SHEIN, a cross-border fast fashion platform based in China, is piloting a model similar to Taobao in Brazil, whereby merchants set up stores directly on the site and are responsible for their own operations and logistics, LatePost reported on November 9. Previously, SHEIN’s business strategy involved designing and purchasing goods by itself.
An individual close to SHEIN said that this decision was made in 2021 and officially launched in March this year. Since last year, SHEIN has pursued an original brand manufacturer (OBM) mode, which is mainly aimed at brands in China and overseas, requiring them to have development and design capabilities, supply chains, independent operations and clear brand features.
One cross-border e-commerce practitioner said that at present, the OBM mode only requires brands to supply goods, while SHEIN is responsible for logistics and operations. According to a local logistics service provider in Brazil, the firm’s domestic merchants record about 40,000-50,000 orders per day.
“It is reasonable for SHEIN to try the Taobao model in Brazil, a large market with the limited profit margin compared with the US. Shopee has also proved that there are enough third-party sellers in Brazil,” another cross-border e-commerce practitioner said.
SHEIN’s sales in the United States are equivalent to those in Europe, and the sum of the two accounts for about 50% of SHEIN’s total sales. In Latin America, Mexico and Brazil have a close share, accounting for about 3%. SHEIN’s per customer transaction in Brazil is about $30. From the perspective of growth rate, Brazil will be one of SHEIN’s next key markets.
This move has accelerated the expansion of SHEIN’s competitors. TikTok’s e-commerce business entered the Brazilian market ahead of schedule, from the second half of 2023 to the first half of 2023. One of the important reasons for the adjustment is the active expansion of SHEIN in the country.
The company is now trying out more new business models. This year, SHEIN opened a long-term offline store in Cat Street in the Harajuku fashion district, Tokyo, Japan. The store does not sell goods directly, but is mainly intended for consumers to try on and check goods. If consumers want to buy, they need to scan the QR code to place orders online. In the future, this store will hold fashion shows and designer activities.
Interestingly, the offline store was originally occupied by Uniqlo, a Japanese casual wear designer, manufacturer and retailer. SHEIN has opened offline pop-up shops in Brazil and other places before, so SHEIN may explore the possibility of more offline channels in the future.
In the first half of this year, SHEIN’s gross merchandise volume (GMV) was about $15 billion, with a growth rate of about 50%. In addition, Forbes reported on November 6 that SHEIN has hired Donald Tang, an investment banker from Bear Stearns, as executive vice chairman, and the industry generally believes that Tang’s joining is intended to boost SHEIN’s IPO.
In addition to continuing to maintain its growth rate, SHEIN is now facing more complicated competition. Its two young but powerful competitors, Pinduoduo’s Temu and TikTok Shop, are now blooming.