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• Managing huge variety - A basic t-shirt might come in 10 colours, 6 sizes, and 2 necks. That’s 120 SKUs to manage for just one product.


• Labour intensive - garment factories aren’t full of robots, they’re full of people with sewing machines who need to be valued and respected.


• High returns - items bought online may not fit correctly or look as good as the customer had hoped, until AR (augmented reality) becomes common place this is a costly area.


• Predicting Demand - a retailer needs to warehouse inventory that accounts for all of the above, across a huge number of different products.


Shein rises to the challenge, standing taller than the crowd in 6 distinct ways:


1.World class customer insight – combining 3rd party data (plugs directly into competitors’ websites and Google Trend Finder to understand what’s in-fashion) with 1st party; linking its in-app and on-site user behaviour to forecast demand and adjust inventory in real-time.


2. Integrated supply chain - its supply chain management software enables it to produce a wider variety of relevant products cheaper and quicker than competitors; factories only run Shein’s software which means that (like Apple) they have total real-time production transparency.


3. Agile process - Shein feeds that data into a massive in-house design and prototyping team who create product from drawing board to production, then online in as little as three-days because all areas of their business are tied into their ERP (Enterprise resource planning) system so they instantly update manufacturing plans based on who’s looking at which product page every hour.


4.A ‘virtual’ vertical - located at the epicentre of China’s fast fashion manufacturing capital Guangzhou and having built up years of loyalty with its suppliers, it operates in a similar way to Apple - as if it does all of its own manufacturing; it can start with incredibly small batches and respond quickly once a product is live.


5. The Retail science of Algorithms – relying homeofdirectcommerce.com | Direct Commerce


on data and algorithms, supplemented by human insight. The demand prediction, fast iteration, small batches, and manufacturing relationships means that Shein eliminates waste and delivers low prices on quality, trendy items.


6.An addictive UX (user experience) - fashion mobile ecommerce experience comes down to four things. Shein smashes them all ‘out of the park’:


• Low prices.


• Great products that are refreshed thousands of times a day.


• Lots and lots of reviews, with pictures, video and engaging content.


• Using every trick in the book to build the customer base and retain them.


Shein’s strategic ‘f lywheel’ is spinning so fast because they recognised what China is good at – manufacturing. They’ve learnt to develop technologies to master their blind spot - Retail.


These are the key ingredients for shein’s ‘secret sauce’.


Conclusion Anyone who can predict demand more accurately, test more nimbly, and dial up production of popular SKUs faster than others, thereby reducing; waste, inefficiencies, and markdowns, will hold a huge advantage over competitors.


Predicting the future suggests the logical interim conclusion is manufacturers going direct on a global scale, cutting out all the middlemen, and replacing local know-how with algorithms. It’s hard to imagine a company better placed for retail’s near-term future than Shein; they can manufacture, write code, and market to global consumers as well as anyone in the world.


They were not the first ultra-fast fashion company, but they have already overtaken Boohoo and ASOS sales combined in less than 8 years.


How will Boohoo, ASOS, Indetex and Uniqlo react if they are to preserve their ground?


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