Shein is a Chinese fast fasion retailer that is pushing the boundaries by designing and making new clothes in less than a week. Upload 200 new styles and over 20,000 SKU per day. Other fast fasion retailers are taking notice how Shien is so efficient in their supply chain. In this post, we will explore what give Shien's an advantage supply chain.
What do all Fast Fashion companies strive for?
1) Low prices
2) Onboarding the latest trends
3) Efficient Inventory management
These are the 3 most common trends fast fashion companies strive for, but Shein took a different approach.
Shein utilizes technology as their advantage.
Shein during the early stages (2008), was an online wedding dress supplier. They went to local wholesale markets and basically looked at styles that they thought western consumers may like, then posted it online and watched the interaction.
Shein utilized technology such as google trends, SEO, etc to monitor the interaction. Soon they shifted to general womans clothing because they realized the technology enabled them to identify fashion trends faster than other retailers. From here, they adopted online selling through their website or your phone app.
Shein also went on to hire over 800 people to identify fashion trends based on technology. Shein got an early jump start to utilize technology to help determine trends, while other fast fashion companies were focusing on lowest price, inventory management and creating the latest trends (Zara, HM).
Fast forward today, they provide over 20,000 SKU with 200 new styles per day. From fast fashion to ultra-fast fashion standards.
In conclusion, Shein invested the majority of its resources in capturing fashion trends by further shortening manufacturing cycles and making its items readily available on its online properties, and now they are investing in logistics to distribute these clothes to millions of customers across the world, without the burden to have to operate physical stores.
What is Shein doing now with their supply chain?
One advantage Shein is based in China, which means it HQ based in Guangzhou is home to many apparels manufacture and clothing wholesale markets.
Shein utilizes a scorecard for their suppliers based on 2 key areas.
Development and production of goods. Faster development, lower defect gets the highest scores
Capacity of the supplier based on large volume orders.
From this, they cull out the lowest 15-25% performing suppliers if they do not meet their standards.
Shein has established standards in development for suppliers to provide prototypes within 3 days or be faced to be eliminated from their supply chain. Production needs to happen within 5 days and reorders take 9 days. Sounds really tough? Actually Shein works with their suppliers to educate them on what they need to complete the cycle and based on this each supplier has a scorecard.
Here is an example of a comparison of Shein vs traditional retail buyer buying process.
Traditional retailer process
-Retail buyer sends artwork (weeks for design to come up with artwork approval)
-Factory will provide limitation on what can or cannot be done. (up to 3 days)
-Buyer will need to approve changes before prototype (up to 2 weeks)
-Factory makes prototype (up to 8 days)
-Prototype gets sent to buyer who will have a meeting with a group to determine a final buy. (meeting can be weeks later). If the group doesn't like it, then back to development (start all over again)
-If the buyer issues a PO, then there are several QA/QC inspections that happen during the process, which extends production length. (each QA/QC visit is 1-2 days)
At this point, it's probably a 3-4 month cycle
Shein process
-Shein requests their suppliers to submit ideas by drawing/photo
-Within 3 days, Shein group evaluates based on drawing/photo and cross reference this against their algorithm to see if there will be a trend/interest.
-Shein will request prototype samples within 3 days.
-If prototype looks good, they order a small test order that needs to be delivered in 5 days.
-During this, Shein is already marketing the product and ready to sell after 5 days.
-If public loves the product, Shein places a larger re-order
All of this happens in less than 14 days.
Shein is basically making faster decisions and relying on their suppliers to provide the best services/quality on their products, instead of controlling every aspect of the process.
In other words, every department in Shein is based on speed.
Shein is also working as partners with factories. Shein focus is marketing the latest products as the fastest speed and leaving the production concerns to factories to control. Basically, if the item sells well, then both Shein and their supplier wins. The expectations is both sides have responsibility to insure they do their best.
What is the disadvantage of Shein process?
The main disadvantage is Shein supplier selections may not provide the best quality. Shein basically relies on their suppliers to control their own aspects of manufacturing. If Shein suppliers are not respecting those guidelines, then you will see reviews about poor quality or Shein is using poor manufacturing processes. As many agents know, picking the wrong supplier can lead to major headaches. But what we learned is, poor communication/expectations between buyers and supplier causes the majority of problems. This is where Shein is now focused on improving.
Summing it up
Shein is the #1 ultra-fast fashion company and with that comes more competition. But unlike the competition, Shein is a technology company that happens to sell clothes, where the competition is retail brands that sell cloths. The process of thinking is different, and this is where Shein excels.
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