Ready for a new ecommerce giant?
Here comes Singapore’s Shein.
Supply Chain Digest Says...
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Shein says it will provide third-party sellers with access to its demand planning and supply management software to help them cut down on excess inventories.
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Everyone knows Amazon. Many are aware of China’s Alibaba and JD.com, even they still lack much US presence.
But there is a potential another ecommerce giant spreading its global wings, and that is a company named Shein.
According to a recent article in the Wall Street Journal, “In just a few years, Shein has rapidly expanded from a discount Chinese apparel seller to a global fast-fashion giant. Now, it’s branching out, pitting itself against some of the biggest names in e-commerce.”
Based in Singapore, Shein is expanding from selling just its own branded apparel to becoming a marketplace platform where other merchants can sell almost anything, as they can on Amazon and other marketplaces.
Shein recently launched its marketplace in Mexico, Brazil and the US, with plans to roll it out in Europe later, the Wall Street Journal reports. It is actively courting resellers for its site.
The company is dangling incentives to 100,000 sellers to help them achieve annual sales of $100,000, with a goal that 10,000 will reach $1 million in annual sales within three years.
Those incentives include zero commissions for three months to no advertising charges. To join Shein’s platform, sellers must already have annual sales of $2 million on Amazon.
Shein generally featured low cost third party products, but the company’s US marketplace now also lists items from high-end apparel brands such as Paul Smith and Stuart Weitzman, in addition to Shein’s own branded goods.
Shein has already achieved success with its low cost apparel, with teenagers buying lots of its trendy $5 skirts and $9 jeans, the Journal says.
That has helped the 11-year-old company become the top fast-fashion retailer in the country, with a 40% market share, according to Earnest Analytics. Estimates are that Shein has already reached $8 billion in US sales – an impressive number.
That would put its US sales at about 25% of the company’s gross merchandise value (GMV), or total value of products sold through its marketplaces. Interestingly, Shein does not sell to Chinese consumers now, due to the level of competition.
However, the pace of Shein’s US sales growth has slowed considerably, to around 13% in 2023, versus triple digit growth seen in 2022 and 2021.
Now comes the move into general merchandise.
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“If they can establish themselves with that younger crowd and stick with them through the years, that could really turn them into a viable Amazon competitor,” Brian Ehrig, partner in the consumer practice of the consulting firm Kearney, told the Journal.
For its apparel business, “The company uses algorithms to predict customer demand and preferences based on their browsing activities. It subcontracts with thousands of small factories, places orders in small quantities to test market appetite and replenish orders as needed, which helps cut inventory waste to low single digits. That’s far below the industry average of 30%,” the Journal article said.
Shein says it will provide third-party sellers with access to its demand planning and supply management software to help them cut down on excess inventories.
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