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Decoding SHEIN, online clothing giant
By:Wu Qiong   |  From:english.eastday.com  |  2020-09-04 08:42

While Donald Trump is banning TikTok in the US, another Chinese fashion brand SHEIN has now come under the spotlight as it is on the list of 59 Chinese mobile apps restricted in India.

Despite being a Chinese company, it was little known by Chinese consumers before the trade wars exploded. When it popped into the Chinese public’s eye, it was already a global industry champion with an estimated value of 15 billion dollars.

SHEIN is one of the biggest online retail brands in India, with an established reputation of delivering designer clothes and stylish garments at reasonable prices. It finished its series E funding on August 4 and in the previous five rounds of funding, it had garnered more than 553 million USD investment from Sequoia Capital, IDG Capital and Shunwei Capital, among others.

With the United States, Europe and the Middle East being SHEIN’s major overseas markets, the brand’s territory covers 220 countries and regions, including India.

In the first six months of 2020, the brand’s sales volume surpassed 40 billion RMB (5.86 billion USD). Considering the growth of global online e-commerce spurred by COVID-19, it is possible for SHEIN to reach the goal of 2020 set last year despite the economic turbulence, said a former middle manager of SHEIN.

(The brand has 12.6 million followers on Instagram.)

The brand was founded in Nanjing, Jiangsu Province in 2008. Twelve years passed, and many companies are copying SHEIN’s mode of supply chain. But few of them previously knew how the brand has grown step by step. Its competitiveness lies largely in a strong back-end supply chain ecosystem.

95% of SHEIN’s global products are shipped from a domestic warehouse in Foshan, Guangdong Province. At the same time, the company has many overseas transit warehousesin Saudi Arabia, Dubai, Italy, Australia, Vietnam and Indonesia. As datafrom 2019 show, the inventory of the Foshan warehouse was approximately 30 million pieces (about 400,000-500,000 SKUs) compared with 10 million pieces in overseas warehouse (about 150,000 SKUs).

There are also operational warehouses inHong Kong,Belgium, Delhi, and the northern and western parts of the US, responsible for the distribution of goods in surrounding areas. They cover about 5%of SHEIN’s global shipments.

Moreover, SHEIN has a complicated supply chain information system, which is hard for competitors to duplicate, because for different supply chain links, it has a distinctive information system.

At present, most people in the market like to compare SHEIN with Spanish fashion group ZARA.

With 2,270 stores in 202 markets around the world, the annual net revenue of ZARA in 2019 reached 19.56 billion euros, while the sales of SHEIN in 2019 were between 1/5 and 1/6 of ZARA.

Sales volume, for sure, is not the only criterion if SHEIN wants to beat ZARA. However, be it asset scaleandglobal supply chain network, orbrand building and corporate culture,SHEIN still has a long way to go to surpass the Spanish fast fashion brand.

Photos by Jiemian.com