What is SheIn?
“Do you know SheIn?”
“I don’t know too much about it.”
That is the very typical answer when you discuss SheIn with the Internet insiders. It appears to be difficult to match between such low popularity and the huge size of the company.
According to LatePost, SheIn has finished its series E funding this year and valued at more than 15 billion dollars. It hopes to become an online Zara as it sold RMB 30 billion worth of apparels overseas last year—about one-seventh Zara or two and a half H&M.
With the outbreak of COVID-19, SheIn declared at an internal meeting in June that its sales had exceeded RMB 40 billion, which were expected to hit RMB 100 billion this year. Almost at the same time, Zara announced that its revenue was nearly halved from February to April and 1,200 stores closed. SheIn is preparing for a listing plan and is negotiating with underwriters such as Goldman Sachs, Morgan Stanley, Merrill Lynch, and Bank of America.
In the United States, SheIn’s largest market, Google search shows that it has more than three times as many users as Zara, but no media agency has ever reported the sudden rise of the Chinese company.
From China to the United States, from media to research institutions, the unicorn lists covering companies valued at more than one billion dollars released by the Wall Street Journal, CB Insights, Crunchbase, FORTUNE, ITjuzi.com, and iiMedia Research have all omitted this company.
A multiple of veteran VC investors focusing on consumption told LatePost that it would be too late to invest before they heard about SheIn.
“The most mysterious company with over ten billion dollars in China,”one of them signed with emotion.
Established in 2008, headquartered in Nanjing, capital of Jiangsu province, SheIn is a cross-border fast fashion company growing up in silence over the past 12 years. Only a small number of venture capitalists are aware of its real valuation. Last year, a we-media worker wrote a news report about SheIn’s financing, but soon after he was approached by SheIn and asked to delete it from the whole network. “They just said they wanted to keep a low profile. I never encountered such a situation before, and it is not negative news,” he said to LatePost.
A manager of Zara’s supplier, the state-owned foreign trade giant SUMEC Group Corporation, also headquartered in Nanjing, asked the sales staff about the origin of SheIn, and most of them also were the first to hear about it. Last year, SheIn’s sales were five times more than that of SUMEC’s clothing business, and this year it will double the figure of last year.
Several rounds of financing of SheIn were completed at the end of 2013, 2015, 2018, and 2019. The investors include the Asian established VC firm—JAFCO Asia, IDG Capital, the private equity giant—Greenwoods Capital, Sequoia Capital, Tiger Global, and Shunwei Capital. However, the above firms all rejected the interview of LatePost because of the company’s “low -profile” demand.
When a media peer politely conveyed the interview demand to Xu Yangtian, CEO of SheIn, and said “it’s time for you to start a public relations department,” the CEO replied, “whatever they report, but if it were not true, I would definitely sue them.”
Shopping on SheIn: $12 For One Piece, 600 New Arrivals Daily
SheIn is Cheaper than Zara
“I couldn’t stop buying, lol. I am addicted to SheIn.” Shequarian Pleasant, a college student in Georgia, USA, posted her shopping list on Facebook.
16 items cost $108 in total, including 6 large size shaping suits with unit price between 6 to 18 dollars, one yoga ball, one yoga belt and one yoga pedal stretcher with the average price around 5 dollars, 7 small accessories, and the cheapest is only about 1.38 dollar.
After place the order, these clothes will be shipped from Foshan, Guangzhou province to a transit warehouse nearby Los Angelas, and finally delivered to Shequarian Pleasant by USPS, which may take 10 days or more.
Even if the waiting time is much longer than Amazon USA, which is delivered the next day, it is cheap and stylish to get more than 30% of the consumers back to SheIn to place orders again.
“I have never seen a store with so many clothes I like,” Abby Parkhouse, a full-time mother told LatePost that the first order she placed in SheIn cost €120, and then she spent several hours visiting the website every day and planned to pay another €100 for products in SheIn.
The seven consumers interviewed by LatePost mostly come from small cities, including college students, vocational school students, full-time mothers, photographers, and hospital chefs. Some can’t even afford Zara, some like using their own GUCCI and Prada to match SheIn’s clothes; some can’t buy a few new clothes a year, some major in fashion buyer; some are still at school, some are a mother of several children, but they have one thing in common, that is SheIn becomes popular in their world. Cheapness, multiple options, and addiction are the keywords they repeatedly mention.
Last year, SheIn released 150,000 new types throughout the year, with an average of more than 10,000 new models per month. It has caught up with Zara’s annual new types in just one to two months. The speed is still accelerating. In the past month, SheIn’s women’s clothing types alone had an average of 2,000 new models per day (including some accessories and old models).
Zara is not expensive, and a small dress may cost $30 or so. But the same clothes in SheIn only cost half price, even less than $10—same as the price on Taobao (China’s biggest online shopping platform, known for cheap and diverse range of products).
SheIn is more than Cheaper
SheIn has a variety of styles, colors, and patterns. “Sexy” is a clothing category, and its model images are also close to Instagram and Internet celebrity on Microblog instead of Zara’s conventional vogue.
“Your ad effect is not good, 90% of it attribute to the pictures, especially the Facebook mobile is basically that picture,” Pei Yang, the former general manager of SheIn Mobile, concluded at a sharing session. Pictures in SheIn online stores are also used to promote in social media platforms such as Facebook, Instagram, Twitter and Pinterest.
In SheIn, every shooting requires five rounds of clothing matching, and five pictures for each type. An HR who was in charge of recruiting photography team of SheIn told LatePost, SheIn has very strict requirements for photographers, and the interview passing rates are almost at 1%, for SheIn hopes photographers to shoot European and American simple style rather than Taobao style. With beautiful pictures and endless options, SheIn is a place where people can turn their desires into reality at low cost, thus gaining a sense of fulfillment.
Seven Days Faster Fashion than Zara
SheIn on contrast, Zara is closing stores
Zara, as a benchmark for SheIn, is the inventor of fast fashion, and the market value of its parent company INDITEX still exceeds $82 billion under the hit of the epidemic.
Normally, the rule for the traditional fashion industry is to develop clothing based on the seasons, and it takes three months for a piece of garment to go from design to order and then to put on sale. Brands either create trends or bet what will be popular in the coming months.
Zara doesn’t bet, it accommodates to fashion. Designers and buyers will discover new popular elements according to the new products at the brand-name product launch event, then combine them into their own designs (for this reason, they are often sued). Relying on the factories around headquarters in Spain, Zara can deliver the finished clothes to stores within 14 days.
If the factory is located overseas, “from the moment the contract is signed and the goods are delivered to the consumers’ warehouses in China, the whole process is basically limited to 30 to 60 days for Zara and INDITEX’s fast fashion brands, and some may take 20 days, ”a foreign trading company partner with Zara said to LatePost.
In more than 7,000 stores across the world, consumer requests and sales data collected every day are transmitted to the data center at Zara headquarters on the same day. Zara first quickly produces small batches of clothes in Spain, at least 500 pieces, but generally 1,500, 3,000 pieces, or even more. These clothes are put into the market for tests, if the effect is good, and additional orders will be placed. So far, 54% of Zara’s suppliers are still in Spain.
The trend is fast-changing. Companies behind the trend such as H&M, 70% of its products are basic types, and more than 30% must be sold at a discount. But Zara can keep up with trends, and only 40% of the basic types and 85% of the products can be sold at the original price.
SheIn, which has no stores and complete online selling, steps ahead than Zara in every respect.
SheIn’s Mobile Digital Step
Pei Yang, the former general manager of SheIn Mobile, demonstrated the company’s tracking system at an event. SheIn has captured the products on retail websites of various sizes of clothing and summarized the current popular colors, price changes, and patterns.
Based on the clues collected through multiple channels, designers and buyers will combine elements to design new clothing or contact factories to check if there are proper styles available to produce directly. A buyer of SheIn men’s wear said to LatePost that he often visits 1688.com, watches videos of fashion shows and big brand launch events, and researches offline stores of the same kind. “I used to be driven out by the clerk because I took photos, and brand stores are very sensitive to it,” said he.
It is the key account of Google. SheIn draws upon Google Trends Finder to discover the hot-word searches of different countries and the uptrend, like what color, fabric, or styles will be popular. For example, SheIn succeeded in projecting the lace that was caught on in the United States in the summer of 2018 and the cotton material that was popular in India.
SheIn shortens the process from proofing to production to as fast as 7 days, which is 7 days less than Zara the fastest time. A top supplier of SheIn said to LatePost, it only took them 5 days from receiving SheIn’s order and fabric to send the ready-to-wear garment to SheIn’ warehouse, one day for fabric production, three days for cutting, sewing and finishing, and one day for embroidery and printing.
SheIn has better judgement on product performance at a lower cost. Without offline stores, SheIn can produce at least 100 pieces of garments for one style, and determine which styles to be increased production in terms of consumer feedback.
Likewise, to produce 3,000 pieces of garments to test the market reaction, Zara can only test one to six styles, while SheIn can test 30 styles. That is to say, SheIn has better odds of hitting the popular style. A SheIn business plan in 2008 obtained by LatePost shows that SheIn’s hot-sale rate is 50% and the unsalable product rate is about 10%. After hitting the hot cake, the cost of single item can be greatly reduced by adding subsequent orders.
The small batch of 100 pieces means that the cost of failure to try different fabrics and colors is lower. This is why compared to Zara, SheIn’s clothes are more dynamic and younger, with bright colors, a variety of fabrics and patterns, and there are not too many basic models in black, white and gray.
Investors said that SheIn first tested the reaction to the clothes among the multiethnic United States before pushing them to other regions. “Whether it is in the Middle East or India, Europe and the United States represent a mainstream market trend. If the test result is good, we will push it to the global market.” A dollar fund investor who has seen the SheIn project told LatePost.
Zara, which emerged in the 1990s, relied on personal computers to transform the production process and subverted the rules of the fashion industry with fast fashion. Now SheIn counts on the Internet to further transform fast fashion.
SheIn’s Quality Control
The Pain of Supply Chain
SheIn didn’t have supplier chain of its own before 2014.
It replenished the stock largely from the thirteen-hong of Canton garment wholesale market. The clothes pictures were firstly uploaded to the website, then replenished the stock and shipped the goods when received orders.
SheIn was a small-sized company back then. In January 2013, the next day of Yu Yangtian’s wedding ceremony, the founder of SheIn, posted a message on his Facebook, “My company grows rapidly with more than 50 employees already !”
SheIn hit the first bottleneck by the end of 2014. A senior manager said, “SheIn’s orders reached up to RMB 20~30 million every month, RMB 40~50 million at the peak time.” Due to the inability to stock up, this made SheIn stuck in the bottleneck. “The weakness is that so many SKUs (stock-keeping units) cannot be fully stocked, which leads to poor purchasing experience, low return rate, and rising marketing cost. It’s not a virtuous cycle,” said the senior management.
Improvement Of Supply Chain
In 2014, Xu Yangtian decided to go to Guangzhou to set up the supply chain in person and created a design team to build board houses for clothing pattern making. By 2016, a team of 800 members could quickly design clothes, make samples, and finally send to factories for production.
It is difficult to receive an order of 100 pieces at a time. A top SheIn supplier told LatePost that almost no factories were willing to work with SheIn for such small orders.
The smaller the order is, the higher the cost will be. “The cost of starting the machine is very high, and it’s losing money, ”A women’s wear supplier of SheIn said.
There are a great deal of companies in China that intend to make small orders of 100 pieces or even 1 piece and increase orders based on market reaction (the so-called “small order quick return”), but few could make it to the end.
But SheIn made it. SheIn proactively subsidizes the factories to ensure that the factories produce 100 pieces without losing money. At the same time, SheIn takes care of pattern making on its own. The cost ranges from hundreds to thousands—the factories couldn’t make so many bucks for an order of 100 pieces.
At the same time, SheIn does not default on payment. The spirit of “duty” that often mentioned by Duan Yongping (CEO of Bubugao Electronics) is quite rare in China’s real economy. The two suppliers told LatePost that SheIn is one of the few companies that does not default on the bill. They will even pay the supplier in advance.
If the payment date happens to be a weekend, SheIn will not postpone it to Monday but will advance the payment to Friday. In contrast, a factory interviewed was owed tens of millions of RMB yuan in payment by another cross-border e-commerce company, and then stopped cooperating.
“We are now squeezing our way to work with SheIn,” the responsible person of the factory said. In 2015, SheIn moved its supply chain center out from Guangzhou to Panyu, and almost all of the factories that SheIn worked with have moved away with it.
The factories that moved with SheIn did not suffer. In 2015, SheIn accessed to the Middle East market, and the sales soared the following year. In 2016, some of SheIn’s key factories began to receive orders of RMB 50 million or more each year, achieving large-scale profitability.
In 2016, SheIn’s sales were about 4 billion RMB, and by 2017 it had exceeded 10 billion. A dollar funds investor who has investigated SheIn told LatePost that more than 80% of the orders placed by SheIn in 2018 will place new orders to further spread the cost.
According to the business plan, the focus of SheIn’s supply chain from 2018 to 2019 is to transform core links such as fabrics, printing, and dyeing, and achieve 75% of the factory’s direct procurement. This can ensure the stability of the quality of the materials used, and can further shorten the clothing production cycle, boost efficiency, and more importantly, provide a huge space for cost optimization.
Factory Quality Control
As the growth of foreign trade slows, more and more overseas brands will migrate their production to Southeast Asia. SheIn has more say than factories. Currently, SheIn introduces personnel with experience in Japanese and Korean companies for factory quality control. Suppliers’ KPI mainly includes four aspects: the timely delivery rate of urgent procurement, the timely rate of stocking and delivery, the rate of defective products, and the success rate of new launches.
The quarterly assessment (the purchase amount score accounts for 60% and the KPI indicator score accounts for 40%) determines the supplier level. Among the five levels of S, A, B, C, and D (suppliers in the assessment period are N-level), 30% of the suppliers ranked at the bottom of D-level (less than 60 points) will be eliminated.
A swimsuit supplier that used to cooperate with SheIn but ceased, later on, told LatePost that when it first cooperated with SheIn in 2015, it was easy to get A grade and the production was more casual. “If you have stock, change the size S to XL, and they will take it”.
One Piece of Clothing must be Less Than Three Threads
This year, the supplier wants to resume cooperation with SheIn, and found that the threshold has become higher.“The return order requires 8 days for delivery (it takes more than half a month for traditional factories), a piece of clothing should have fewer than three threads and no more than 3 cm long and the size error is within 2 cm.”
SheIn and the hundreds of factories surrounding it have built an industrial cluster similar to La Coruña, a small town in Spain where Zara’s production headquarters is located—54% of ZARA’s products are produced around the headquarters. The upstream and downstream factories are adjacent, so the order response is prompt and timely. This is the ideal model for fast fashion.
SheIn does not have factories far abroad and does not need to use foreign trade dealers as middlemen. A women’s clothing supplier said that he often walked from the factory to the Panyu Building where SheIn Guangzhou headquarters is located. SheIn also has a requirement for supplier recruitment, “A two-hour drive away from Guangzhou is proper.”
Unlike Spain, China has the world’s most complete supply chain of garment production with countless choices of fabric accessories, which provides endless possibilities for SheIn to release new styles quickly. As the foreign trade of garment orders continues to migrate to South Asian countries, SheIn’s global sales capabilities can in turn lend support to hundreds of factories for further operation.
When it comes to the topic about how Xu Yangtian who has no any supply chain experience could make it successful, the above-mentioned top supplier mentioned a detail, “I go to headquarters in Panyu at any time, even at 2 or 3 in the morning, you can find Xu and his team still working in the company.” He said, “he is always at meetings, never lazy, and always trying to learn good things from you”.
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The Founder of SheIn
“SheIn was first founded by me, but later Xu Yangtian kicked me and another founder Wang Xiaohu out,” Li Peng said to LatePost.
SheIn was founded in October 2008, the year the financial crisis happened. The company was originally named Nanjing Dianwei Information Technology Co., Ltd. According to business registration information, the founder Xu Yangtian held 45% of the shares, and the other two partners Wang Xiaohu and Li Peng held 45% and 10% of the shares respectively.
An SEO Expert
Xu Yangtian started as SEO (Search Engine Optimization). A former partner of Xu Yangtian said that Xu worked at Nanjing Alldao Information Technology Company (for online foreign trade marketing) before created Nanjing Dianwei Information Technology Co., Ltd. His SEO team picked up business outside and invested the money they earned in Nanjing Dianwei Information Technology Co., Ltd.
“It’s like offer chaff for grain, and they sold some fake goods. This is the necessary primitive accumulation,” a former partner said.
At that time, no company used the name SheIn, and many keywords of domain names were used on the website, including fashion, outlets, online shopping, she, her, etc., for example, do-a-fashion.com. Nanjing Dianwei Information Technology Co., Ltd. used many methods to increase the keywords search ranking on Google by clicking the farm, and if it was found to be an illegal operation, they would change other domain names to continue.
“Perfection” is what Xu Yangtian impressed on Li Peng. When they worked on SEO, Xu often tested on tens of thousands of customers, “he is testing all day long”. Xu Yangtian did all the work that Li Peng assigned to his marketing directors.
Most people can only invest in advertising to a certain level, but Xu Yangtian “is so shrewd that he controls the marketing cost 70% cheaper than the peer.
Xu’s Start-Up Story
Li Peng still remembered the first time he met Xu Yangtian, “he was quite skinny.” When the training was over, Xu Yangtian asked him to have a meal and talked about his poor family background. At his early childhood, he ate steamed bread soaked in soy sauce, worked outside in the third year of high school, and took part-time jobs in the university. “Some people were forced to work hard,” in Li Peng’s impression, Xu Yangtian was never lazy, and didn’t have many entertainments and hardly returned home before eleven o’clock. Li Peng said, his personality was quite contrary to Xu Yantian.
Nanjing Dianwei Information Technology Co., Ltd. only survived less than one year. One day in 2009, Li Peng and Wang Xiaohu came to the company only to find that Xu Yangtian and his team had “gone”.
It didn’t take long before they found that Xu Yangtian and his team took up cross-border e-commerce of wedding dresses. At that time, wedding dresses were cross-border electronic products second only to digital products.
“The most exaggerating thing is that they just change the RMB purchasing price into US dollars and sell it.” said Cao Guangyao, an SEO expert who once worked at DHgate.com and LightInTheBox.
Li Peng was angry, “my shares were given to others by Xu Yangtian”. He said that Xu Yangtian invited him to visit the new company, but he ignored it.
After left Nanjing Dianwei Information Technology Co., Ltd., Li Peng started ROMWE, a brand of the cross-border women’s wear in 2009 and officially launched in 2011. He began to cultivate some potential cyber celebrities on the garment matching website Lookbook.nu, mailed clothes and cameras to them every single week. In return, they put on ROMWE labels whey they posted messages. Later on, Li Peng used some tricks on the data to push pictures to the ranking list, “ROMWE became famous overnight”.
Xu Yangtian captured good business again. At the beginning of 2012, Xu Yangtian quit the wedding dress business, and began to fully transform the established domain name SheInside.com to the cross-border women wear. Different from the ROMWE’s fashion brand positioning, SheInside positioned in fast fashion. “They sold anything, trying to migrate the whole China’s clothing industry to the Internet,” Li Peng commented. This year, Amancio Ortega, the founder of Zara, surpassed Warren Buffett to become the world’s third-richest man with a fortune of $46.6 billion.
A few months later, a company named Choies was founded, and it was almost a copycat of SheInside. An informed source told LatePost, “the three companies were the first-batch companies to draw on overseas cyber celebrity traffic at that time, and they were all located in Nanjing.” SheInside and Choies also looked for Internet celebrities on Lookbook.nu, exchanging traffic and sales conversion with free clothes.
In 2015, SheInside was renamed SheIn. Du Jin, CEO of YU said to LatePost that SheIn put a lot of effort into overseas advertising. Her evaluation of SheIn is: execution is very high, and the boss is also in favor of new things.
An employee of Yeahmobi, an advertisement agency who contacted with SheIn in 2016 said to LatePost that SheIn was the top e-commerce customer of Yeahmobi. SheIn has an immense volume to launch, the user positioning doesn’t have to be very precise. Only two requirements of “age”,” shopping and fashion” are met, they began to launch ads. At that time, SheIn had one floor of office which was full of advertising optimizers.
After the paid ads are finished, the marketing agencies such as Rose Studio will help SheIn operate its Facebook homepage. Their main job duties are to look at the contents on Lookbook.nu, make matches with original contents based on the hot spots, and posted social network updates. At present, 15 million followers are on SheIn’s main Facebook account and 11 million on Instagram.
SheIn seized the marketing opportunities before the commercialization of the Internet celebrity. A cyber celebrity who cooperated with SheIn in 2010 only cost 30 dollars, but it would cost 50,000 dollars in 2016. In addition to Facebook and Instagram, SheIn caught the rise of Pinterest, the picture social network. The above insider said that Pinterest was SheIn’s first source of traffic from 2013 to 2014.
“Pinterest targeted the female users, more like Xiaohongshu, which was more suitable for female users,” an employee of Pinterest who is in charge of growth said to LatePost.
“We didn’t go deep in this respect, the research was not enough, and people with experience in SEO were better at it,” the above insider said. At that time, Choie’s balance of payment structure was 30% for purchase, 20% for logistics, 25-30% for ads, 5% for payment and refund and the remaining 15-20% was profit.
He inferred that SheIn’s early advertising expenditure accounted for only 15%-20%, and the profits were higher.
In 2014, SheIn acquired ROMWE officially.
SheIn turned out to be more of a traffic-oriented and more efficient distribution company. After acquiring ROMWE, it absorbed its brand and other experience. “SheIn was able to have a better foundation to expand categories, which boosted the development of a startup company. In the later stage, things were gradually modularized, such as the ability to do branding and traffic, and finally it became the prototype of SheIn,” the above-mentioned investor said. After the acquisition, SheIn started the dual-brand operation of SheIn and ROMWE.
However, Li Peng explained the reason behind this acquisition of great significance was a quarrel between him and his ex-girlfriend, so he left ROMWE. But the latter sold the company to Xu Yangtian, at that time ROMWE kept losing money. This statement was confirmed by several people closely related to SheIn.
SheIn’s Market: More than just European and American Markets
If you look at SheIn’s sales volume trend chart from 2012, you will find that the steepest part appeared in 2017. This is the dividend brought by the rise of SheIn in the Middle East market.
Whether it is a platform or a brand, the primary issue for entering the Middle East is logistics. Saudi Arabia is sparsely populated, country address information is not complete, and delivery to the last mile is difficult. Most users in Saudi Arabia choose cash on delivery. If goods are rejected, the platform will suffer a net loss.
For the entire Chinese cross-border e-commerce industry, the last-mile delivery in the Middle East is particularly important. Just like the last step of the Long March, crossing over is a victory, otherwise, the whole game will be lost. NAQE, a state-owned enterprise controlled by Saudi Post and cooperating with SheIn, told LatePost.
In 2015, cross-border e-commerce companies such as SheIn and Fordeal successively entered the Middle East. The above insider said that he learned from a SheIn senior management that Xu Yangtian went to the Middle East personally to discuss a cash on delivery solution. In the end, SheIn was responsible for the early logistics to reduce costs and handed over the collection to NAQE with a state-owned background. NAQE said to LatePost that per customer transaction in the Middle East was higher than that in other markets, with an average of about $150 per package. Normally, local users who accept e-commerce have high requirements for product quality, so e-commerce companies are required to strictly control the quality and increase the repurchase rate, thus lowering the average marketing cost each order and reducing the rejection rate.
A logistics entrepreneur in the Middle East told LatePost that e-commerce companies in the Middle East tried hard to reduce the cash-on-delivery ratio to a maximum of 60%, but SheIn reduced this ratio to 30%. “It is possibly that the supply chain is good, there are more repurchases, and consumers have gained trust,” the data has not been confirmed by a third party.
When the aforementioned investors described the most exaggerating situation is that SheIn’s daily sales were the sum of other cross-border e-commerce sales in the Middle East. “Just imagine Zara’s sales surpass Taobao plus JD.COM plus all.”
A dollar fund investor revealed that in 2018, SheIn’s sales took up 30% in the United States, 20% in Europe, and 20% in the Middle East.
After that, SheIn began to expand markets such as India. A former employee of SheIn India who was in charge of cash on delivery business told LatePost that SheIn was a rarely seen company that focused on several overseas markets, investing heavily in the Middle East, India, and Southeast Asia.
He said that SheIn also wanted to expand in India, but the logistics was difficult to handle, and the complaint rate and return rate stayed at a high level. Before then, SheIn had a return warehouse in India and later built a shipping warehouse. “Some goods were returned without opening them, and they could also be salable.”
He revealed that in order to reduce cargo losses, SheIn did not choose to return for the cargo plane from Foshan to Mumbai via Hong Kong, but continued to fly to Europe to dispose of the remaining cargo. This detail has not been confirmed by a third party.
Amazon Global Vice President, Amazon Global Selling (cross-border sales business) told LatePost that SheIn’s sub-brand ROMWE entered the Amazon U.S. site in 2015, and subsequently entered Amazon Europe, Japan, and other 9 major sites. In 2018, it became one of the important sellers of Amazon’s apparel category with annual sales exceeding RMB 100 million.
In fact, in addition to self-operated business, SheIn is also covering some overseas users through Amazon. At present, Amazon has opened 14 overseas sites to Chinese buyers, which can reach 300 million users around the world and use Amazon’s warehousing logistics. SheIn aims to spread its business to the world’s major economies, so it won’t miss this opportunity.
In the 2018 business plan, SheIn described its annual sales of RMB 12-40 billion from 2018 to 2019, the transformation of the supply chain, and global expansion goals. Today, they are all accomplished.
At this year’s annual meeting, Xu Yangtian announced to his employees that SheIn’s sales in 2019 have exceeded RMB 20 billion. Before cheers and applause went up, he continued to say, “we must be prepared for danger in times of peace.”
SheIn Rise: An opportunity waiting for 12 years
In 2020, a sudden pandemic will be a disaster for most companies. This year, Zara’s parent company Inditex Group suggested the largest plan of closing stores of all time, and its Q1 financial report showed a net loss of 409 million euros (about RMB 3.2bn).
In contrast, SheIn’s sales volume in March nearly tripled year-on-year. When the order flooded in, the server was not able to hold it. A SheIn programmer iterated three or four versions a week and constantly complained. In the last company, his workload is one-tenth of what it is today. But he also felt fortunate that his previous employer (also a cross-border e-commerce company) was in crisis due to the epidemic and laid off all technical staff.
SheIn’s domestic shipping warehouse is located in Foshan, close to the Vipshop warehouse, which is several times larger than the latter. More than 1,700 staff of SheIn have been working in this enclosed place for many days, and the entire storage system is overloaded. Within a week, SheIn’s HRs have hired more than 3,600 people for this warehouse.
Finally, on April 17th-SheIn was “out of stock”. The HRs urgently decided to mobilize more than 900 SheIn employees from various departments around Foshan for reinforcement. A few days later, SheIn issued an announcement and suspended receiving new orders.
SheIn’s business has spread all over the world. It has four R&D institutions in Nanjing, Shenzhen, Guangzhou and Hangzhou, six logistics centers in Foshan, Nansha, Belgium, Eastern U.S., Western U.S. and India, seven customer management centers in Los Angeles, Liege, Manila, Dubai, Mumbai, Yiwu and Nanjing, and a peripheral distribution network covering the world.
The dollar fund investor who looked at the SheIn project in 2015, but finally gave up, said that the biggest concern at the time was whether SheIn could become a brand, and whether the value of simply being a brand was too weak.
Its future goal is to develop new business directions such as “mobile payment, supply chain finance, user accounts, and advertising systems, and the acquisition of mobile-end traffic products in traffic”. At the same time, SheIn decided to land an offline store. To some extent, SheIn has entered the core territory of ZARA.
But now she believes that the SheIn has made its brand, mainly depend on per customer transaction and repurchase rate. SheIn’s per customer transaction in 2019 is $100 (including numerous packages). In 2018, more than 30% of customers placed orders again.
SheIn has become a big company. At present, it has nine centers with more than 10,000 employees. The supply chain center (including warehousing and logistics) has the largest number of people, and there are over 1,000 IT technicians.
The company’s core management has not changed much since its inception. In addition to CEO Xu Yangtian, there are also CMO (Chief Marketing Officer) Miao Miao, CTO (Chief Technology Officer) Xu Hao, head of Supply Chain Center Ren Xiaoqing, head of Human Resources and executive administration Kong Shaolin, etc.
Xu Yangtian is a person who is good at seizing opportunities and can make huge sacrifices for his goals. He is unwilling to delay payment days for suppliers, but will directly lead the team out of the company without informing the partners.
Li Peng said that when he chatted with Xu Yangtian before, the 2008 financial crisis made him realize that the middle class would collapse someday, so he had to provide them with cheap clothes. Not only the two of them, many people saw this opportunity. But 12 years later, the winner of cross-border e-commerce is Xu Yangtian.
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