Shein set to market supply chain technology to outside brands and designers. Here’s why it’s a smart move
According to media reports, Chinese fast fashion giant Shein is set to market its supply chain technology to global brands and designers.
It’s a smart move, according to Brittain Ladd, a supply chain consultant and former Amazon executive.
In a LinkedIn post, he said: “Shein and Temu are both doing exactly what I stated they would do when I first started writing about the companies two years ago.”
“Primarily, they are following the Chinese business playbook written so well by Alibaba, Pinduoduo, and JD.com - provide an ecosystem of options and services that are open to all.”
Shein’s Executive Chairman, Donald Tang, announced the aforementioned plan in a letter to investors. allowing outside brands and designers to leverage his company’s system for testing out new fashion items in small batches and tracking how popular they are with consumers. Tang called the new initiative “supply chain as a service.”
Ladd added: “Shein has revolutionised fashion manufacturing, and has rapidly expanded from a discount Chinese apparel seller to a global fashion brand with the help of its small batch, on-demand manufacturing model, and now sells to more than 150 countries.”
“It contracts with thousands of factories in China that churn out tens of thousands of new styles daily. It places orders to suppliers to be delivered in days, relies on real-time data to quickly analyse demand and replenishes orders as needed.”
“That cuts down on the cost for storage and limits inventory waste, a primary reason for its ultra low prices.”
“By making its supply chain ecosystem more widely available to brands, Shein is refocusing on its powerful capabilities to manufacture and distribute fashion products efficiently. I can't stress enough how brilliant this move is for Shein.”
Everyone is making the wrong assumption about Shein, Ladd argues. The belief held by retail executives is that it is going to stay focused on cheap, small batch fast fashions.
“That's false. I guarantee that Shein is going to go after all fashions. It will do this by giving access to their technology and infrastructure to brands. In addition, it will begin to sell fashions that compete directly with the fashions sold at The TJX Companies, Target, Walmart, Macy’s etc.”
“Shein can increase the quality of its fashions while leveraging its expertise in manufacturing and the supply chain to deliver fashions that will be 30% to 50% less."
Ladd continued: “Shein reminds me of Amazon. For years, retail executives claimed that, "No one will buy their clothes online." Amazon is the largest apparel retailer in the world. Far too many executives continue to say, "Shein can't manufacture and sell fashions that can compete with our brand.” Big mistake.”
The company is just getting started, he believes.
As for Temu, it has become the second most popular shopping app in the USA. It is going to decimate entire categories, Ladd reckons. Specifically, Temu will increase its focus on apparel, home furnishings, furniture, tools, shoes, and electronics.
“Temu is becoming an “everything store.” Like Amazon,” Ladd concluded.
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