C&B Notes

Shein for the Win

Inditex, owner of the Zara chain, is a business we have long admired for its supply chain, process, and retail floor innovations in the clothing industry.  It has faced challenges during the pandemic with the accelerated move to online shopping.  Shein, on the other hand, is a big winner, sometimes at Zara’s expense.

Shein has accelerated into what Matthew Brennan, author of a book on TikTok, calls “real-time retail”. It often designs and makes new clothes in less than a week, flooding its apps and online stores in 220 countries with new designs (4,981 “daily new” products were listed on Shein’s UK site on Thursday). Its founder Chris Xu (also known as Yangtian Xu) started out in search engine marketing before selling wedding dresses and other clothes online, and Shein is natively digital in a way that older rivals such as Zara, which was founded in 1975 and has 2,000 stores, are not. It uses TikTok influencers and celebrities such as Katy Perry to make its bargains glamorous. Shein’s cleverest trick is to plug its digital marketing funnel straight into its supply chain. It has grouped a network of factories and suppliers, all using its software, around a hub in Guangzhou and can adjust its production rapidly according to what sells, or even attracts clicks. It produces small batches of thousands of designs, then ramps up the popular ones.

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