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According to industry sources, in 2021, SHEIN plans to test a Taobao-like model in Brazil, which will subvert the previous model of the platform designing and purchasing products by itself and allow third-party sellers to settle in and open their own stores. In March 2022, the platform model was officially launched in Brazil and further expanded to Mexico, with the next stop being the United States.
Related news and speculation about SHEIN's movements have long been circulated, and now SHEIN has made it final and officially announced that it will launch a third-party e-commerce platform in the US market. SHEIN's third-party platform in the United States officially announced that it will have 0 traffic fees and pricing power On May 4, SHEIN officially released a press release announcing that it will gradually launch the platform model SHEIN Marketplace in the global market. As SHEIN's business boundaries continue to expand, the long-rumored statement that "SHEIN will become a third-party platform" has officially been officially confirmed.
It is understood that SHEIN Marketplace made its debut in Brazil last month, and the next stop will be the United States, and further expansion to multiple markets around the world. In fact, SHEIN's recent talent recruitment has long been traceable. Last month, Modern Retail reported that SHEIN posted recruitment information for multiple related positions in Los Angeles and California on LinkedIn, covering senior business developers in the market business, supplier management experts, and inventory clerks.
Around March, many cross-border merchants revealed that they had received investment invitations from official managers and would enjoy multiple benefits such as free commission and return shipping in the first three months, 0 traffic fees, and pricing power.SHEIN's business model has always been based on designing and selling its own brands. The SHEIN Marketplace launched now will not only sell SHEIN's own products, but also invite third-party merchants to sell them. This means that third-party sellers will compete with SHEIN on the same platform.
With both self-operated brands and third-party sellers selling in parallel, how SHEIN will balance the traffic distribution between its own products and third-party sellers, and how much freedom SHEIN will give to sellers after the platform model is officially implemented is also a question worthy of attention.
Another important message is that SHEIN Marketplace allows sellers to obtain real-time insights into SHEIN's trends, learn about 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.
Opening up new routes on third-party platforms is a necessary step for SHEIN.
With its two killer features, small-order, quick-response supply chain model and efficient traffic conversion system, SHEIN has made rapid progress in the US market. In 2021, SHEIN surpassed Amazon to become one of the most downloaded shopping apps in the US; in 2022, SHEINGMV exceeded US$30 billion, a year-on-year increase of 50%. Of course, SHEIN's ambitions do not stop there: by 2025, GMV is expected to grow to US$80.6 billion and achieve a net profit of US$7.5 billion.
However, in the current unpredictable market environment, SHEIN's future is still full of uncertainties. Amid the unstable factors such as slowing macroeconomic growth and the increasing pressure from competitors, SHEIN urgently needs to transform and change.
The establishment of third-party platforms and the participation of sellers will not only expand sales categories and promote the diversification of the supply chain, but also help break the current audience limitations and tap into more incremental space. Shopify lays off another 2,000 employees, sells off business to lighten up In the independent station craze brought about by the butterfly effect of the epidemic, SHEIN, Shopify and others are undoubtedly among the best, leading the independent station model to impact the third-party platform e-commerce empire headed by Amazon.
However, the benefits of the pandemic are like the ebb and flow of the tide. When the tide recedes, greater challenges begin to emerge. How to stabilize the engine of growth is a serious problem. Shopify has a deep understanding of this.
In 2020, Shopify soared all the way with the help of the epidemic, with sales increasing by 86%. In the fourth quarter of 2021, Shopify's GMV exceeded US$54 billion, reaching nearly 50% of Amazon's scale. However, the miscalculation of the consumption situation led Shopify into a growth scam, and the chain reactions of operating losses in 2022 were US$822.3 million, the stock price plummeted by 80%, and the market value evaporated by more than 170 billion. Shopify, which suffered a setback, began to explore ways to transform. On the one hand, it made drastic layoffs, adjusted its strategy and reduced its business scale. On the other hand, it started the transformation from light service to heavy e-commerce, changing its former "Amazon rebel positioning" to the bold route of "Amazonizing Shopify's business." To this end, Shopify built its own logistics system by imitating the FBA model, developed applications closer to platformization, and placed heavy bets on social e-commerce.
Shopify is also regaining its vitality as it continues to explore new opportunities. According to the latest financial report, Shopify's first-quarter revenue was $1.51 billion, higher than analysts' expectations of $1.43 billion; adjusted earnings per share were $1 million, better than analysts' expectations of a loss of $0.04 per share; and GMV was $49.6 billion, higher than the expected $47.68 billion.
Looking ahead, Shopify expects second-quarter revenue growth and gross margin to be the same as in the first quarter, and to achieve positive cash flow freedom in every quarter through 2023.
In addition to the release of the financial report, Shopify also disclosed several major actions. First, after laying off 1,000 employees in July last year, it announced another 20% layoff of employees, estimated to be around 2,000 people; second, it sold its logistics department to freight forwarder Flexport.
The logistics division that Shopify sold to Flexport reportedly includes Deliverr, a logistics company acquired for US$2.1 billion in May last year, and 6River Systems, acquired in 2019, which was sold to British retail technology company Ocado. The moves mark the end of Shopify's years-long effort to build its own logistics business as it focuses on e-commerce and artificial intelligence.
From the bursting of the high-growth bubble to the attempt at "Amazonization" and now opening up new routes, Shopify, which has experienced many ups and downs, is now gaining its foothold.
As the spokespersons of the independent station model, SHEIN has opened up third-party platforms to seek new growth curves, while Shopify has sold its logistics department and cut off businesses that have invested billions of dollars over the years. In the face of an economic environment full of macro uncertainties, only by seeking change in stability can we go further.
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