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A new business model can help Shein expand product and consumer base


Chinas Shein has taken the womenswear world by storm Now what

Offering customers the trendiest looks at pocket friendly prices, has helped Shein emerge as the most downloaded shopping app in the US in recent monthly rankings. As per research company Similarlweb, Shein’s website gets more visitors than any other clothing brand or retailer in the world. A May ranking by the Kantar Group and Google ranks Shein higher than other market leaders like Tencent, DJI, and Tsingtao beer.

The retailers’ latest financial results also speak of its stupendous success. As per the Chinese financial news publication Late Post, established in Nanjing in 2008, Shein’s revenues doubled last year to $10 billion and reached almost $2 billion last month. The company owes its success to a quick market turnaround time, says an Asia Nikkei report. It can mass-produce a new piece of clothing, right from the design process in just five to seven days whereas fast fashion brand Zara requires two to three weeks to achieve the same results.

Analyzing latest Google trends

Shein achieves this through Google Trends and competitors' websites which help it analyze latest fashion trends in individual markets. The company’s in-house designers study these trends to create their own prototypes and launch on the platform.

Once these items are launched, their demand is monitored by measuring user clicks and additions to virtual shopping charts. This helps the company manage inventory and update its suppliers about its materials needs.

Algorithms to guide users with purchases

Shein is also able to guide new users with purchases through algorithms developed by world-class big data developers and machine-learning experts. On average the company launches over 1,000 new products on its website in a day. The number of new releases per week surpasses Zara’s launches for an entire year.

Another advantage that Shein has is its cheap rates. The items are sold at cheaper than other fast fashion brands. A pair of jeans sold by Zara for $49.90 is sold on the Shein platform for just $17.

Following production ethics

Shein is known for paying its suppliers before time. The company processes suppliers’ payments within 30 to 45 days of receiving the goods. Shein also helps suppliers with financial loans and supply chain management software. The company has over 300 suppliers who can process orders as small as 30 items that helps Shein gauge consumer response.

Innovative marketing for a pleasant experience

Shein’s comprehensive marketing strategy helps the e-commerce company attract consumers. Combining social media, user-generated content, search engine optimization, short videos and livestreaming as well as pop up stores, the strategy helps Shein provide young consumers a pleasant shopping experience.

Consumers can also help Shein market products by uploading their pictures and videos wearing Shein clothes on social media platforms. They can also promote Shein’s products on TikTok, Facebook, Instagram and Pinterest. Social media influencers can also endorse Shein’s clothes in exchange for free clothes every month besides 10 to 20 per cent commissions on recommended sales. The company, which recently expanded from women’s wear to men’s and kid’s clothes, now plans to open to its platform to outside vendors.

In future, Shein can follow a TikTok like approach and launch livestream shopping. It can also introduce mobile payments besides expanding supply-chain finance services. The company has a customer base of 7 million monthly active users. Though it’s innovative supply-chain pull model have so far helped achieve great results so far. It needs more data and newer ways to monetize growing user base. In future, it will have to either build a new online model or join an existing one to expand its product and consumer base. What route it takes, only time will decide.