Shein’s secrets to achieve success in ecommerce and perhaps to unseat Inditex

August
18, 2021

15+ min read

Opinions expressed by Entrepreneur contributors are their own.

Every time we think that fast fashion is going to disappear, diminish or simply lose its power, a new brand arrives that ends up changing the rules of the game. This is the case today (we have to say it), Chinese monster Shein , which has not only come to fill that space in the closet of millions of clients around the world, but has also given an option under the slogan “everyone has right to enjoy the beauty of fashion ” . But why has Shein been so successful?

In the few analyzes of the case, they limit it to a simple factor: low-priced clothing . Is price really the only factor to consider? Of course, it is a very important one, but as entrepreneurs we must keep in mind other highly relevant ones, such as the consumer, the pandemic, the type of application, marketing and the business model. If the price were the reason that the Chinese company had a turnover of only 10 billion dollars last year, according to LatePost, why would the “paca” clothing (brand clothing brought from the United States to Mexico and sold in the flea markets) does not reach those numbers?

Although the “bale” business has been growing and being the livelihood of thousands of Mexicans, with profits of up to 500%, according to data from El Financiero , these represent a health risk and are an illegal practice. In addition, in the social aspect, not everyone dares to speak openly about the origin of their clothes.

The key: the consumer

We are clear that for a brand to “explode” it needs customers. And Shein does. Covers more than 220 countries and territories around the world. In addition, according to data from Bloomberg , on May 17, 2021, Shein ended Amazon’s streak as the most downloaded app in the United States and worldwide with 17.5 million downloads, according to Sensor Tower .

Why do so many people download the app? The innumerable offer and the addiction it generates. The online store offers clothing for women (from size XS to 5XL), for men, children, household items, your pet, accessories, makeup and even technology.

@shein_official

CUTENESS OVERLOAD @sampaigeeee ## SHEIN ## SHEINgals ## cute ## springlooks

original sound – SHEIN

Basically it has everything you need to “look good” at affordable prices and has focused on a market forgotten by many brands for years: plus size or curvy . One of the factors that has made Shein a success is that he dresses women in fashionable clothes of their size without having to go to a fitting room. You will never see a salesperson squint at asking for a larger number.

For Blanca Hernández , an expert in trends at the WGSN agency, “many people who buy plus-size garments feel that putting this type of clothing in a separate category within traditional commerce stores marginalizes and shames them, that’s why they end up buying for Internet”.

With the body positive movement, brands must now rethink their strategies of what they are offering to their consumers. Women are embracing their bodies and seeking to dress them as they deserve. Blanca explains it like this: “retailers must consider how they mark plus size clothing and how they are located within stores, since most of these consumers are not looking for a specific product for plus sizes, but the same product that they could find in any store with more variety of sizes ”. In short, you don’t want to dress like your granny just because you have an unconventional body.

The tendency to accept our differences is being driven by teenagers and millennials, according to the expert. “They demand a product that better meets their needs and reflects more diversity without limitations due to its size or skin color.”

An intuitive and easy-to-use application

Another factor that has made this monster grow is its application. Those who have downloaded it will realize how easy it is to use, as well as being intuitive and visually appealing. Unlike other online stores, Shein has several aspects that make it stand out.

First, you can browse and choose your favorite products to put on a wish list without needing to buy them immediately. It allows you to calculate how much will be the total of your purchase with everything and shipping and additional discounts, you can go back and add or delete something from your cart as many times as you want without losing the data.

But a super valuable point that few fashion retail stores really have, is that you can comment on your opinion about the product, upload real photos and also get rewarded for doing it. In this way, users can better visualize what they are buying and get an idea of how it will fit their body type, not just catalog images.

According to Gustavo Parés , general director of the Mexican company specialized in the development of Artificial Intelligence solutions, NDS Cognitive Labs , one of the main challenges in the fashion retail industry is to move a business to an online model, since attention the client must be equal to or better than in person. Digital shoppers may have more questions about sizes, fabrics / materials, shipping, and sales. That’s when chatbots come in, which of course, Shein has to answer almost any question, either through the application or even through WhatsApp.

Almost flawless marketing

They well say that there is no better advertising than word of mouth and the company knows that very well. However, in addition to having people’s recommendations, they use the right medium to reach their potential customers: influencers .

With an exchange model, the brand offers “free” products in exchange for content on different social networks, with YouTube being the most popular. Simply, when searching for Shein in Google , more than two million 800 thousand results appear (and growing), of pure audiovisual content that speaks of the brand.

But, Instagram is not far behind. If you search for the hashtag #Shein, 3,500,000 related publications will appear. Because not only infleuncers take great pains in their posts on the social network, but also ordinary users from all over the world.

Buyers are not only attracted by influencers, even celebrities have collaborated with the Chinese firm. Katy Perry, Lil Nas X, Ellie Goulding, Nick Jonas, Rita Ora and Steve Aoki have performed at the global virtual concerts organized by the brand to raise funds, in 2020 for the COVID-19 Solidarity Response Fund for WHO , while that this year the proceeds were supposedly destined for racial justice, children at risk and to help counteract climate change, with a total of 300 thousand dollars to three associations: NAACP , Together We Rise and Ecologi.

On the other hand, the brand has devised a strategy that does not let its already captive consumer forget about it . During the day you receive messages reminding you what is new, what product on your wish list is on sale, the campaign that is running and of course, your daily income to accumulate points. Therefore, Shein makes sure that at least once a day you think about entering the app . That’s not counting the amount of advertising on social networks like Facebook and Instagram. In 2020, he reached 20 million followers on Facebook.

The pandemic and the ecommerce boom

During the pandemic, sales soared, according to Bloomberg, 250 percent above the previous year, well ahead of what Zara was able to raise in the same period and more than double that of Victoria’s Secret . Shein only cared about growing, while Zara had to rethink its business model and restructure and Forever 21 went bankrupt.

When we found ourselves needing to stay home, it affected us in different ways. Some people lost or gained weight, a generalized depression or anxiety arrived, we stopped seeing our friends and family, now it was only possible through a screen and the satisfiers such as going for a run, eating at a restaurant or shopping they disappeared. That’s when e-commerce exploded and with it our pockets.

At a time when uncertainty took hold of our lives, many of us found in retail sales a bit of the satisfaction that was taken from us. Now instead of going out for a coffee, the novelty of the day was to receive a package.

We spoke with Dr. Francisco Javier Mesa Rio, a specialist in psychiatry and professor at the National Autonomous University of Mexico (UNAM) at the Faculty of Medicine , about the change in consumption habits and satisfaction during confinement.

“There is more and more evidence that we are more aware of using technology, because human beings function with customs and habits. So the easier the processes to achieve a goal are, we are going to receive a positive stimulus ”, says the specialist. “If before you went to a store to look for a product and it took you for example two hours to receive that stimulus, now you can do it in 15 minutes, the brain registers it faster and the stimulus is immediate.” In other words, online purchases achieve that almost immediate satisfaction.

“In addition, you have an illusion that you have the entire store at your disposal on your computer, you no longer have to walk or move or make any kind of effort. Now by sitting with a device in hand you can see everything the online store has to offer, ”says Dr. Mesa.

The state of uncertainty and fear was one of the key points for the use of technology to skyrocket, the mental health specialist says that although this was already present in our lives, the pandemic gave them a great boost.

“ Fear gives us three types of responses which are: attack, flee or remain paralyzed or frozen. Before when we felt that emotion, we started a series of mechanisms to try to cope with it. For example, working excessively, fighting with people or going to a party, seeking escape. But what happened in quarantine is that you are scared and cannot deal with it and have the freedom to go anywhere. Thus the possibility of escaping goes towards technology, towards virtual spaces. So these became the great substitute for human interactions. “

“Applications replaced human contact, the need to go shopping and that makes them part of our lives.”

Simply put, electronic commerce in Mexico reached 316,000 million pesos in 2020, which meant a growth of 81% compared to the previous year, this was announced by the Mexican Association of Online Sales (AMVO), through the Sales Study Online 2021.

Globally, in 2020 ecommerce sales shot up to 4.28 trillion dollars , according to the PayPa l Global Trade Report 2021. In addition, it is expected to grow 14.3 percent.

On the other hand, also derived from the pandemic and the confinement that it caused, we were forced to move our lives to the virtual, either for work or leisure. So, there was a clear increase in app downloads, according to Sensor Tower , among the most popular were TikTok, Snapchat and Zoom , while in e-commerce Shein , it was the one that took the crown surpassing even Amazon . In fact, it is the number one app in the App Store shopping category in 56 countries.

When asking the academic about a possible “addiction” to this type of app as a method to escape from reality, he tells us how our mind works when faced with this type of stimulus. “Our brain works with neural pathways and if you go through it many times it becomes a habit. That is why it is said that a habit is formed in 21 days, because a new neuronal pathway is formed and is maintained ”.

“The easier applications are to use, allow the user to feel owner of the action. Although in appeared you do something different in reality it is the same. For example, Candy Crush, when leveling up, the difficulty increases, but in reality you do the same thing only multiplied several times. Apps allow people to feel very skilled and the more accessible they are, they allow the brain to feel closer to them ”, clarifies the psychiatrist.

“We have been in a pandemic for almost two years and we are witnessing how society is changing, we are just beginning to see these changes and the consequences for mental health in the long term,” concludes Dr. Francisco Mesa.

The beginning of everything

It is clear that Shein is not the only Chinese website that has had considerable success, we have AliExpress, Wish, Alibaba and JD.com . It is even forecast that in 2021, 52.1% of retail sales will come from electronic commerce in the Asian country, something unheard of, according to eMarketer . Even Bloomberg named it the first big hit in Chinese fashion.

However, the difference between these pages and the clothing store is their origin: Shein’s is almost a mystery. Since its founder, where it is manufactured, where the fabrics come from, the cotton, what’s more, it has been impossible for a servant to contact a PR to find out the perspective of the brand. It is simply an airtight brand.

Shein was founded in 2008 and is headquartered in Nanjing, a province of China (previously called SheInside until 2015). Theoretically, the CEO of Shein is Chris Xu , who does not give interviews and almost no one knows, is a real enigma. According to Owler , Xu does not appear on the list of Asian billionaires. However, some outlets report that he is a US-born businessman and a graduate of the University of Washington specializing in business.

Another important difference is that the Asian giant entered other international markets very quickly. SheInside, arrived in Spain in 2010 and from there it expanded to other countries such as France, Russia, Germany and Italy.

As for the design, some have already baptized it as a real time fashion business , instead of the fast fashion with which we were already familiar. For example, Zara does not guess what its consumers want, but studies trends and data to come up with its own designs. Instead, Shein uses Google trends to find out which fabrics, colors, and styles are most sought after . They are based only on data, they do not have their own style and they tropicalize it to each region. Engadget mentions that Shein only takes 7 days in production tests, unlike Zara with 14, so the Chinese brand can test 30 styles for 5 or 6 at most of what Zara does before putting them on sale.

With that exorbitant amount of production come the questions about how they take care of the planet, where the cotton they use comes from and how sustainable a company that offers a shirt of up to 80 pesos can be. However, the philosophy of how you see prices so cheap, buy more and it has worked.

But low prices are not the only factor that has made this unknown ecommerce, to become a strong competitor of large conglomerates such as Inditex or even Amazon. Only time will tell how far the motto “everyone has the right to enjoy the beauty of fashion” can go .