Are you familiar with Shein (pronounced she-in), an e-commerce retailer of women’s apparel; me neither? We all better become aware because Shein is modeling an e-commerce business model that may just be the next big thing.
According to a Bloomberg article, “How Trump’s Trade War Built Shein, China’s First Global Fashion Giant,” Shein is riding a retail rocket:
Shein ended Amazon’s 152-day streak as the most downloaded shopping app in the U.S., a remarkable feat for any seven-year-old clothing brand, let alone one most Americans over 30 still haven’t heard of.
The secret to its success is that it ships its products direct to consumers from its warehouses in China. Warehouses that are in proximity of the most sophisticated manufacturing infrastructure in the world. Before e-commerce, a retailer competed with the store down the street or at the mall. With the advent of digital shopping, competition could be from anywhere in your country. Now, it can come from the other side of the world.
What is the secret to Shein’s success; constantly changing styles and incredibly low prices? The low prices are powered by customs rules that exempt any package from duty with less than $800 in value.
How cheap are the prices? According to the article, one British consumer purchased 30 bikinis for 100 pounds (418 U.S.). Other examples include a backless halter top for $5, purple pajamas for $10, and a dress with pearl trim for $22.
The Shein prototype is a bit ominous for non-Chinese retailers.
Shein pays neither export taxes on most of its products nor, in the case of the U.S., import taxes, an advantage that tilts the playing field heavily against its rivals, particularly as consumers shift to and stay online. It’s also not the only Chinese retailer to benefit from the trade war, and won’t be the last. Thanks to the government’s support, China’s online retail exports — known as “cross-border e-commerce” — jumped 67% in 2018.
If you are a retailer, pay attention to those last couple of sentences. Shein is demonstrating a business model that any retailer in China can copy, and that includes toys.