Is SHEIN worth $100 billion?

SHEIN, who has been making money silently for many years, can no longer keep a low profile.

SHEIN, a cross-border e-commerce brand focusing on fast fashion and cost-effective women’s clothing, has developed in less than 10 years. It is designed and produced in China, and the market and consumers are overseas. It exists in the form of B2C, which is rare in the industry, and has its own independent website and APP. , known as the “Chinese version of ZARA”.

Due to the focus on the European and American markets, and the fact that the founder team rarely shows up, SHEIN rarely appears in the public eye and media reports. Recently, SHEIN has attracted attention as “China’s most mysterious unicorn company”, because it was reported by many media that it is conducting a new round of financing, and its post-investment valuation may reach 100 billion US dollars (equivalent to about 666.6 billion yuan).

What is the concept of an unlisted company with a valuation of hundreds of billions of dollars? Data from analyst firm CB Insights shows that this valuation is second only to ByteDance at $140 billion and SpaceX at $100.3 billion in the global unicorn startup list.

Is a cross-border e-commerce brand doing fast fashion clothing business worth hundreds of billions of dollars? From the three sets of numbers, one or two may be seen.

One is financing and valuation. According to a recent report by Bloomberg, SHEIN is raising a new round of financing of at least $1 billion, with investors including General Atlantic Capital, Sequoia China, and Tiger Global Fund. Prior to this, according to Tianyancha, SHEIN had completed five rounds of financing with publicly disclosed amounts, and its valuation was only $15 billion when it last raised in August 2020.

The second is scale and growth rate. Based on the research reports and media reports of a number of securities companies, as of 2020, SHEIN has grown by more than 100% for 6 consecutive years, with revenue of about 10 billion US dollars in 2020, and sales in 2021 will double from the previous year. The latest data from Dolphin Club shows that SHEIN’s sales in 2021 will be 100 billion yuan, with a growth rate of 89%.

The third is users and daily activities. PYMNTS’ shopping app ranking shows that in May 2021 and January 2022, SHEIN’s app downloads surpassed Amazon’s twice. According to a LatePost report, in June 2021, SHEIN has more than 120 million registered users and more than 30 million daily active users (DAU).

Li Chengdong, founder of Dolphin Club, analyzed to Kaipineapple Finance that the valuation of 100 billion US dollars represents the capital’s high expectations for SHEIN. From the perspective of the company’s GMV growth rate and growth in the past few years, “the problem is not big” . In addition, he revealed that SHEIN is not short of money and has been in a profitable state.

What is worth exploring is, behind these dazzling data, how did SHEIN become a unicorn in its own way? Where does the $100 billion valuation come from? Will it be replicated and where will it go?

China’s most mysterious unicorn

As the most mysterious unicorn in China, SHEIN has no shortage of competitors. In recent years, the most popular ones to share the cake are the Internet giants that go overseas.

Alibaba, which owns the old cross-border e-commerce platform AliExpress, has invested in the Southeast Asian e-commerce platform Lazada, the Turkish fashion e-commerce platform Trendyol, and Indonesia’s largest e-commerce platform Tokopedia in recent years. Last year, it also launched a cross-border e-commerce business for women’s clothing. Platform Allylikes.

ByteDance, an Internet upstart who owns TikTok, an emerging short video social platform overseas, officially launched TIK TOK Shopping and an independent e-commerce APP Fanno last year. The latter’s positioning is described as “the European version of Pinduoduo”. At the end of last year, ByteDance also launched Dmonstudio, a cross-border independent station for women’s clothing that is considered to be the benchmark for SHEIN.

A number of analysts admitted to Kaipineapple Finance that when dismantling the various links of SHEIN, many of them are not the first, and the threshold is not high. It is not difficult to copy the model of SHEIN.

For example, “quick return for small orders” is actually a common model in China’s apparel industry. “It’s just that SHEIN applied it to the blue ocean market of fast fashion going overseas, which was not much concerned about at that time, and also obtained external financing to polish the supply chain.” Zhang Ke said.

Another example is KOL planting grass. Chen Tao believes that from the graphic content of the original Weibo official account to the short video live broadcast of Xiaohongshu today, it is also a mainstream marketing method in China. “SHEIN learned from the successful experience in China, moved overseas to try it, and received the first wave of overseas dividends.”

Zhang Ke recalled that a few years ago, many clothing merchants wanted to do overseas business through the AliExpress platform, but many people lacked the courage and capital, and never regarded cross-border e-commerce as their main business. “But SHEIN has done this. From the beginning, it has studied the dressing style and habits of overseas users. After the discovery of demand, it returned to the domestic docking supply chain, not to do explosive, not to drill the brand, to do the cost performance.

Today, when SHEIN already has enough scale advantages, and can exchange for high profits and drive suppliers in reverse, it is difficult for latecomers to create another SHEIN.

According to reports from the investment community, Dmonstudio focuses on fast fashion women’s clothing, and the selection of products overlaps with SHEIN; it covers more than 100 countries and regions, and has overseas warehouses around the world; even half of its team is digging from SHEIN. come. However, the wind comes and goes quickly, and in February of this year, Dmonstudio announced that it would cease operations just three months after its launch.

In Chen Tao’s view, many new projects of big Internet companies are meant to be experiments, and such entry or end is normal. “Large factories may start multiple projects at the same time to see which model is more profitable and cost-effective with less investment of resources, and if it fails to meet expectations, it will be cut off.”

Back to SHEIN itself, foreign troubles are not yet close, but there are many internal worries.

The most often criticized is the quality of its products. Although the price has made many consumers take the initiative to lower their expectations, on social platforms at home and abroad, evaluations such as “the quality of clothes is generally not good”, “thin fabric, small size, poor texture” and “frustrating shopping experience” are still not available. few. Followed by, there are also overseas environmentalists accusing SHEIN products of being unfriendly to the environment and a serious waste of resources.

At the same time, SHEIN’s massive fast-fashion items are also constantly encountering infringement disputes due to suspected imitation and plagiarism. According to the report, in June last year, the British martin boots brand Dr. Martens sued SHEIN for plagiarism and using the original photos for publicity, but SHEIN subsequently denied it. In the same month, Kikay, an American jewelry brand, accused SHEIN of copying a certain earring from its product, and the product was later removed from the shelves.

It can be seen that although SHEIN has successfully gone overseas as a brand, if it wants to take root in the global fast fashion field, and even seek to go public in the future, the focus of SHEIN is bound to shift from scale, efficiency and profit to quality, image and corporate responsibility.

Dmonstudio’s folding, to a certain extent, proves that cross-border e-commerce fast fashion business, not so good. shein’s internal worries are also visible, “new players are not completely without opportunities.” Chen Tao believes that because the global apparel market is large enough, SHEIN’s market share is not that high, “new players may be able to focus on a more segmented blank track, playing a differentiated, such as Southeast Asia, the Middle East market, such as men’s clothing, children’s clothing, or women’s clothing in the swimsuit, sports and fitness clothing categories.