CC BY
0CROSS-BORDER E-COMMERCE REVOLUTION. ANALYZING SHEIN'S RISE AND ITS GLOBAL IMPACT
Khattobov U.B.
JSCB Kapitalbank specialist https://doi.org/10.5281/zenodo.13092599
Abstract. SHEIN is actually more of a technology company than an e-commerce fashion company, even though its name refers to the apparel and footwear sector. This is because the company's primary focus is not on great fashion design, but rather on taking advantage of high sales volumes and low product unit prices for a broad consumer base. In order to accomplish this, SHEIN completely depends on contemporary digital methods to obtain direct access to consumer data and information rather than tangible items. Low prices and eye-catching product images also significantly lower costs [6]. E-commerce platforms have become a prominent type of commerce in contemporary society due to the growth of the e-commerce market and the expansion of the Internet. The e-commerce platform, as a representation of the apparel industry, is also confronted with a chance for rapid development. Fast fashion companies who had only ever functioned through offline channels have started to create and launch their own online channels in an effort to take share of the omnichannel sales industry in recent years. SHEIN, a young consumer-focused cross-border e-commerce platform and new Chinese fashion brand, has emerged as a leader in the international garment market, having developed quickly in a short amount of time[3]. Marketing tactics have a significant influence on how the public views a business and how its clients behave. This is especially noticeable in the quick fashion sector. Fashion is best described as a social-psychological phenomena in which recently created objects, concepts, and behaviors are widely embraced, pushed, and eventually abandoned by society as a whole. Fast fashion, on the other hand, is an acceleration of the fashion process as it relates to apparel. It started in Europe in the middle of the 20th century as a way to quickly respond to and copy popular fashion trends. To meet the various needs of a wide range of customers [5]. SHEIN, a digital fast fashion company, exemplifies the convergence of technology, fashion, and global commerce. This introduction examines SHEIN's multifaceted role in creating economic value through innovative digital retail strategies, its social impact, particularly in shaping consumer behavior andfashion trends, and its environmental footprint, an aspect increasingly scrutinized amidst global sustainability concerns. SHEIN's evolution from an e-commerce startup to a prominent fashion company reflects broader shifts in the retail industry, consumerism, and the challenges of balancing profitability with social responsibility and environmental stewardship [7].
Keywords: SHEIN, Fintech, ASOS, E-Commerce, Global Market.
The rise of Shein
SHEIN was established in Nanjing, China in 2008, and in 2009, the company-initiated a cross-border e-commerce business for wedding dresses. This involved sourcing wedding dresses from domestic wholesale markets and selling them to Europe and the United States through third-party e-commerce platforms [3]. SHEIN's primary rivals in the UK are the quick fashion stores ASOS and Boohoo, both of which have a higher brand awareness than SHEIN. Compared to 70% for SHEIN, over 80% of British consumers were aware of ASOS, according to a survey. Shein has to set itself apart by emphasizing e-commerce and digital marketing because the rivalry has been
fiercer due to poor market growth rates and low brand loyalty. Despite these initiatives, competition is still fierce because of rival brands' strong product difference, the numerous marketing and strategic campaigns that big businesses run, and the perception that Shein's designs lack originality. Experts have observed that Shein releases approximately 2,000 fashion products per day, which is equivalent to the number of products released by other platforms in a week [1].
Because there are so many other brands and substitutes, those in the clothes and garment business have a lot of negotiating leverage. Shein tackles this issue by concentrating on becoming an online fashion retailer and providing reasonably priced goods. The ease of moving between brands, the abundance of information available, and the price sensitivity of a significant portion of the market imply that buyers' negotiating power endures despite these tactics. Because of its growing market reach and close closeness to many suppliers in China, Shein enjoys a relatively weak bargaining position with suppliers. It is therefore a desirable business partner. The abundance of suppliers, the low differentiation across production inputs, and the low cost of switching suppliers collectively serve to further diminish the bargaining power of suppliers. Furthermore, Shein's forward integration strategies facilitate more direct transactions and stronger relationships with suppliers, thereby optimizing its supply chain for efficiency and cost-effectiveness. The initial production run for SHEIN's website is typically modest in comparison to the thousands of items that traditional peer retailers typically manufacture. For suppliers, these small-scale orders from SHEIN frequently result in losses. However, the brand's extensive consumer data allows for more informed decision-making regarding a range of aspects, including raw materials, design, and effective production over the long term [1]. SHEIN utilized online platforms such as YouTube and TikTok to disseminate promotional content for their products. These video platforms are well-suited for advertising the products, as the videos posted by influencers are likely to garner millions or even billions of views. Collaborating with influencers on these platforms could also be a relatively inexpensive method of promoting the products, as if SHEIN were to engage celebrities to speak on their behalf, they would likely have to pay a significant sum for the advertising. However, for the influencers on the social platforms, SHEIN could easily promote their products at a relatively low cost. This method of advertising is typically included in a video created by the collaborating influencers, which is called an unboxing video. In this video, the influencers would demonstrate the opening of the parcel and the subsequent wearing of the products by SHEIN. The influencer would also highlight the appeal of the products and their high-performance cost ratio. These videos would be distributed to users who are likely to be interested in purchasing these clothes, according to the results of big data analysis. This is an effective method of attracting potential consumers [2].
Shein's global impact
SHEIN ought to think about reducing the quantity of outsourced providers in order to strengthen its control on the guidelines and the workplace. Since it would enable more thorough monitoring and inspection of the manufacturers, such a system would probably be successful in resolving the issue. It is advised that SHEIN offer a thorough standard for the working hours, surroundings, and downtime of its staff. Moreover, the identification of problems in these firms would help to speed up their resolution. SHEIN should perform an environmental evaluation and set a norm for the working hours of its employees before partnering with a plant. Moreover, it would be advisable for SHEIN to send specific personnel to ensure that each factory adheres to these regulations. It is imperative that the data pertaining to the working hours and the
environmental conditions of the factories be made transparent and accessible to the media and the public. This will serve to demonstrate that SHEIN is rigorously adhering to the standards it has set. These solutions are practical for SHEIN in order to salvage the reputation of the company. It is possible that the shortened working hours of the workers and the higher restrictions would result in increased production costs and a reduction in the speed of production. Nevertheless, it would address some of the most pressing concerns and help to rebuild trust with consumers and the public [2]. Another of SHEIN's core competencies that differentiates it from homogeneous markets is its distinctive flexible supply chain. Agile and flexible supply chains are distinguished by their ability to adapt to changing circumstances through flexible process alignment, dynamic resource pooling, and the creation of virtual capability synergies. The existence of SHEIN's flexible supply chain effectively establishes a robust positive feedback loop for SHEIN (see Figure 2). As illustrated in Figure 2, SHEIN's C2M business model and flexible supply chain model facilitate a direct interface between users and suppliers, thereby ensuring the optimal satisfaction of user needs. Additionally, SHEIN integrates upstream and downstream resources within the supply chain. This integration is facilitated by the use of big data, which enables intelligent warehouse management and effective information exchange at all stages. This integration reduces warehouse costs, improves inventory turnover, and facilitates sales. Furthermore, it gradually builds a global logistics supply network. The "pay first, produce later" model is also a significant factor in the appeal of the platform to both users and manufacturers. For corporate businesses, this model allows for the customized production of individual garments and a superior user experience [3].
Challenges and controversies
For consumers seeking quality, SHEIN may not be their first choice. At the same time, their fast supply chain system leads to an inventory backlog. Facing these problems, SHEIN did not provide a perfect solution. In the long term, this will affect their brand image [5].
The following are the challenges that SHEIN will face in the future.
The first piece of advice is that traffic increases are often flat. In 2011, SHEIN experienced a period of exceptional profitability, with 100% of its traffic originating from Netflix and a return on investment (ROI) of 1:3, according to Yang Pei, general manager of SHEIN Mobile in 2016. It is anticipated that the growth in traffic will gradually stabilize in the future. SHEIN has also been accused of plagiarism. The manufacturer of "Dr Martens" footwear, AirWair International, has initiated legal proceedings against SHEIN, claiming that the latter has permitted the sale of more than 20 counterfeit "Martin boots" via its online platform. SHEIN has rejected the allegations. Levi Strauss, a company specializing in apparel, has accused SHEIN of plagiarising the "Arcuate" stitching technique, which is frequently used on the rear pockets of Levi's trousers, prior to AirWair. Despite its considerable market share, the presence of competitive obstacles, and the potential for further growth, SHEIN is a pragmatic corporation. "SHEIN, which plays a significant functional role, is unlikely to become a great company, but it may be a fairly successful company in the commercial sense." Finally, the decline in China's low-end workforce represents a significant challenge for SHEIN. In the future, the supply of inexpensive labour for clothing factories will gradually decrease, negating SHEIN's advantage of low prices and quick counters. This is a key issue for the Chinese economy. SHEIN still has a way to go before achieving the same level of brand awareness and fashion influence as the professional fashion business. Traveling overseas is an attractive possibility in the upcoming 10 years. SHEIN primarily caters
to a younger demographic, yet there are still numerous business opportunities for other age groups [8].
The future of cross-border e-commerce
Firstly, the cross-border e-commerce industry is one of the fastest-growing and most promising sectors of foreign trade in China. Since 2017, the scale of import and export of China has increased tenfold. From the perspective of trade size, in 2020, the market size of cross-border e-commerce was estimated at 12.5 trillion, representing a 119.05% increase compared to the previous year. Furthermore, in the year 2021, the market size is projected to reach 14.2 trillion. Secondly, with regard to the fast fashion industry, there are several industrial magnets, including ZARA, H&M, CAP, and others. Thirdly, there are also several strong e-commerce competitors, such as Amazon and Shopee. Other Chinese brands, including TEMU, Ali Express, LAZADA, and MIRAVIA, have a similar consumer target as SHEIN. The market is becoming increasingly competitive as a result of the growing number of e-commerce partners. TEMU, for instance, is a new player in the market and has already attracted a significant volume of concerns. It is currently the top free shopping app in terms of downloads. Temu has emerged as a formidable competitor to Amazon and SHEIN. One of the reasons for this is that a significant proportion of consumers believe that Temu offers highly attractive discounts and a wide range of promotions. On Black Friday, a number of products are available at a 30% discount, while consumers can also enjoy around 90 days of no-quibble returns [4]. The global retail market is moving toward e-commerce bit by bit. The penetration rate of e-commerce retail in the global retail market is steadily rising along with the gradual shift of the global retail market to e-commerce. Certain foreign nations and regions have experienced rapid growth in the e-commerce retail market share and market size. Euromonitor projects that between 2012 and 2019, the United States' e-commerce retail sales share of total retail sales would rise from approximately 7.0% to approximately 15.2% (21.3% in 2020), with a compound annual growth rate (CAGR) of 15.7%. This is significantly higher than the 3.5% CAGR for total retail sales during the same period [8].
The advent of cross-border e-commerce (CBeC) has profoundly transformed both the consumer and business landscapes. Despite the relative youth of CBeC companies, numerous university scholars have conducted extensive research on the significant challenges and opportunities presented by this new business environment. Given the nascent nature of this research area and the lack of a unified theoretical framework, it is essential to conduct a comprehensive review of the existing literature to identify the key insights that have emerged. In order to identify the existing gaps and fragmentation in the CBeC literature and to provide directions for future research, this study undertakes a review of that material. The assessment indicates that in order to address the existing research gaps, this field of study requires greater focus and enforcement. The filling of gaps enables practitioners to address challenging business issues and academics to develop a robust body of knowledge [7].
Conclusion
In conclusion, SHEIN is a cross-border fast fashion platform that was launched in August 2008 and is primarily utilized for export e-commerce. It has its own distinctive supply chain structure, designs and manufactures its own clothing, develops its own brand, and operates as a separate website to access foreign markets. The primary target user demographic is young women between the ages of 18 and 35. The objective is to pursue fashion and beauty, going beyond the minimum requirements for basic physiological needs to dress in a manner that provides spiritual
enjoyment and a sense of style. By forging strong alliances and fostering mutual trust with small and medium-sized suppliers, all of whom utilise the MES supply chain management system, SHEIN has been able to achieve supply chain flexibility. Furthermore, SHEIN employs the use of big data in the field of fashion design and recommendations on numerous platforms, utilising this information to the fullest extent possible in order to support regionalised operations.
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