Shein was unsuccessful in acquiring Topshop, but it may now be looking for other troubled retailers to consolidate its position as China's leading exporter of ultra-fast fashion with global ambitions.

Shein was unsuccessful in acquiring Topshop, but it may now be looking for other troubled retailers to consolidate its position as China's leading exporter of ultra-fast fashion with global ambitions.

Shanghai, China-Their ads are everywhere on Facebook, and you may have seen them before you know it. They often display product photos with white backgrounds: shiny velvet miniskirts clinging to the curves of headless models for only $18, or close-fitting hoodies printed with irreverent, cliche slogans such as "Fun fact: I Don't care!" Only $11.

Like many people who stumbled upon the low-cost, trend-driven, and constantly updated Shein brand world, Demi Harvey, a 27-year-old native of Lancashire, UK, found it irresistible. After clicking on the Facebook ad and visiting Shein's website, Harvey said that she was "surprised by the variety of clothes, accessories and everything they did, and the prices were too good to be used."

Describing Shein's product portfolio as "a great variety" is an understatement. The brand claims on social media that as many as 4,000 products appear on the brand's online channels every day, and its app has been downloaded more than 100 million times in 2019. On Instagram, Shein's main account had more than 17 million followers at the time. Writing, there are millions of people who follow accounts in individual countries, such as Shein US, Shein UK, and Shein Mexico.

Like other participants in fiercely competitive fields such as Fashion Nova and Boohoo, Shein uses its community of young female users and thousands of micro-influencers (with followers between 1,000 and 100,000) to post themselves wearing tagged The pictures of Shein clothing, for example as #SheinGal, hope to be promoted through reposting of company accounts.

Erika Stagliano, 24, said that a few years ago, she discovered Shein when she was a “penniless boy” and had been working with the brand for the past year. In exchange for free clothes, she posted a selfie of herself wearing Shein clothing and offered discount codes to her 36,000 followers on Instagram. "I like that they give everyone the opportunity to wear the latest fashion clothes at an affordable price."

This is a virtuous circle of social media marketing, creating a steady buzz, and at the same time cost less than working with major celebrities (although Shein did the same, and in May last year, he teamed up with Katy Perry and Little Nas to host a "Shein Together” digital public welfare concert)' to raise funds for the World Health Organization’s Covid-19 Solidarity Response Fund).

In Tribe Dynamics's 2020 list of the top ten apparel brands based on earned media value (EMV), the US-based Fashion Nova is far ahead of its competitors, with an annual EMV of US$2.28 billion, but its year-on-year value has declined 17 %. Shein, ranked seventh, has an EMV of US$280 million in 2020, a year-on-year increase of 37%.

Shein's popularity among American teenagers is particularly reflected in the semi-annual Gen Z survey conducted by investment bank Piper Sandler and found that Shein is the second most popular e-commerce retailer in this population, second only to Amazon.

However, not everyone has a consistent positive experience with Shein. Almost all posts on the company's official Instagram are filled with comments complaining about delayed shipments and missing orders. A quick Google search can also quickly display customer reviews with common adverbs, including: "plagiarism", "poor quality" and "junk". Dissatisfied customers are increasingly frustrated because there is no contact email and phone number on the company's own channels, and it is obviously difficult to reach anyone in the company.

At the same time, sustainability advocates regret the one-time nature and environmental costs of the ultra-fast fashion industry represented by Shein and its competitors.

But apart from the glossy surface portrayed on social media, few people know Shein. Even though its reputation overseas continues to increase, due to the growing influence of social media on platforms such as Facebook, Tiktok and Instagram, many Shein fans and customers still do not realize that it is a Chinese company.

Shein's road to success

Shein was founded by Chris Xu 12 years ago (although there are reports that he is aliased Sky Xu; others use the Chinese name Yangtian Xu), when the brand was still called SheInside. Xu uses China's highly developed manufacturing capabilities and speed to market to attract European and American consumers away from cheap and cheerful digital-first brands such as Boohoo, Fashion Nova and PrettyLittleThing.

They saw the opportunity and jumped on it.

The private company is headquartered in the eastern city of Nanjing and reportedly also has operations in Shenzhen, Guangzhou and Hong Kong, but its products are not mainly sold in China, so it is even more elusive for Chinese shoppers who shop in China. They are more likely to go to Taobao in the Alibaba market to meet their cheap and stylish fashion needs.

Maureen Hinton, Group Global Retail Director, GlobalData, responsible for research and analysis, said that the opaque nature of Shein’s operations and management “makes [industry analysts] difficult to cover.” Although everyone seems to agree that “it has clearly been Fashion consumers are very attractive."

At the beginning of 2020, market intelligence platform CB Insights valued Shein at $15.8 billion. But before that, the company that sells online through its own website, app, and Instagram has plunged into an epidemic that has pushed the growth of ultra-fast fashion e-commerce to new heights. It also put pressure on the traditional public. -Market fashion competitors operating physical businesses.

“They saw an opportunity, and they seized it. They saw an opportunity to do more marketing and get more investment to reach customers who might never have tried it before,” explains Aneesha Sherman, Bernstein’s vice president of European retail.

There are no additional overhead costs and physical stores that may be closed, and its products are mainly manufactured from the Chinese manufacturing center in the Pearl River Delta and exported to other parts of the world (the center largely avoided the severe outbreak of Covid-19), which led to other places Factories and warehouses are closed), Shein is particularly capable of weathering this pandemic.

In the 2020 edition of The State of Fashion published before the pandemic, BoF predicted that Chinese cross-border sellers will rise and become important future competitors for mature fashion brands and retailers, because manufacturers here will get rid of their traditional supply chain roles. The main international brand work has turned to making fashion fashion for cross-border e-commerce platforms (such as Shein), which sell directly to foreign consumers at low prices.

Companies like Shein are enjoying the online boom accelerated by the Covid pandemic.

As this trend is already bubbling, coupled with the fact that most of its target audiences in Europe and the United States stay at home, feel bored, and want to shop on Instagram more than ever, especially for those who are unlikely to be in big cities. Shein saw sales skyrocket with low-cost commodity accounts that dried up bank balances during the popular era.

According to data quoted by a Chinese news report attributable to the company, Shein's estimated revenue in 2020 will exceed 63.5 billion yuan (close to 10 billion US dollars). According to reports, this is the eighth consecutive year that Shein has achieved more than 100% revenue growth.

Edited market analyst Kayla Marci said: "Companies like Shein are enjoying the online boom accelerated by the Covid pandemic, which proves the limitless opportunities for e-commerce to thrive in this challenging new era of retail."

With ample funds and offering deals in the form of well-known fashion retailers that went bankrupt due to the pandemic, Shein's name is considered a potential buyer of traditional brands including Topshop in the Arcadia Group.

According to Sky News, Shein bid 300 million pounds (approximately $412 million at the current transaction price) to acquire the Arcadia Group brand, which, if accurate, is higher than the 295 pounds (405 million U.S. dollars) eventually paid by Asos. Topshop, Topman, Miss The Selfridge and HIIT brands announced an agreement on February 1.

By inheriting the identity of each brand, Shein can [expand] its influence beyond traditional Gen Z fast fashion consumers.

BoF contacted Shein to confirm the accuracy of these details and other financial reports, but the company declined to comment on the matter.

"Shein is already a major competitor, and [acquiring a brand like Topshop] will [strengthen] its position," Hinton said.

Edited's Marci said that similar acquisitions are meaningful for Shein, strengthening its portfolio with a ready-made brand roster, which already has a reputation and followers.

“By inheriting the identity of each brand, Shein can serve a larger audience through a pre-established loyalty foundation and expand its influence beyond traditional Gen Z fast fashion consumers,” she explained.

Other online-only players follow the same logic, snapping up traditional retailers to expand their consumer base after the pandemic. Crucially, a sign of these new retail transactions seems to be the purchase of a brand, rather than the weight of hundreds of physical stores, or the cost of thousands of labor that this physical network brings.

Last month, Boohoo reached an agreement with the 242-year-old Debenhams chain in the UK, but made it clear that the price of 55 million pounds (75 million US dollars) was for the purchase of brand names and websites, not its remaining 118 stores or employees Team. Similarly, Asos' acquisition of Topshop, Topman, Miss Selfridge and HIIT brands does not include affiliated stores.

Shein may have missed Topshop, but in the near future, new opportunities for closed retailers with a strong brand image seem likely to become attractive acquisition targets, leading to an investment in companies such as Shein, Boohoo, and Asos In the combination construction competition, they all hope to take the mass market fashion e-commerce model they won to a new level.

Shein has promoted it to a new generation of online retail success stories in the 2020 harvest year, but risks still exist in the future. More attention from success also means more scrutiny, and the company has been included in the list of Chinese apps banned in India in 2020. Its status as a Chinese technology company may also lead to unnecessary scrutiny in other markets, although the election of Joe Baeden, when the president of the United States, may provide some probation for Chinese technology companies. This is the threat of a blanket ban. These companies are ordinary kingdoms. Sign of the President's time in the office.

While its customer base is growing exponentially, Shein needs to improve its products and services to turn one-time customers into repeat customers.

In response, Shein established a competitive element in its supply chain, ranking its OEM manufacturer network in China based on the speed of delivery. Current and former supply chain partners interviewed by the Chinese news media said that the lower-ranked suppliers will be New suppliers give way, while the lower-ranked suppliers get rewards and incentives.

This year, the company also launched Shein X, a channel for collaboration with up-and-coming designers to provide their products through Shein's channel.

These actions show that Shein understands that in the cruel world of low profit margins and short social media attention spans, quality and design and brand diversification are critical to its future success, especially when it is similar in depth-focusing on the same A prize competitor.

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