CHANGING THE GAME

By Kunal Sinha

If you’re a GenZ shopper, Shein’s marketing can seem inescapable.

Once you’ve downloaded Shein’s app or signed up for its emails, a barrage of promotions will entice you from your inbox. There is always a can’t-miss sale, a new deal, a reason to buy.

Founded by Chinese entrepreneur Chris Xu in 2012, Shein has since grown into a global fashion marketplace, serving customers in more than 150 countries and employing with more than 11,000 people.

Shein’s website is a digital bazaar bursting with pop-up ads and strobing discounts. It lists thousands of new items every day – clothes, housewares, pet supplies, cosmetics, sex toys – at inconceivably low prices: RM 20 for a bodycon dress, RM 14 for a curling iron, RM 32 for a saddle bag, RM 4 for a four-pack of sunglasses.

It draws in shoppers by getting pop stars like Rita Ora and Katy Perry to perform at its virtual concerts, but it also attracts a vast amount of organic user-generated content.

On TikTok and YouTube, company-recruited influencers film themselves modelling their Shein hauls, as they empty out their newly-arrived packages and give their frank reviews of crop tops, dresses or beauty blenders which they have bought from the site. The influencers offer Shein discount codes, which make shoppers buy even more.

The codes of Shein’s success

Shein’s success can be attributed to its ability to seamlessly fuse the fast-paced world of fashion with the convenience of e-commerce. The company operates on a digital-first model, using cutting-edge technology to stay at the forefront of the latest trends and deliver them to a vast and diverse customer base.

Shein leverages China’s basis of small and medium sized manufacturers, not just for low-cost production, but churning out impossibly low minimum order quantity batches. That manufacturing basis enables an inventory agility and velocity that makes incumbents look outdated. This on-demand manufacturing system allows it to quickly boost production of popular items and drop products that do not sell as expected.

It helps improve production speed and inventory management, helping it consistently achieve average unsold inventory rates in the low single digits.

Likened to Fordism or the Toyota Just-in-Time model, Shein has pioneered a new Large-scale Automated Test and Re-order (LATR) model model that continually optimizes production based on real-time data from the open web.

The system scrapes social platforms and competitor sites to interpret trends, tests consumer demand with a low-batch order, scales up and down production based on product launch sales, and reiterates. LATR, the Darwinian mechanism behind the 6,000 SKUs Shein adds every day, represents the evolution beyond fast-fashion to what tech commentators have called ‘real-time fashion.’

By 2017, the present-day iteration of Shein had begun to take shape.

The brand advertised on daytime television shows in the US, and fashion influencers showcased Shein products and hauls alongside other retailers, like Fashion Nova and Zaful. It was, however, the retailer’s early use of TikTok and ability to market viral products that skyrocketed Shein’s popularity.

Shein developed a fashion blogger program, a free trial center, and a bonus points program to popularize and strengthen its reach. It crafted deals that quickly caught the attention of buyers.

Moreover, Shein recruited designers from various parts of the world to conjure a vibrant product catalogue, and continues to partner with upcoming designers who offer design ideas and drafts. If their designs are chosen, the designers receive 30% commission from the design’s sales and a long-term collaboration contract.

The team at Shein refers to this approach as C2B business model, a setup wherein the designers beome a part of Shein’s community. They are then known as ‘Sheinside designers’.

It also uses gamification strategies to boost customer engagement on its shopping app which is used by millions of people worldwide. Users get points and discounts for logging in daily, sharing purchases on social media and referring friends. This encourages users to repeat such behaviours to earn more rewards and, as a result, they keep coming back, engaging with the app, and making purchases.

These strategies are evidently paying off – in a direct comparison with Zara, Shein scores higher on price, convenience and trendier selection, according to research by NEA.

Shein in Malaysia

Shein currently ranks as the fourth most popular shopping app in Malaysia, following Shopee, Lazada, and Temu, with approximately 500 million downloads. In terms of website traffic, it is also among the top apparel sites, attracting around 448,756 visits monthly, placed third after Uniqlo and Zalora.

The platform is finding ways to engage with its community, as it launched its first pop-up store at Kuala Lumpur’s MyTOWN Shopping Centre in October last year. From a dazzling fashion runway to an exciting styling challenge, this day was all about celebrating the unique style and influence of the SHEINfluencers.

The Shein Fashion Show featured womenswear and menswear, specially curated and styled by Malaysia’s top influencers such as Ash Edward, Khainina Khalil, Isha Norsham, Ashley Chin and Ikhmal Nour. Renowned Malaysian personalities, influencers, and fashion icons such as Amelia Henderson, Scha Elinnea, Yaya Zahir, Sairiya Murugiah, Dior Yaw and Farrah Khairina were invited to the event.

From its not-so early beginnings to its current status as a global fashion giant, Shein’s journey is a testament to the power of digital innovation and adaptability in an ever-evolving fashion industry.

Learn more about how Asian brands have leveraged the power of digital in conquering new markets and beating incumbents, in Kunal Sinha’s workshop The Codes of Asian Branding on November 6&7 at Eastin Hotel, Kuala Lumpur.

Kunal Sinha is Chief Knowledge Officer at Ampersand Advisory, Kuala Lumpur. He has built brands across China, India and Indonesia, is the author of six books on creativity, consumers and marketing, and has spoken at the world’s top business schools, including Harvard, Cambridge, London Business School, University of New South Wales and CEIBS.