supply chain are not much inferior. In the early stage, in order to open up the market, Temu was able to offer lower prices than SHEIN , such as a wool coat for only $11.77 , a necklace as low as $0.95 , and sunglasses for $1.92.

In terms of shipping costs, Temu offers free standard shipping on almost all orders, while this service is only available on SHEIN if you spend more than $29 .

In terms of delivery efficiency and return policy, Temu will compensate $ 5-13 if the package is delayed . It also allows customers to return goods for free within 90 days of purchase , while SHEIN's return time is within 45 days.

All of the above can be described as an all-round attack, and Temu does not conceal his ambition to replace and surpass others.

At the same time, it is not just Temu . In the fast fashion industry, SHEIN is often compared with ZARA by consumers.

Since last year , there have been many heated discussions comparing SHEIN and ZARA on social media platforms such as Instagram and TikTok .

In April this year , after SHEIN was accused of infringing ZARA 's copyright, the #zara vs shein topic on TikTok has been viewed nearly 60 million times . A video comparing the same clothing between SHEIN and ZARA posted by a German TikTok blogger received nearly 10 million views in just a few days .

Although the keyword data of the price comparison website Money.co.uk shows that SHEIN is the most searched retailer in 113 countries and regions, replacing ZARA as the most popular fashion retailer in the world, it still cannot relax its vigilance in such a competitive environment with wolves in front and tigers behind.

Low prices are becoming the trend, but SHEIN has started to raise prices

"Love cheap" is a common psychology of consumers all over the world. Especially this year, inflation has led to an aggravation of personal financial crisis, and consumers are more concerned about low-priced products than ever before. Temu is also taking advantage of this opportunity to quickly squeeze into the US market, while SHEIN, which has always been committed to low-priced fashion, has suddenly gone the other way and started to raise prices.

In fact, due to ESG (environmental, social and corporate governance) controversies , the widespread cost increases this year, and the profit pressure in the early planned IPO plan, SHEIN had to start raising prices for its products.

It is reported that SHEIN was accused of " suspected violation of labor rights " not long ago . In order to quell the accusation, it said it would invest 15 million US dollars in the next three to four years to upgrade hundreds of supply factories and improve working conditions for workers .

In addition, in February this year , the U.S. House of Representatives and Senate passed the "American Competitiveness Act of 2022" with overwhelming votes . The "Import Security and Fairness Act" contained therein clearly mentioned that the United States will tighten tariff restrictions on imported goods, and the situation of " imports below $800 can be tax-free " may be broken. Although the specific implementation time has not yet been determined, in mid-June , hundreds of American companies jointly called on the U.S. Congress to pass the bill as soon as possible. At that time, SHEIN's shipping costs will increase .

In terms of marketing, SHEIN cooperates with many KOLs on TikTok, Facebook, and Instagram . Data shows that its annual advertising and marketing expenses are between 10 billion and 15 billion yuan .

As for profit pressure, due to the low product prices, the profits are already slim, and consumers continue to put forward new requirements for product quality, so its costs continue to increase and the profit margins shrink. It is reported that last year SHEIN's growth rate dropped from 250% to 60% , the first time in nine years that the performance growth rate was less than 100%. In the first half of this year, SHEIN's year-on-year growth rate was 50%. Obviously, in this year's sluggish market, the low net profit margin exposed its poor risk resistance.

In April this year , SHEIN was valued at more than $100 billion , but in recent months , its market value has shrunk by as much as one-third to only $ 65 billion to $85 billion.

Under various pressures, and with the possibility of getting rid of the "low price and low quality" label, SHEIN began to raise prices. How can SHEIN, which is famous for its low prices, transform in the short term and continue to attract consumers?

With so many moves, can SHEIN continue to write the legend?

To improve the efficiency of product delivery, SHEIN is establishing distribution centers in the Midwest and California. Its distribution center in Whitestown, Indiana is already in operation, which can shorten shipping time by up to four days . The second distribution center is expected to open in Southern California in the spring of 2023. It is also considering opening a third distribution center in the northeastern United States .

In addition, in order to accelerate brand building, improve brand favorability and recognition, and expand the user base, SHEIN has launched the second-hand resale platform " SHEIN Exchange " in recent months; opened the world's first long-term offline physical store in Japan , allowing customers to "try on offline and buy online "; and piloted the " Taobao model " in Brazil , where merchants of different categories can open stores directly on the platform .

Recently, SHEIN also launched its first membership service " SHEIN   CLUB” , members pay $6.99 per quarter and enjoy exclusive 5% discounts on more than 100,000 items and other discounts. This membership system is currently only available in the United States on a trial basis and is expected to be launched in other countries and regions in the future.

Speeding up delivery, expanding from a single women's clothing category to all categories , and accelerating the development towards platform-based e-commerce are all efforts SHEIN has made to increase user stickiness .

SHEIN ’s success is indeed related to its low-price strategy , but it is one-sided to say that it relies solely on “ price ” . It is also because it uses a small-order, quick-response strategy, testing products in small batches (about 100 orders), and then fully recommending them after identifying the best-selling products .

It is precisely because of the "fast launch of new products" (it only takes 14 days from product design to shelf launch), "multiple styles" ( according to incomplete statistics, there are more than 660,000 SKUs , and the current average daily launch of 6,000 new styles) , and " low prices " (the price difference between the same clothing and brands such as ZARA is as high as five or six times) , that overseas consumers cannot resist this sense of fast fashion at low prices .

SHEIN co-founder Molly Miao said that SHEIN 's sell-out rate remains at 98% , which means that 98 out of every 100 pieces are sold . The extremely high sell-out rate enables it to maintain a high cost-effectiveness.

Bloomberg   Second   Measure data shows that SHEIN has accounted for 40% of fast fashion sales in the United States . According to Coresight Research data, SHEIN's revenue has grown at an annual rate of 57%, while fast fashion giants such as ASOS and H&M are hovering around 20%. However, with the current increase in new competitors and the pressure from old competitors, how can SHEIN continue to write the legend? How can it break through the siege?

SHEIN

Temu