Text | Giant Tide WAVE, author | Dong 2,000
Since the anti-monopoly banner was held high, nearly half of the Chinese stocks were "slashed" in market value last year, and more than 40 Chinese stocks fell by more than 80%, and the bearish situation continued, a scene of "dusk of the gods".
However, there is always hope in disaster. Just like in mythology, the world will usher in more vigorous vitality after the apocalypse.
SHEIN has become the bright color in the "end times" of the Chinese Internet. Through the domestic system of Internet play, it quickly cut into overseas markets and transformed the traditional clothing industry. According to Forbes, analysts estimate that SHEIN is currently valued at $45 billion, or nearly 300 billion yuan.
SHEIN is one of the hottest companies going to sea at this stage
Completely different from the SITUATION OF SHEIN, in 2021, the C-end factory that was once envied by most people stepped off the altar overnight - the old business struggled to maintain, the new business fell to the ground, the most typical is didi removed the once highly anticipated Orange Heart Preferred, and confirmed a net investment loss of 20.8 billion yuan.
Essentially, inner volumes are born at the cessation of expansion. From the perspective of the C-end, the Internet has long since lost the so-called dividend period, and has entered the stage of the stock game around 2018.
But from another point of view, fierce competition has also cultivated the internal strength of China's Internet industry and a strong expansion ability for overseas markets. Whether it is the push of the iron army, marketing play, or the degree of digitalization, etc., domestic Internet companies basically have remarkable points.
01 The sea is wide
If SHEIN had focused on the domestic market at the earliest, it might have been difficult to develop so smoothly.
As early as 2017, Wang Xing, the founder of Meituan, prescribed a prescription for domestic Internet companies to "globalization of heaven and earth". Heaven, that is, high-tech, real hard technology; entering the ground, means to really do industrial connection, transformation and efficiency, and truly create value; globalization is that Chinese enterprises need to go to the sea to see the world in order to gain long-term competitiveness.
SHEIN is a practitioner of the globalization strategy. Founded in 2008, SHEIN, formerly known as "sheinside.com", started as a wedding dress business.
The early SHEIN can be seen as a follower of Lanting's gathering, and the essence of both business models is to grab the traffic dividends of Google AdWords and SEO, while relying on the price difference between the Chinese and American markets to complete the original capital accumulation. This path has been valid even now.
In 2012, "sheinside.com" was upgraded to its own brand "SHEIN", focusing on the field of fast fashion women's wear.
The smartest thing about SHEIN is that with the help of domestic supply chains and systematic Internet play, its response speed is much higher than that of overseas fast fashion giants such as Zara; compared with domestic companies with the same methodology, SHEIN has smaller competition.
SheIN's top suppliers once told the media: "From receiving SHEIN's orders, fabrics to sending garments to the warehouse, it takes only 5 days, of which 1 day is fabric production, 3 days are cutting, sewing and finishing, and 1 day is secondary process (embroidery and printing). ”
A fact is that the consumption power of overseas users is not lower than that of domestic, if it is developed in Europe and the United States, it can even be said that it is stronger than domestic, but the overseas Internet infrastructure is far inferior to that of China. Therefore, the understanding of the Internet by overseas peers is relatively worse, and the export of China's methodology can form a certain degree of dimensionality reduction.
For example, SHEIN developed a vibrato-like algorithm in the fast fashion industry, created a fast fashion industrial router, its peak period even thousands of new products on the shelves every day, which is the new volume of overseas fast fashion brands a week, the first batch of these new products are not large, but will be judged according to the small-scale user behavior which is the explosive model, and then quickly add a single to expand the traffic pool test, the explosion out, immediately chase the single volume; if not explosive, this batch is the last batch.
Compared with China, overseas markets need explosive multi-style low-cost fashion. If SHEIN had focused on the domestic market at the earliest, it might have been difficult to develop so smoothly.
Interestingly, the year shein was established was also the day of the birth of Vipshop, also focusing on special e-commerce, Vipshop has been excellent enough, has obtained stable and sustained income, but the valuation is only 1/7 of SHEIN. Different business models have brought about huge differences in the valuation of enterprises.
02 What SHEIN did right
In the era of flexible manufacturing, SHEIN was the first to discover the potential of these manufacturers.
If we carefully break down the success of SHEIN, we can summarize it into two points.
One is the success of China's supply chain, SHEIN's supply chain is almost all around the South China market layout, as a gathering place of China's garment manufacturing industry, China's original garment production supply chain to SHEIN has brought the highest level of response speed.
SHEIN cleverly captured many "workshop-style" small garment factories in the Pearl River Delta, which are the bottom force of the apparel supply chain. Since the garment industry does not need to invest any fixed assets for a new SKU, clothing production is inherently small workshop-style compared to heavy investment industries such as automobiles.
In the era of the supply chain of brands placing orders for 10,000 pieces of clothing at once, these manufacturers were once regarded as lagging behind in productivity, but in the era of flexible manufacturing, SHEIN was the first to discover the potential of this batch of manufacturers.
The appeal of this part of the manufacturer is to obtain stable orders, although SHEIN's orders are not more than 100 pieces each time, but it is better than long-term stability. At the same time, due to the small order volume of shein's single SKU, it is only in the Pearl River Delta region where the garment industry chain is complete that it is possible to open up the supply chain process.
In order to better coordinate the development of the two sides, SHEIN has a short account period for suppliers, and now has more than 4,000 factories to cooperate, with an average account period of 7-10 days. For Top-level suppliers, SHEIN can basically do weekly settlement, which is rare in the world.
The second is the success of China's Internet model, with SHEIN starting in Europe, then expanding into North America and then into Central Asia. To this day, China is still not the main market for SHEIN. It has become a typical example of China's Internet going to sea.
Taking SHEIN's digital system as an example, compared with traditional companies, its digital path is particularly innovative, in order to improve efficiency, the early three sets of digital systems were parallel, and finally the best choice.
This sounds very similar to the "horse racing"-type product strategies of Internet companies such as Tencent. Essentially, it is the "AB test" of Internet companies, for traditional companies, doing three systems at the same time is a cost; for agile companies, making three systems and finally giving up two sets is a cost saving.
Zeng Qiao, a partner at Hejun Consulting, compared SHEIN to Pinduoduo in the field of women's fast fashion. He explained: "SHEIN has achieved huge traffic aggregation through overseas market traffic, cheap products and Internet marketing fission, and finally completed the information flow matching between global traffic and fast fashion products." ”
03 Replicable legends
How to lead an industrial chain to go to sea together to earn incremental benefits?
An interesting question is, what exactly does the rise of SHEIN mean? Juchao believes that the development of SHEIN reflects two major trends in China's Internet industry.
On the one hand, the rise of SHEIN heralds the end of the era of the "birth of the gods" on the Internet, and it is difficult for large and complete giant companies to appear again. With traffic growth peaking, macroeconomic adjustments, and anti-monopoly banners held high, the golden age of Internet platforms is gone.
It is worth noting that this does not mean the end of competition, but that competition has the characteristics of zero-sum games, so it will be extremely difficult for latecomers to develop users. For example, around 2015, Qunar began to rise, and corresponding to the decline of Ctrip, rather than the common prosperity of the two. At present, similar industries are not only tourism, but also in almost all segments.
However, the rise of SHEIN overseas has eroded the market of giant companies such as ZARA, bringing incremental value, which means that many traditional industries still have the opportunity to transform or even expand. Perhaps, similar companies will emerge in more verticals later.
On the other hand, the rise of SHEIN also means the success of China's Internet methodology, and going to sea may be paid more and more attention to enterprises, and previous successful cases have been seen frequently, such as the 5-year and 8-fold growth of Naked City, Tik Tok's victory over Facebook in the short video era, and so on.
But the success of Akako Castle and TiKToK is not exactly the same as SHEIN.
Taking Naked City as an example, this "APP factory" is more to export excellent domestic product capabilities and product culture overseas. This kind of going to sea is a kind of "product and business model going to sea", which is to copy China's successful Internet products overseas and reduce the dimensionality of similar products in various countries.
Its expertise includes social networks, online games and short videos, all of which are the types of products that Chinese Internet companies are best at as a group. Throughout the process of going to sea, the posture of Akako Castle is relatively independent.
Naked City's overseas social networking application
The output of SHEIN to overseas is not so much an APP as a complete set of clothing industry chain. Consumers embraced their apps, essentially receiving fashion customization services from thousands of garment workshops in the Pearl River Delta. Among them, there is not only the wisdom of Xu Yangtian and shein's products, but also the hard work of countless workers in small workshops, which are finally displayed in the form of physical goods.
This is a model that is not common in overseas Internet companies, and has a lot to do with the characteristics of high-frequency consumption, wide audience and high acceptance in the clothing industry. But for more overseas Internet companies, this is very worth thinking about and very instructive - how to lead an industrial chain to go to sea to earn incremental income?
04 Write at the end
In Norse mythology, when the black dragon Nedhogg bites off the root of the world tree, it heralds the coming of the twilight of the gods.
At that time, Loki pilots the underworld ship to lead the dead back from the underworld to slaughter the gods; the giant wolf Fenrir breaks free of the strongest shackles, Gladny, and its two wolf sons Hatti and Scul swallow the moon and sun in the sky respectively... There is only a great silence of dead silence and eternal darkness left in the universe.
However, in mythology, after the apocalypse has passed, the purified land can grow more lush plants than before.
The same is true of the domestic Internet industry. It's the twilight of the gods, and the rise of SHEIN represents a shift in the balance of power — going to sea, the industrial Internet, the productization of supply chains.
Resources:
1. "The Theory of Capital Growth: Enterprise Growth and Capital Management", Zeng Qiao, People's Post and Telecommunications Publishing House
2. "The Era of Industrial Internet: How New Technologies Empower Enterprises to DigitalLy Transform", Yan Yanchun, China Friendship Publishing Company
3. "Deep | SHEIN: The Triumph of Long-Termism", Cheng Chunxiao
4. "Boohoo is only fast and not broken", 21st Century Economic News