SHEIN sellers in the era: Catching up, Innovating, and Breaking out in the tide of going global

[Ebrun Original] For Chen Qiao, who seized the opportunity of going global on the cross-border e-commerce platform SHEIN to start his first entrepreneurial project in 2020, the policy guidance encouraging domestic enterprises to go global in recent years has been like the "God of Wealth" that turned his life around, while the vast overseas consumer market has become his "land of fortune."

Originally a middle-ranking employee in a Fortune Global 500 foreign company, Chen Qiao labored as a white-collar worker for over a decade. Feeling exhausted, he couldn't bear the thought of continuing to age in the workplace and losing his passion and life goals. Later, inspired by a friend who made money selling makeup brushes, he started part-time e-commerce business, wholesaling makeup brushes, beauty blenders, and powder puffs and selling them through an e-commerce platform, thus embarking on independent entrepreneurship.

In 2020, Chen Qiao heard that a company called SHEIN had started to collaborate with third-party sellers and were focusing on going global. With his prior experience in the e-commerce sector, Chen Qiao decided to seize this seemingly fresh opportunity and established his own company to focus on operation. In just three years, Chen Qiao's business embarked on a fast track to development, and he has transformed from a novice to the "leader," selling products worth 20 million annually, thereby changing the course of his life.

Yet, in the eyes of many ordinary manufacturing factories and sellers in China, the overseas market still feels like the deep sea. However, with the wave of going global surging, choosing the right platform can allow global expansion to yield twice the results with half the effort.

2023, the awakening, struggles, and independence of manufacturing enterprises in cross-border e-commerce

In 2023, the US e-commerce industry faced its slowest growth since the 2009 economic downturn. Although Amazon holds 40% of the US e-commerce market, it only accounts for 4% of the entire retail industry in the country. Not to mention other overseas markets and countries and regions further down the market ladder. Compared to the high penetration rate of domestic e-commerce, the vast overseas market is still like a boundless blue ocean for doing business.

Since the "first year of cross-border e-commerce" in 2014, Chinese manufacturing factories and cross-border sellers have connected with macroeconomic trends in the manufacturing industry and hundreds of millions of overseas consumers, constituting the fundamental force driving industrial development. However, the majority of domestic enterprise's global expansion models, even until last year, still faced significant uncertainty: unstable sales, the risk of orders being canceled by foreign businesses at any time, and a lack of understanding of overseas consumer demands.

Furthermore, the practices of trading in goods lacked uniqueness and innovation, intensified homogeneous competition, leading to intense price wars. Meanwhile, the brand building efforts of some cross-border sellers have been weak, lacking notability and reputation, making it difficult to gain long-term trust from overseas consumers and obtain repeat purchases with loyalty.

How to build a stable and sustainable cross-border business is not only a revenue requirement for domestic factories and sellers but also the fundamental principle of maximizing the hard-won global business opportunities.

"Shein is a giant with extensive global e-commerce and social network influence. The fan following of SHEIN on Instagram exceeds the total of Amazon and Walmart." Chen Qiao initially felt that the millions of young fashionable consumers gathered on SHEIN were the most suitable audience for him, and even without any additional screening costs. Having accumulated verified market experience, SHEIN not only focuses on fashion trends but also studies market preferences in different regions and cultural backgrounds. These verified experiences have enabled SHEIN to swiftly capture subtle market changes and inform sellers in a timely manner to adjust their product and market strategies, ensuring that they are always at the forefront of consumer trends.

Moreover, SHEIN is well-versed in cross-border supply chains. Mature cross-border e-commerce businesses operating in traditional ways inevitably fall into the grip of complex international logistics and inventory backlogs, whereas SHEIN's on-demand model has been a long-term success, not only fully demonstrating to many later cross-border operators but also significantly reducing the operating risk and improving the efficiency of seller operations, consequently enhancing overall profitability. Wang Yongxin, who has experienced his share of setbacks in cross-border business, stated that, after joining the SHEIN platform in September last year, he has experienced the best time of his life without the need to worry about running his own website or marketing. In addition, he no longer has to handle overseas logistics and after-sales, and can quickly sell products. "Before, every sale was a source of concern about tomorrow's sales, and now I finally have peace of mind."

Furthermore, Chen Qiao discovered in his operation that purely competitive prices are no longer sufficient to attract consumers, while the SHEIN platform focuses on helping sellers establish unique brand features to captivate consumers. This leverage in potential brand power for sellers means that SHEIN is not just a sales platform; it also gives sellers the confidence to succeed.

"There is a trend for China's manufacturing industry to shift from 'Made in China' to 'Marketed by China'." Juozas Kaziukenas, the founder of the renowned US e-commerce intelligence company Marketplace Pulse, noted in a blog post. If sellers like Chen Qiao and Wang Yongxin have contributed by opening up diverse overseas supplies for "Made in China," then cross-border open platforms represented by SHEIN have initiated the avant-garde in China's 'Marketed by China' campaign.

Following the market, the new stage for businesses to break the bottleneck and grow

Fortune Magazine once reported that the average lifespan of small and medium-sized businesses in the US is less than 7 years. According to some public data in China, the average lifespan of domestic small and medium-sized businesses is only 3 years, and that of group enterprises is only 7-8 years, implying that even businesses in their prime can easily wane and fade, if the necessary reserves and preparations for long-term operation are not made.

Therefore, keeping up with global commercial trends and maintaining a certain level of creativity are essential prerequisites for wanting to go global and sustain long-term business growth, this desire is not just about riding the trend wave.

Industry insiders believe that the "front factory, back store" of the physical economy and the "front electronic commerce, back factory" of the e-commerce era have not changed the essence of supply and demand: the core of the manufacturing industry is the factory, which produces goods according to the enterprise's plan, and the core of the retail end store sells and satisfies consumer demands in a manner that is often vague. The appearance of internet e-commerce has moved stores online, but it is platforms like SHEIN that truly change the manufacturing industry.

In Dongguan, Guangdong, Luo Jie runs an accessory factory. She thinks there is one key difference between going global on SHEIN and traditional trade businesses is her products. Prior to SHEIN, she supplied to offline traders, leading to inventory pile-ups during the epidemic. Traders would give her orders to produce, without finding out what products sold well, and she wouldn't know when the next order would arrive. Upon opening her store on SHEIN, Luo Jie discovered that she would be guided, had control over what products to produce, and would first develop 50-100 units for each new product before continuing production when sales picked up. By continuously developing new products, monitoring market sales daily, following the data, and maintaining low inventory and high traffic items, her operation remained efficient. The essence of this difference is that cross-border sellers are undergoing a more digitized and more tangible understanding of overseas consumer demands.

Risks and opportunities are two sides of the same coin. The road ahead for Chinese small and medium-sized enterprises to go global is still long. Factories, sellers, and platforms, all parties in the industry need to "share the prosperity" and withstand "the common hardship." More and more factories and sellers that have gone global through cross-border e-commerce platforms such as SHEIN are emerging.

The success stories of the above-mentioned small and medium-sized enterprises going global will not be isolated cases. Enterprises that deeply understand the global market, continuously innovate supply chain management, and focus on brand building are competing to "go global." While realizing the dream of global deployment, they are bringing diverse and rich Chinese product experiences to global consumers.

The impact of this trend is profound, reflecting the overall development trend and transformation of Chinese companies going global: they need to break away from the path dependence of the traditional model of going global, have the courage to eliminate inferior practices with superior ones, establish earning potential in the global market, possess innovation capabilities for global operations, and achieve sustained industry development.