Technology empowers industrial transformation and upgrading: SHEIN's digital-real integration approach

Recently, China Entrepreneur magazine launched a series of surveys on " New momentum of digital and real integration, looking for benchmarks of ' double-real enterprises ' " . SHEIN , which uses innovative technologies to drive the digitalization and Internetization of the clothing manufacturing supply chain, was rated as one of the benchmarks of double-real enterprises. It is reported that the survey aims to record the company's own digital transformation and upgrading path, capture the changes brought about by digitalization to manufacturing companies, and show a new model of collaborative innovation and common development of the industrial chain and ecological chain. He Yifan, deputy editor-in-chief of China Entrepreneur magazine, said, " Through the survey, we have seen   The highest level of digital transformation in China, the digital level of these benchmark enterprises is also leading in the world. " In the future, whether it is the path of high-quality development of the manufacturing industry proposed by the country or the ever-changing technological changes, " double-real enterprises " are needed to play a mainstay role in social and economic development.

In the opinion of the review team, a " double-real enterprise " must possess the three core values ​​of " entity, empowerment, and chain leader " at the same time.   Specifically, they must be entities or have entity characteristics, have achieved results in digital transformation and formed their own methodology, and more importantly, they can also empower other real economies and drive the digital upgrade of the upstream and downstream of the industrial chain. This is why this survey activity is named " Finding " Benchmarks.

The long and arduous journey of digitalization and flexible supply chain has also won SHEIN overseas markets and reputation.

On the basis of the original self-operated brand, SHEIN has now formally formed a unique model of self-operated brand + platform dual-engine development. The platform model also supports the multi-mode of agency operation + independent operation to help more sellers go overseas. This is a key leap in SHEIN's business model. The " small order and fast response " flexible supply chain methodology, international market operation and brand experience, and a broad sales network forged by the self-operated brand can better empower more " overseas " sellers; as a platform , SHEIN has started a new attempt.

The second generation of factory workers transforms into the new generation of cross-border enterprises

Before engaging in cross-border e-commerce, Zhou Yunbin, born in 1996 , was a " second-generation factory worker " .

Since he was a child, his parents have been running a foreign trade business. At that time, foreign trade basically depended on what the customer ordered. Zhou Yunbin still remembers that when he was in high school, his family's factory employed more than 200 employees, but when he graduated from college, the factory had closed down and was in debt.

In 2022 , Zhou Yunbin joined the SHEIN platform through a friend's introduction and became a self-employed small seller of resin ornaments on the platform. However, unlike the foreign trade business he had been exposed to since childhood, the process of " small seller " doing cross-border e-commerce from 0 to 1 was not easy.

" When entering this new industry, if there is no dedicated person to guide you, you often don't have the confidence to stick with it. " Zhou Yunbin admitted the difficulty of entering the industry. It was not until he joined SHEIN that his business started to pick up again.

Zhou Yunbin introduced that SHEIN 's professional buyers will first check the factory and its qualifications offline to ensure that the factory has sufficient supply capacity; they fully communicated the platform's concept and user characteristics, so that he could have a preliminary understanding of overseas consumer needs. Professional buyers will also regularly share with him the fashion trends, hot-selling items and elements of each season to help store owners choose products.

After a year of exploration and learning, Zhou Yunbin has learned to review sales, analyze popular styles and popular elements, and launch more hot-selling items that meet overseas needs. Today, Zhou Yunbin's store on the SHEIN platform sells more than 500 items every day. The turnover has also increased 400 times from more than 2,000 yuan a day .

In addition to price, creating competitive pallets is the key

Low-price competition has become a true portrayal of the competition between many cross-border e-commerce platforms.

How to get rid of simple price wars and take a cost-effective path with high user stickiness and its own product characteristics is not only a challenge faced by the platform, but also a breakthrough for major cross-border e-commerce sellers.

" Some people I know are also trying other platforms, working hard and losing money to make a name for themselves. One of our relatives tried other platforms at the beginning, and only earned more than 1,000 yuan with more than 6,000 orders a day. " Zhou Yunbin said that he has only joined the SHEIN platform at present. In his opinion, the governance rules of the SHEIN platform are more stringent, and time will automatically eliminate many people. Those who persist are the winners.

Unlike Zhou Yunbin, fashion shoe seller Joey is actually a battle-hardened e-commerce seller. Before joining SHEIN , he was already a best-selling self-branded seller on other platforms.

Despite his small success, Joey is not satisfied with the status quo.

Shortly after SHEIN opened its third-party business, Joey chose to join SHEIN , mainly because of SHEIN 's influence in the fashion field and its considerable traffic on the site. " The second reason is that SHEIN 's consumer group is young, which is consistent with our company's own brand's main fashion footwear products, " he added.

Based on the characteristics of the platform, Joey also adjusted the product selection of the store after entering SHEIN . For users of the SHEIN platform, Joey said that he differentiated the product selection to ensure that the shoes on the shelves of SHEIN are both comfortable and fashionable, so whether it is the adaptability to the platform or the product fits the user group, it has formed a certain competitiveness.

As a registered seller with the authority to set his own prices, Joey took the initiative to lower the price of the same pair of shoes on SHEIN by about US$ 7 compared to other platforms .

The same product has different prices. Behind the seemingly " disadvantage " , Joey is determined to hold a long-term position in the SHEIN platform after careful consideration .

The pricing is lower on SHEIN , first of all because SHEIN has zero commission in the first three months and only charges a 10% commission in the later period, so the cost can be brought down.

On the other hand, Joey is also optimistic about the development of SHEIN . Under the strategic guidance of in-depth cooperation, Joey has made a tilt in pricing. In the first month of entering SHEIN , Joey 's monthly sales reached one million US dollars, and in just a few months, it has grown to three million US dollars.

However, it is interesting to note that sellers who want to open up overseas sales on the SHEIN platform do not necessarily have to have a price advantage to succeed. Joey's review shows that the key to its success lies in the fact that its own product pallets are in line with the characteristics of the platform, fully enjoying the benefits of the SHEIN platform, and its products are competitive, and its main categories are deeply complementary to the platform.

Output methodology, SHEIN provides sellers with menu-based options

There are many seller cases similar to Zhou Yunbin and Joey on the SHEIN platform; the stories behind the sellers are often microcosms of Chinese companies' transformation and exploration overseas.

Data shows that over the past five years, China's cross-border e-commerce imports and exports have increased nearly tenfold; in 2020 , the scale of China's cross-border e-commerce imports and exports was RMB 1.62 trillion, an increase of 25.7% ; in 2021 , it was RMB 1.92 trillion, an increase of 18.6% ; cross-border e-commerce, as a new form and model of foreign trade that has emerged in recent years, is injecting new impetus into China's foreign trade growth and has become one of the means to stabilize foreign trade.

SHEIN has spent 10 years blazing a unique path in the overseas market. Now, he is using his methodology to empower tens of millions of Chinese companies that have overseas expansion needs.

In May 2023 , it announced the launch of the " Xiyou Gravity " Million Sellers Plan, which plans to help 10,000 merchants around the world, including China , to achieve annual sales of over one million US dollars in the next three years, and to help 100,000 small and medium-sized merchants achieve annual sales of 100,000 US dollars.

On September 19 , 2023 , at the SHEIN Platform Investment Strategy Conference, SHEIN launched the National 500- City Industrial Belt Overseas Expansion Plan. SHEIN expects to penetrate into the 500- city industrial belts across the country within three years.

At present, the levels of digitalization and internetization of the supply chains of many manufacturing industries are still low, and the industrial efficiency is low, which cannot match market demand and supply more accurately. In the process of driving the international development of more industrial belts, SHEIN's on-demand production of " small orders and quick response " flexible supply chain model has extended and spilled over from the apparel industry to more industries, providing more possibilities for the digital upgrading of industrial belts.

In the clothing field, SHEIN has achieved the success of the fashion brand by relying on its innovative " small order quick response " flexible supply chain, and has driven the digitalization of the clothing industry, allowing the industry to be closer to the real needs of the market and consumers, improve overall industry efficiency, and reduce a lot of industry waste in the past.

SHEIN continues to carry out supplier empowerment plans around technological innovation, training support, factory expansion, and community services . In the first half of 2023 , SHEIN announced a five- year investment of 500 million yuan to continue deepening supplier empowerment work, and established the first apparel manufacturing innovation center to continuously output flexible supply chain standards. As of the first half of 2023 , SHEIN has cumulatively supported the construction of nearly 240,000 square meters of supplier factories , trained more than 240 times, and continued to promote supplier community public welfare such as Children's Home and Juxingguang, empowering the long-term sustainable development of supplier communities and ecosystems, and promoting the comprehensive capacity improvement of supplier factories in all directions to help the transformation and upgrading of the apparel manufacturing industry and its international expansion.

SHEIN is also empowering other industries with its flexible methodology and standards. While other home furnishing sellers usually order 1,000 pieces of similar products, Zhou Yunbin usually orders 200-300 pieces per batch, matching market demand and supply more accurately, reducing waste, and saving a lot overall.

If you want to do business on the platform for a long time, you don't have a competitive advantage by relying on long-term purchases, so Zhou Yunbin also learned from SHEN in the past to build his own supply chain, and Zhou Yunbin began to invest in factories. With the expansion of business, production and warehouse management are another major content that Zhou Yunbin wants to improve. In order to synchronize the production factors and information of the whole process more accurately and in real time, it is necessary to open up the digitalization and onlineization of the whole chain. These are all mature experiences and methodologies that SHEIN has explored in the past ten years. Zhou Yunbin began to participate in the supplier conferences and merchant meetings held by SHEIN . Over the years, SHEIN has been continuously improving the digitalization level of its partners' supply chains through daily and special training, from the full-process use of digital technology tools, to the analysis of business dashboards, to the training of skills in various modules such as quality management, to improve the overall flexibility and operational capabilities of suppliers. This has become another secret for his rapid growth.

In fact, more and more sellers are setting their sights on the overseas market, and seller services have also generated diversified market demands.

SHEIN , which has insight into this demand , provides a " menu-style " option for going overseas to meet the " going overseas " demands of sellers of different sizes in the industry belt . For small and medium-sized sellers who have no experience in sales and operation on overseas third-party platforms, the SHEIN platform can provide them with agency operation services, allowing these sellers to focus on the product aspects they are good at. SHEIN provides one-stop empowerment and services including product operation, warehousing, logistics, customer service, and after-sales, allowing sellers to expand into the international market easily and worry-free.

For sellers like Joey who have their own brands, after joining the platform, they can conduct independent operations including self-management of product selection, listing, market strategy, sales, inventory, logistics, etc. SHEIN can empower the further development and growth of the brand through the platform's resources and brand building experience, and help expand its brand influence and popularity and build the brand.

Although there are great opportunities in going overseas, there are still challenges such as localization, laws and policies of different countries, and brand promotion. SHEIN has gone through a decade of development and formed its own set of methodologies, which it has exported to more sellers.

" I believe victory will lean towards long-termists. " Zhou Yunbin said that his brand benefited from the cultivation of the SHEIN platform and he placed his future on SHEIN .

The article is compiled from reports from the National Business Daily and other news outlets.

SHEIN

Digitalization

Industrial transformation and upgrading