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E-commerce expert Sharon Gai started her career at Alibaba and now explains to the rest of the world how consumer platforms in China work differently from the West, and why also newcomers like Shein and Temu work differently. A discussion on Retail TouchPoint.
China’s consumers are adjusting their purchasing habits and big players are adjusting their strategies to the search for cheaper products. Marketing expert Ashley Dudarenok looks at the changed strategy of Alibaba’s Taobao for the Double 12 festival, she says at marketing-interactive.
Marketing-interactive:
China has seen an abundance of huge shopping festivals over the years. However, the increasing dissatisfaction with complicated discount systems and the oversaturation of shopping events highlights a need for eCommerce platforms to innovate and align with evolving consumer preferences, said ChoZan’s Dudarenok…
The latest revamp also shows that Taobao is adapting to a change in consumer sentiment. Given the “general disinterest in shopping due to economic uncertainties” among Chinese consumers, shifting towards promoting value and affordability could serve as a strategy to re-engage customers and sustain sales, according to Ashley Dudarenok, founder of China digital consultancy ChoZan.
“Chinese consumers are also tired of the complicated discount systems. Taobao usually offers discounts through the “满减优惠” method (e.g, 50 yuan off for every 300 yuan spent),” she added.
By shifting its focus towards offering products of better quality at reasonable and affordable prices for consumers, Taobao’s move will benefit consumers as well as small to medium-sized brands.
Sharon Gai is an e-commerce author, keynote speaker, and former head of global key accounts at online retail giant Alibaba.
She says the way retail apps are designed in China is “fundamentally very different” from businesses in the West, which tend to focus more on search functionality.
“So their primary goal is to get you into an app very quickly, and then out of the app very quickly as well,” Gai said.
“In China, shopping apps are oriented around discoverability — how long can we keep you inside the app, how long can we entertain you, [and] how many new brands or products or trends or styles can you discover?”
Gai also said China’s huge domestic ecommerce market — which recorded almost $3 trillion in sales last year — enables platforms like TEMU and Shein to find the best formula for attracting new customers.
But while Chinese apps have been able to adapt their models to dominate US, UK and Australian markets, Western apps are struggling to achieve the same success bringing their business to China.
Last week, corporate social media giant LinkedIn announced it was shutting down its China service, InCareer, after pulling its main platform from China in 2021.
According to Gai, what sets Chinese and Western apps apart is how fast they are able to respond to the market’s needs
She said at Alibaba, the team motto “changing the motor of the aeroplane, when you’re flying in the air” means moving fast to address the market.
Gai says it’s this speed that has allowed Chinese companies to adapt to Western markets and become the preferred platforms for shoppers worldwide.
Shein, Temu and TikTok have become winning platforms on the internet, and for a good reason, says e-commerce expert Sharon Gaiat the Rest of the World. “Globally you have an economic slowdown, so a lot of consumers are also spending less per platform,”
The Rest of the World:
When Temu launched in September 2022, it also drew people in with low prices. In February, it broadcast an ad during the Super Bowl encouraging viewers to “shop like a billionaire” and fill their virtual carts without having to worry about the cost. That weekend, Temu racked 426,000 app downloads in the U.S., according to digital analytics company Sensor Tower.
“Globally you have an economic slowdown, so a lot of consumers are also spending less per platform,” Sharon Gai, the former head of global key accounts at Alibaba and author of Ecommerce Reimagined, told Rest of World. “When there’s a low-cost e-commerce platform that’s emerged out of nowhere, they are obviously going to like it.”
Fashion firm Shein developed a new global position, managing through domestic regulatory difficulties and tense relations between China and the US.Internet watcher Matthew Brennan looks at CNN Businesshow a new kid at the block is faring and looks in many ways like the successful Tiktok.
CNN Business:
Shein positions itself firmly as a global business, with an emphasis on distribution: It ships to more than 220 countries or territories. Its website has no mention of its backstory or even where it’s based, stating only that it is “an international” firm. In recent months, that has led to some suggestions that the retailer deliberately downplays its Chinese roots amid rising biases and political controversy.
“Given the current climate of geopolitical tensions, it can … make sense for Chinese entities to lay low,” said Matthew Brennan, who writes about Chinese mobile technology and is the founder of research firm China Channel. “They just want to do business. This is something that they don’t want to have to deal with. And so I don’t think we can blame Shein for taking that option.”…
Shein has made a name for itself by blitzing social media users with its affordable and trendy clothing catering to young women, including $6 crop tops and $9 minidresses. Similar to Boohoo and ASOS, the company relies heavily on influencer marketing, teaming up with internet stars and celebrities like Katy Perry and Nick Jonas to expand its reach.
The brand is especially popular with Gen Z shoppers on TikTok, where it has become a trend for users to post $1,000 Shein “hauls,” or large purchases. That kind of buzz comes on top of Shein’s affiliate marketing programs, which reward influencers handsomely for spreading the word about its products.
The company is also savvy about keeping users on its platform. Last September, it held a virtual fashion show exclusively on its app, which likely helped it pick up more users, noted Lexi Sydow, head of marketing insights at App Annie. Grammy-nominated singer Ellie Goulding was among the performers.
“They’re just so far ahead in terms of user experience,” said Brennan. “They mix together media and entertainment into the experience, and user-generated content and reviews.”
One of its key differentiators, however, is a concept that analysts are calling “real-time retail.”
They say that Shein has come up with an in-house algorithm that trawls the web — including its own massive customer database — to find out what fashion items are trending on search, and what people are responding to on competitors’ websites…
Shein concentrates on exports, naming Europe, the United States, Australia and the Middle East as key markets. Shein does not publicly break down what its top markets are.
It has recently also seen momentum in Latin America, with app downloads in Brazil skyrocketing 988% in the 12 months to June, compared to the previous year, according to App Annie.
The brand also remains a fan favorite in India, although its platform was booted out of the country last summer amid a crackdown on dozens of apps. Last month, it returned to India through Amazon’s Prime Day shopping festival, leading to excitement among customers.
In some ways, Shein’s rise could be compared to that of TikTok, according to Brennan, who authored the book “Attention Factory: The Story of TikTok and China’s ByteDance.”
“I see so many similarities,” he said, reflecting on how the short video app was regarded before it became a global sensation.
“It was viewed as something that was just for Gen Z. It was sort of viewed as frivolous entertainment … I think the competitors were looking at it similarly, and not taking it as seriously as they should have. And I’m sure that platforms like YouTube and Instagram much regret that now.”
Fashion firm Shein makes inroads into the global market with a smart approach to please its consumers: an unbelievable speed focusing on social media, says e-commerce expert Matthew Brennanto Drapers’ Online. Brennan says that once an item is trending, Shein simultaneously increases social media activity for these products to boost sales further. (currency in British pounds)
Drapers’ Online:
Shein’s appeal is trendy, own-brand designs at ultra-low prices: jewellery starts at 50p, mini-dresses at £5.49 and trench coats can be bought for just £28.49.
The “new in” category for womenswear on its website is updated daily. On 11 August, its website showed 6,531 new products for that day. By comparison, Boohoo’s “new in today” category lists just 177 products and Asos 3,563 products, but neither state what time period this is represents. Asos also includes products from third-party brands.
Shein achieves this through an agile network of suppliers in China, which reportedly get designs to market in as little as three days, says Chinese ecommerce expert Matthew Brennan. In a deep-dive of the business on American business blog Not Boring, Brennan says Shein produces small quantities initially, but if an item sells well, it ramps up production for what he calls “real-time retail”, to describe the etailer’s quick response time to trends. Brennan says that once an item is trending, Shein simultaneously increases social media activity for these products to boost sales further.
Fashion firm Shein has been attracting quite some attention. But behind them, a new industry trend is emerging: fast fashion. E-commerce expert Matthew Brennan explains at Marketplace how the fashion industry is changing fast.
Marketplace:
Matthew Brennan: Real-time fashion refers to the model that Shein’s developed whereby you’re in the Shein app, and you put something in your cart. When they upload a new item, they can actually update the systems that they have in the back end, whereby the action that you take can immediately have an effect on the factory floor. So, everything from the website back end through to the supply chain management system is all linked together.
Kai Ryssdal: But the moral of the story is they’re wired to get it from your phone to being made in lightning speed.
Brennan: Yeah, exactly. For fast fashion, speed is really important, and if you’re able to quickly spin up when an item is doing well, that gives you a sustainable advantage over your competitors.
Ryssdal: You write that Shein is the fastest-growing e-commerce company in the world. If it’s so fast-growing, how come it’s not better known?
Brennan: Shein’s extremely well known within the demographic that it targets. You speak to a woman under the age of 30 in North America, they will usually tell you it’s a brand that they’re very familiar with, typically. But outside of that demographic, you’re right. It’s much less well known.
Ryssdal: Do you think this, what they are able to do, could happen anywhere that wasn’t China, which has the labor force infrastructure for this, it’s got the industrial infrastructure for this? This is sort of China-specific, right?
Brennan: They certainly do have an advantage in the supply chain for China. China’s not the cheapest place to manufacture anymore. You can go to markets like India or Bangladesh; the labor costs are definitely lower in those markets. But China still has an overall advantage in terms of the speed and flexibility, and the overall package of infrastructure is still best in class.
Ryssdal: Let me dig into the whole demographic thing a little bit, of which I am clearly not a member, and that’s fine. But as we started getting ready for this interview, I went to the Shein site, and I clicked around, and there’s a little tab that says, “Men,” and I clicked on that. And look, it’s nothing that I’m ever going to wear. But the question is, are they looking to grow beyond women under 30?
Brennan: Sure. I think you know, when you look at something like this, you start with, you know, appealing to one demographic, and then you can start to expand out from that. So, that’s exactly what we see Shein doing. If we roll back the clock just a few years ago, yes, it was nearly all just women’s fashion. Today, that’s not true. The categories are much more varied. They have men’s fashion, they have household items for your kitchen. So, in several vectors here, we can see that they are clearly expanding their offerings.
Ryssdal: So look, if you’re the new guy running Amazon, now that Jeff Bezos just wants to go into suborbit, are you worried?
Brennan: You could be, you could be. I mean, I don’t want to mislead you into thinking that Shein is on the scale of Amazon. It’s certainly not right now. But if you could think about this, you know, how would a disruptor to Amazon arise? You know, they’re using a model, their model is very, very difficult, perhaps impossible for Amazon to copy, and they’re coming in with a price advantage. You know, if you roll back the clock three years, and if you’d said, you know, could a company come in and compete with Facebook? Most people in Silicon Valley would have said no, that’s not possible. TikTok from China has proven that’s possible. So, it’s not beyond the realm of rational imagination that Shein could do something similar.
Fashion firm Shein belongs to a new breed of ultra-fast fashion brands that keeps an edge on its more traditional competitors, says innovation expert Matthew Brennanat the Vox. Why is Shein going to crunch fashion companies like Zara?
The Vox:
Toward the tail end of the 2010s, “ultra-fast” fashion brands — Asos, Boohoo, Fashion Nova, and now Shein — emerged as viable competitors to the dominant fashion empires of the previous decade. Last October, Reuters reported that investors think “Zara … is going to be crushed by fast fashion 2.0.” These ultra-fast fashion companies are able to reach millions of young shoppers directly through social media without the need for physical retail space, and relied on search traffic and customer data to foreshadow trends.
But by virtue of Shein’s location and software technology, the retailer developed a speedy edge on its competitors. Matthew Brennan, a Beijing-based writer and analyst of Chinese technology, likened its pace to “real-time” retail. That means Shein is constantly gathering and analyzing customer data and uses that knowledge to craft new designs — within as little as three days.
“Each new design is basically a bet because Shein can estimate how well a product is going to do, but it doesn’t know for sure until it sells,” Brennan explained. “Compared to its fast fashion competitors, Shein is able to take more bets, but at a lower risk. It’s able to place very small initial orders with these factories, about 100 or even smaller.” These batches were much smaller than Zara’s and that of ultra-fast fashion retailers like Boohoo, which reportedly ordered about 300 to 500 units per style. If a specific top goes viral overnight on TikTok, for example, Shein will be able to instantaneously ramp up production on the garment and place additional orders depending on demand.
Shein has spent years cultivating relationships with Chinese garment factories and manufacturers, whereas most Western brands generally outsource this work. Inditex is similarly situated close to a garment production center in the northeast region of Spain, but according to Brennan, business in China moves much faster.
“Shein doesn’t work with very large factories but [with] small to mid-sized workshops that pick up orders daily,” Brennan said. “It’s very much like an Uber system, where new orders are coming into factory owners’ phones and they receive the order. It’s very scrappy, but efficient.”
This company is a very savvy operator in terms of acquiring users through social media platforms. They were early to Pinterest. They were early to TikTok. They were actually the most talked about brand on TikTok globally the last year. But to be honest, price is a bigger driver. This platform, Shein, the prices on there, it makes Amazon look positively expensive. I don’t know if you have any personal experience of this, but if you talk to anyone on there, the prices are significantly lower than you would expect. And that’s really attractive to their target customer base…
Their model is actually quite innovative. And it’s difficult for their competitors to copy because the thing about fashion is, fashion is very volatile, especially fast fashion. And so if you’re able to operate faster than your competitors in terms of assessing and identifying new trends and getting those garments spinning up, SKUs that are doing well, faster than other people, then you are able to reduce markdowns. And you are able to lower your costs and increase– reach more customers.
That’s what Zara’s done, essentially. From the 1990s, they basically invented fast fashion and created their system, which works for a store network. In the last, say, decade, we’ve seen a new breed of DTC platforms. Brands like Fashion Nova and, in the UK, Boohoo and Asos– which are already publicly listed companies– are doing quite well. Shein, we can view as just taking this up another level. They are faster than the ultra fast item in real-time retail.
In terms of the– they’re taking the data that they’re seeing on their app in, say, America and using that and connecting that directly to the Chinese factory floor. In terms of when people start putting items in a basket in America, they know, OK, we’re going to sell more of this. And they immediately run that through to the factory floor and start ordering more and ordering materials. And the algorithms automate everything. So it’s really quite an innovation that they’ve managed to achieve…
The reason why they’re able to get that price is because the supply chain is unbelievably efficient. They don’t technically own the factories, but they’re so closely linked up with their supply chain management software, that it’s almost– it works effectively as they did, if they did. They’ve been criticized for a variety of things, as you rightly pointed out. There is questions over the sustainability of fast fashion and the environmental impacts. I think those are things that we do need to look at.
But in this context of the target consumer that they’re reaching, obviously, there are people concerned about these things. But it seems that, at least for the people who are buying on Shein, they’re less concerned about the environmental impacts and more concerned about their immediate needs to stay on top of the fashion trends within their social circle.
There’s also been complaints about suspicions of them using things like child labor. I think that those are a little bit hard to believe, given where they’re based in Guangzhou being one of the highest GDPs in China. And so, yes, we do need to look at these issues. But overall, I think these are wider questions about the fast fashion industry that could be applied to many, many companies.
Fashion firm Shein makes inroads into the global market with a smart approach to please its consumers: an unbelievable speed focusing on social media, says 
