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On July 26, the media reported that in a letter sent by SHEIN Executive Vice Chairman Donald Tang to investors, it was mentioned that in the first half of 2023, SHEIN achieved its highest semi-annual profit to date. I still remember that in early February this year, the media first reported SHEIN's operating data. With revenue and profit reaching US$22.7 billion and US$700 million respectively in 2022, SHEIN's annual revenue target is to exceed US$58.5 billion and achieve a net profit of US$7.5 billion by 2025. As SHEIN continues to grow, this goal is by no means a castle in the air. Behind this, in addition to relying on its core fast fashion business, it is also inseparable from SHEIN's new weapon - the platform model .
SHEIN's profits hit record highs as sellers flock in Behind the record net profit, SHEIN's platform model is constantly revitalizing. Public information shows that SHEIN Brazil has achieved nearly $100 million in GMV based on the platform model, accounting for one-third of its total sales GMV in Brazil, which has tripled since the beginning of 2023. As of now, there are more than 6,000 active sellers. The unexpected platform development also gives SHEIN the confidence to accelerate its expansion. After launching in Brazil, the United States and Mexico, SHEIN is expected to build a platform model in six European countries, including the United Kingdom, Germany, France, Italy, Spain and Poland. When this mysterious unicorn slowly came into the public eye and transformed itself from a "super seller" into a third-party platform, many overseas companies could no longer stand idly by - more and more cross-border merchants are competing to SHEIN. Data from MarketplacePulse shows that thousands of sellers in the United States have joined the SHEIN Marketplace platform. When SHEIN US website was first launched, 3C overseas giant Anker was among the first brands to join. Recently, the best-selling JuvoPlus also "entered" SHEIN. Although still in its infancy, SHEIN's years of independent station business have laid a unique advantage for its platform model: a huge customer base, a complete sales chain, and a wide range of traffic channels. This is the charm of SHEIN that attracts more and more domestic and overseas local sellers to join. It has been more than three months since SHEIN's third-party platform officially opened for investment. What is the real feedback from those sellers who were the first to seize the benefits about the platform? Multiple support policies provide protection For many sellers, the generous support policy of the SHEIN platform is one of the important reasons for attracting them to join. In the first three months of opening a store, sellers can enjoy the benefits of free commission and free return shipping. Compared with other platforms, the lower entry cost also gives sellers more room for profit. “I’ve been doing this for three weeks now, and I’ve sold $5,000 worth of products with 0 commission. It feels great.” "SHEIN's overall traffic is so huge that the first three months without commissions were very attractive." "The store has just been open for a month, and now the platform is providing great support during the bonus period. There is no commission for the first three months, and the platform also covers the return fees. The cost is low, and the profit space is greater." ▲ The picture comes from the seller communication group It is reported that SHEIN allows sellers to obtain real-time insights into trends, learn from its ability to quickly return small orders and respond to customer needs in a timely manner, and benefit from SHEIN's previously established huge consumer base, one-stop delivery and fulfillment system, and brand influence in the global market. Under the protection of multiple preferential policies, the first batch of sellers were able to quickly gain momentum on the SHEIN platform.
An incremental market with a surging opportunity The huge traffic bonus is the biggest feeling of SHEIN sellers since they joined. A seller who mainly deals in furniture revealed that within less than two months after joining SHEIN, many of its categories have successively created hot products, which is undoubtedly due to the high exposure and high conversion rate of the platform. ▲ The picture comes from the seller communication group Currently, the SHEIN platform model is still in its early stages of development, and it provides strong support for product traffic. It not only frequently launches free marketing resources and promotional activities, but also provides multiple traffic entrances for sellers' products. As a result, many sellers’ products quickly became popular as soon as they were put on the shelves, and the traffic was very stable: “SHEIN has been here for almost a month and has received over 400 orders. The current average is 20-40 orders per day.” "We have put 9 products on the shelves in total, with an average order value of about $40. The traffic and order volume are much better than those of the current main platform." ▲ The picture comes from Weibo A seller admitted that SHEIN's advantages are very significant: large scale, many orders, fast collection of payments, and good reputation. Within just two months of testing the platform, its sales soared by 300% and daily sales increased several times. SHEIN, which has just started out, has its own traffic base on the one hand, and the market space is far from saturated on the other hand, providing a brand new incremental channel for cross-border sellers who are caught in an internal war of inventory.
Don’t be kidnapped by low prices According to sellers, the SHEIN platform currently has two cooperation models. One is agency operation, which is suitable for sellers who have no experience in third-party platform sales. On the one hand, this model can free up the energy of sellers and focus their resources and time on product production and manufacturing. At the same time, the entry threshold is also very low. Merchants with product and supply chain capabilities can give it a try in the overseas market. For SHEIN, it can also better control its products according to the platform's standards and requirements. The other type is big sellers who can operate independently. Currently, the SHEIN platform implements a targeted invitation system for big sellers who can operate their own stores, that is, the annual GMV of a single store must reach 2 million US dollars. Such an entry threshold is conducive to screening high-quality sellers and maintaining a good business ecology. In layman's terms, it is to avoid a large number of platform sellers from falling into a pathological low-price war. Many sellers have reported that one of SHEIN's major advantages is that its internal competition is not as serious as other platforms. Although SHEIN's products still focus on cost-effectiveness, this is mainly due to the platform's low operating costs and various preferential policies, which give sellers more room to make concessions. The control of pricing also allows sellers to better control profits. ▲ The picture comes from the seller communication group One seller said: "My products have a relatively high average order value, so I was worried that I wouldn't be able to sell them at first. But I didn't expect that even with a high average order value of $50, I could still get orders steadily. SHEIN's traffic is really encouraging." Another seller revealed: "Switching to SHEIN was the best decision I ever made. The order volume is stable, there are no random deductions, the accounts are clear, and the payment is returned on time. It's so touching." ▲ The picture comes from Weibo With huge growth potential and booming sales opportunities, SHEIN is now becoming a new overseas channel for more and more cross-border merchants.
The battle among the four overseas Asian giants escalates, and SHEIN breaks through with its brand The era of relying on massive distribution to harvest traffic has come to an end. Now that the cross-border e-commerce industry has entered the second half, facing the gradually depleted market traffic, the overseas battlefield is turning to the source supply chain and ultimately reaching the brand. Under the undercurrent of change, the direction of the overseas giants is changing. AliExpress and TikTok are following the path of SHEIN and Temu to join the full-hosting wave. A battle for supply chain dividends is unfolding among the four overseas dragons. From the outside, the four little dragons that have gone global have collectively stepped into the same river called full trusteeship, but their respective ways of steering the ship are not exactly the same. AliExpress has extended the branches of the full-hosting model on the trunk of the platform model; TikTokShop has taken a different approach to content e-commerce, betting on full-hosting to break the bottleneck of e-commerce; Temu goes against the platform model and relies on the full-hosting model to take root overseas. SHEIN is even more special. The traditional SHEIN model does not have the concept of sellers. It itself is an independent self-operated super seller and a fashion international brand. While Li Ning and Anta have built famous brands in China with the help of domestic OEM factories, how did SHEIN build a fashion brand legend overseas? This has to be attributed to the flexible supply chain model of small orders and quick response that SHEIN has established over the past decade, which has helped it become an international fashion brand. Big sellers all know how difficult it is to build a brand of their own. From product positioning, design style, product production, after-sales service, to marketing, the brand itself must control and manage the entire process. Once it is successfully built, the brand's value and assets are also very considerable. At this stage, SHEIN has built a solid brand moat, but as overseas competition continues to escalate, creating another growth curve has become the key to breaking the deadlock. To this end, SHEIN has been deepening its own brand while expanding its platform model; on the one hand, it has a large independent natural traffic entrance, and on the other hand, it actively embraces the seller ecosystem and explores a broader growth curve. The dual-line strategy of own brand + platform model can be said to be SHEIN's uniqueness and a necessary means for it to realize its blueprint.
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