Picture source @Visual China
"Companies that do business with 7 billion people are the next generation of Chinese companies." A former P11 of Alibaba said with emotion.
According to his observation of China’s Internet, in recent years, more and more Chinese companies have gained the confidence to go abroad. At the same time, domestic competition is becoming increasingly fierce, and many people choose to go global, switching from serving the 1.4 billion people in China to serving the 7.8 billion people around the world.
For example, SHEIN (Chinese name abbreviation: Xiyin ) is a typical example of Chinese companies "going global" in recent years. As a cross-border fast fashion e-commerce company, its popularity in foreign markets is comparable to that of domestic Taobao.
Andy, who studied finance in the UK, has become accustomed to swiping SHEIN in his free time. This is consistent with the experience of many Xiaohongshu bloggers on SHEIN. Since the price is not expensive, Andy does not have that high expectation for shopping on SHEIN. If you purchase multiple pieces of clothing or accessories at one time, return them if they are not suitable. "There is a return QR code sent with the clothes. If I need to return the goods, I can just scan the code. I don't need to use a printer to print a return information sheet like other platforms." Andy said.
Backed by China’s powerful supply chain system, China’s cross-border online fast fashion brand SHEIN has captured a large number of global consumers like Andy. After building momentum for more than ten years, it has rapidly expanded overseas markets and its current valuation has reached US$100 billion.
In fact, SHEIN is just a microcosm of the development of China's cross-border e-commerce. As a new foreign trade format, with the industry gradually establishing a cross-border e-commerce highway, China's new foreign trade era has begun.
grows "quick returns for small orders" The success of
SHEIN has been clearly labeled - "strong supply chain, quick returns for small orders". Following this trend, many cross-border e-commerce brands in China also want to copy SHEIN's success.
What is "Quick Return for Small Orders"? In the cross-border supply chain, this word has become almost a god.
In the traditional garment supply chain, seasonal bulk procurement can minimize costs. But "quick returns for small orders" has refreshed our understanding - to catch up with the fast fashion trend, one-time large-scale purchases are already a thing of the past era.
Uniqlo and ZARA were both founded in the 1960s and 1970s. The former originated in Japan and the latter originated in Spain. Their purchasing model actually represents the early days of fast fashion.
Takahiro Saito conducted a detailed analysis of the business models and supply chains of Uniqlo and ZARA in the book "UNIQLO VS ZARA". He classified the business models of Uniqlo and ZARA as SPA (Speciality retailer of Private label Apparel, private label clothing professional retailer ), that is, the clothing company plans and produces its own products, and operates its own stores and sales integration. Business model. This model fully utilizes vertical integration of manufacturing and sales. Under this model, clothing companies can plan products while predicting changes in consumer demand, and integrate the entire supply chain (from raw material procurement to delivery of goods to customers) that previously involved many companies, thereby controlling Supply and sale of goods.
SHEIN, which was born in the first decade of the 21st century, actually belongs to the SPA model, but it does not have offline stores and uses entirely online channels for sales. However, compared to SPA, SHEIN is still willing to sell this full chain online. The product model is called DTC (Direct to Consumer), which means facing consumers directly.
Therefore, in terms of specific commercialization strategies, SHEIN is fundamentally different from Uniqlo and ZARA, and this difference is also evident in the supply chain. Although all three companies have strong control over the supply chain, some designate a limited number of suppliers to facilitate management, such as Uniqlo; while others use multiple types of suppliers to supply, and SHEIN refers to "multi-supplier supply". "Extended to the extreme.
Uniqlo's "centralized" production is relatively obvious. Since it follows the basic style route, Uniqlo will usually start planning clothing styles one year in advance. In actual production, Uniqlo will limit the scope of products, thereby increasing the production of each product. In addition, by reducing the number of foundries and increasing the orders of each foundry, we can gain bargaining power .In the final product ordering stage, UNIQLO will re-evaluate market demand based on weekly sales to decide to add or stop production. That is, while spending a year making plans, UNIQLO will adjust the production and sales of products every week.
ZARA adopts a small-volume production strategy. It entrusts basic products such as sweaters and short-sleeves, which are determined by price and quality, to Asian factories for outsourcing. Others are produced by factories in Spain, Portugal and other countries to achieve a variety of small-volume and fast . That is, we will first produce a small amount of goods for display on store shelves, and then decide whether to add additional production based on customer feedback. ZARA's initial product proposal and raw material preparation took 2 months, but because of independent design and production, each additional production only takes an average of 3 weeks, so there is a turnover of 3 times a season.
However, SHEIN's clothing orders are basically scattered among hundreds of Chinese suppliers. Most of them are concentrated in small and medium-sized manufacturing factories in Panyu, Guangzhou. SHEIN's orders for these suppliers may only be hundreds to hundreds of pieces at a time. , when selecting suppliers, SHEIN will also require suppliers to be able to accept small orders of 100-500 pieces, that is, new models will be launched in small batches for testing first, and based on market feedback, small batch orders will be added multiple times. It is also known as "Quick Return for Small Orders" which is already well-known in the field of clothing supply chain.
Table 1 Source @Titanium Media App Tabulation
In order to avoid warehouse outages and out-of-stock situations caused by multiple shipments, SHEIN later launched the JIT (Just In Time, just-in-time) delivery model. As shown in Table 1, when a new product is launched, SHEIN operations will first place an order for 300 pieces to the supplier based on the new product situation. However, these 300 pieces will not be required to be issued by the supplier at once, but according to 10+7/15+7/ The logic of 18+7 triggers delivery multiple times, and the triggering condition is weekly sales ≥ 30 pieces.
It is understood that the number of Chinese suppliers that SHEIN can reach is more than 1,000. It disclosed this data when summarizing the 2021 Q1 Supplier Conference. At the same time, public data also shows that there are about 300-400 core suppliers around SHEIN's factory in Panyu, Guangzhou.
If calculated based on 3,000 new products per day and 300 orders for each type of new product, SHEIN’s new order volume per day will reach 90,000 pieces. Without taking other factors into account, SHEIN will generate nearly 2.7 million new orders per month, and a company The total production capacity of small and medium-sized factories may be 300,000-400,000.
A SHEIN supplier said that when 's product has good sales and may become a hit, sometimes the first batch of goods has not been finished yet, and the next batch of goods has been ordered. Although this kind of flexible fragmented order will increase the supplier's production cost, the advantage is that SHEIN returns money quickly, and new suppliers can settle monthly payments. As the supplier level increases, the payment cycle can be realized as quickly as possible. This is also One of the reasons why suppliers are willing to cooperate with SHEIN.
Picture source @intercepted from the SHEIN investment official public account
In addition to the OEM (buyer sends pictures, looks at the pictures and makes a version), ODM (independent development and design) cooperation model, SHEIN also supports the OBM model, that is, the supplier has its own brand and trademark. This is also a clear difference from Uniqlo and ZARA. Currently known third-party companies include unifee, jazzevar, genanx and other brands that also have stores on Taobao. There are more and more brand partners, which may be an important reason why SHEIN has gradually grown from 200+ daily sales, to 2000+ daily sales, and now to 5000+ daily sales.
digital base
The cross-border transportation of a piece of clothing will involve two core chains, the back-end supply chain and the front-end supply chain.
The former refers to the process of clothing from design to pattern making and processing into garments, while the latter refers to the link through which garments are delivered to consumers after they leave the factory. In traditional situations, front-end links and back-end links are not interoperable, or cannot collaborate in real time. However, it can be seen in the SHEIN model that SHEIN's supply chain system is relatively smooth in the collaboration of front-end and back-end links. The opening up of
's front-end and back-end supply chains is closely related to the digital capabilities of SHEIN's supply chain.
Titanium Media App learned through third-party inquiries that among SHEIN’s many affiliated companies, Nanjing Xiyin E-Commerce Co., Ltd., Shenzhen Kushang Information Technology Co., Ltd., Guangzhou Xiyin Supply Chain Management Co., Ltd., Guangzhou Xiyin International The four companies of Export Co., Ltd. largely assume the role of SHEIN's "CTO". These four companies own a total of 88 software patents/copyrights. SHEIN's App, supply chain management system , online shopping intelligent recommendations, fashion trend analysis systems, warehousing picking systems, data mining, fabric management, clothing visualization, intelligent marketing and other core systems mostly come from these four companies.
Table 2 Source @TiMediaApp The application of tabulation
technology can greatly affect the downward movement of SHEIN.
Take the second patent "Method, device, equipment and storage medium for determining hyperparameters of deep learning model" as an example. Its function is to retrieve and sort products according to consumer conditions in different regions. This means that SHEIN hopes that when users from all over the world log in to its only independent website and app in the world, it can make personalized recommendations based on the user's preferences based on the region where they are located. This is actually a more technically demanding “centralized” strategy.
Titanium Media App once compared the localization strategies of Southeast Asian e-commerce Lazada and Shopee in the article "Don't ignore Lazada, technology is becoming a key factor in reconstructing Southeast Asian e-commerce." Lazada's strategy is to invest a lot of technology research and development to use a unified set of algorithms and a common entrance to deal with the diverse markets in Southeast Asia. And Shopee's strategy is to provide each market with its own e-commerce application. They respond to the customized needs of different Southeast Asian countries by laying out localization teams in each country. . SHEIN has the same idea as Lazada, but the users it faces are global users. The difference is that Lazada is engaged in all-electric products, but SHEIN is only in fast fashion.
SHEIN was born in the era of rapid development of the global Internet. Because the underlying system has a certain foundation in data precipitation and mining, SHEIN also has certain advantages in social advertising. Regarding Uniqlo and ZARA, the former attracts customers through advertising (offline, etc.), while the latter invests in stores and relies on store displays to attract traffic.
and SHEIN? Public information shows that SHEIN acquires customers by placing ads and coupons on social platforms such as , Facebook, , and Twitter, and then attracts traffic to the SHEIN App. They will also mail the products to Internet celebrity bloggers for free and try them on on social media. Platform sharing and display. The supplier information currently available on
SHEIN indeed proves that SHEIN is indeed purchasing social platform traffic services. TMTpost’s inquiries through third-party channels revealed that a company named “ Yidiantianxia Network Technology Co., Ltd.” appeared in the supplier list of SHEIN’s parent company ZORTOP BUSINESS CO., LIMITED, which is registered in Hong Kong. Company ", Zhuotian Business purchased the company's services in April 2022, with a purchase amount of 59.4173 million yuan. Further inquiries about the main business of Yidiantianxia is to provide multinational companies with Google, Facebook, TikTok For Business Services on other traffic resources.
In addition to leading the trend of Internet celebrities and finding unique ways to acquire customers, SHEIN is also very "exaggerated" in the speed of capturing fast fashion - Uniqlo's prediction of fashion trends will generally start a year ago, and ZARA's product proposals and preparations are Two months, and SHEIN's capture of fashion actually relies on crawling real-time fashion elements from the entire network. After the order is made, SHEIN only uses for two weeks from design to ready-made clothing. Since it does not need to be sent to offline stores, SHEIN is responsible for sending it to offline stores. The goods are centrally transported to overseas independent warehouses and will be shipped nearby when customers place orders.
Through further understanding of SHEIN, Titanium Media App also discovered that the above-mentioned large and small systems only operate at the bottom level, truly connecting consumers in the front-end supply chain with hundreds of suppliers in the back-end supply chain. What is connected together is an inventory management system called GMP (Chinese name: Give me the goods) . Around 2019, SHEIN launched the mobile version of the GMP inventory management system.This allows SHEIN's suppliers to receive various notifications from SHEIN through the WeChat public account, including orders to be confirmed, printing in progress, product information to be confirmed, and order replenishment.
Picture source @SHEIN official public picture
Picture source @SHEIN official public picture
This is why in SHEIN's various investment details, the ability to use the system and have the ability to learn and respond quickly has become a matter that must be emphasized. When market conditions, payment measurement data, consumer orders and other front-end supply chain links can be transmitted back in real time through the underlying system and front-end applications, this allows SHEIN's small order quick return operation logic to run smoothly. The
digital system connects SHEIN's cross-border e-commerce supply chain together.
Supply chain scaling
After digitization, there is scale.
mentioned above that fast payment is one of the reasons why most suppliers choose to cooperate with SHEIN, but this is not the most fundamental reason, and even digitalization is not the fundamental reason. What drives the high-speed operation of digital machines from the source is actually the scale of supply chain management.
's investment conditions that make SHEIN proud are the five "nos": no deposit, no settlement fee, no promotion fee, no sales commission, and no international logistics fee. All the supplier has to do is to "stablely deliver to " after SHEIN issues the production order.
This also means that when orders are completed on time and the goods are shipped to the domestic central warehouse designated by SHEIN, merchants can basically rest flat on the chain going forward. Whether the price of international logistics has increased, how to deliver the last mile of destination logistics, what to do if consumers return goods, whether there is enough product diversion, etc. A series of problems that may arise, SHEIN will handle in a "big boss" way.
This is a completely different global supply idea from Amazon .
Amazon e-commerce has been developing for more than 20 years. Foreign traders who want to sell Chinese goods to the world have studied "how to run an Amazon store" into many monographs. In his book "Cross-border E-commerce Platform and Amazon", Mr. Shi Xianhe sorted out six major categories of costs that may be involved in opening an Amazon store: procurement costs, China transportation costs, first-leg costs, Amazon FBA warehouse costs, commodity Commissions, promotion fees, etc.
But from a logistics perspective, before consumers place an order, Amazon store operators need to predict sales and ship the goods to Amazon FBA warehouses or overseas self-built warehouses in advance. After customers place orders, they will be shipped to the nearest consumer. During this period, the store owner needs to plan the domestic logistics, first-mile, and last-mile delivery issues by himself, and bear the actual transportation costs and possible risk costs.
Table 3 Source @Titanium Media App Tabulation
There are also many ways to know the first-leg cost, such as what kind of goods should be transported by sea, what kind of goods should be transported by air, what kind of goods can use China-Europe freight trains, etc., and if The store is in the early stages of business and has a small volume of shipments. How to make good use of LCL and so on. Shi Xianhe mentioned this in his book. He said: "Among Amazon's operating costs, procurement costs must be controlled at 10%. First-leg logistics costs account for a large proportion, and some even account for more than half of product procurement costs. Therefore, In the case of insufficient financial strength, novice sellers should try to choose products with smaller weights. "
Logistics alone are not enough. The operation of Amazon stores also stumps many cross-border people: how to do promotion, how much promotion fee is appropriate, According to Amazon rules, what kind of store ranks higher, and what kind of behavior is easy to be banned? "In fact, after deducting product costs, logistics costs, etc., products with a profit margin of more than 50% will have more room for price expansion in later promotions."
But if the SHEIN model is followed, the supplier/brand only You only need to bear the cost of the product and the cost of goods from the factory to the SHEIN central warehouse.
However, although it does not cover the domestic logistics of suppliers, SHEIN also provides two end-to-end domestic logistics methods for suppliers. The first method is that the supplier can choose to send the goods to the designated location nearby, and the cooperative logistics will deliver the goods to the SHEIN central warehouse after picking up the goods; the second method is that the supplier sends the goods to the SHEIN central warehouse independently.And since SHEIN requires the location of core suppliers to be concentrated near SHEIN, Panyu, Guangzhou, this also makes the majority of the supplier's cost actually only the upfront cost of product production.
Table 4 Source @TiMediaApp compiled based on public information
At the same time, because SHEIN controls the goods of hundreds of suppliers, it has the "privilege" of shipping large-scale goods to the world, and it will also gain more in logistics negotiations. Negotiation space.
In other words, SHEIN has created a cost difference in the cross-border e-commerce supply chain through large-scale transportation and intensive management of logistics costs, which originally accounted for the largest cost under the Amazon model. The scale of
is not only effective in the logistics link. SHEIN and its suppliers are also beneficiaries in the most important link of cross-border e-commerce traffic acquisition.
Looking back on the development of the foreign trade industry in the past, Li Wenbo, who has nearly 20 years of B2B foreign trade experience, concluded: "To put it bluntly, whether we are the first to do foreign trade or cross-border e-commerce, everyone is still in the same circle and has the same logic. To put it simply, it is , through the platform, or through search engine optimization, advertising, etc., gain traffic advantages to increase sales, then establish a supply chain, and then optimize the supply chain, maximize price and logistics, and ultimately achieve breakthrough growth in scale. "
But the problem with clothing in the traditional foreign trade model is that the cost of purchasing overseas traffic, that is, the cost of product promotion, is very expensive. If the traffic is invested to achieve diversion, but there is no repurchase, in fact, the foreign trade merchant will not make money. It may even enter the cycle of "the bigger you do, the more you lose". "But if there are repurchases, foreign traders will dare to buy traffic, because consumers start to repurchase, which means they start to make money."
replica SHEIN?
According to data provided by SHEIN, SHEIN's sales have continued to grow at a rate of 100% in the past six years (2015-2020). Currently, its business has covered more than 230 countries and regions in Europe, the United States, the Middle East, and Southeast Asia.
Since 2020, affected by the new crown epidemic, the cross-border business of many companies has been more or less challenged, but SHEIN said in a question and answer to suppliers that both sales and logistics have been operating stably, more than once Call on suppliers to stock up with confidence. Especially when all kinds of international flights are cancelled, SHEIN relies on its strong supply chain system and can choose charter flights for delivery.
It is precisely because of the resilience of the supply chain that even in the current situation of frequent global epidemics, SHEIN's order volume has continued to grow in the past three months.
But as mentioned above, in the field of online fast fashion, SHEIN has accumulated more than ten years of experience, and its advantages of scale have gradually become apparent. Without differentiated breakthroughs, it will be difficult for new online fast fashion brands to surpass SHEIN in the world. position in online fast fashion.
In May last year, Kantar and Google released the BrandZ™ list of China's top 50 global brands. SHEIN's brand power in developed markets grew first, and ranked among the 2021 Kantar BrandZ™ list of China's top 50 global brands. No. 11, one position higher than last year’s ranking. ZAFUL, another online fast fashion brand from China that is also on the top 50 list, may be at a disadvantage in terms of supply chain resilience. Its ranking in 2021 has dropped moderately from 2020, falling from 38th to 43rd. name.
The future development of China's foreign trade requires more than one SHEIN. In cross-border supply chain management, are there any general methodologies that non-leading cross-border e-commerce brands like ZAFUL can apply to? "Can copy the next SHEIN?" is a problem that China's cross-border supply chain needs to face together.
In this regard, TMTpost held discussions with many industry experts and practitioners.
Zhu Zibin (Ben), a Chinese export trade expert with nearly 20 years of experience in foreign trade, believes that the model of SHEIN is not completely universal for .
Zhu Zibin once had the experience of starting a chocolate brand. “Our chocolate was produced in Europe at that time, and then we put the Hong Kong brand on it. However, some chocolate manufacturers in Europe didn’t actually want their products to be labeled with other people’s brands, so we first There are many difficulties in supplier cooperation, and they may not necessarily accept the OEM cooperation model.”
The difference between Zhu Zibin’s chocolate foreign trade business and SHEIN is that SHEIN relies on China’s most complete supply chain system in the world, and its suppliers are relatively diversified. Whether it is OEM or ODM, you can find suitable suppliers. , but most chocolate suppliers in Europe may not be happy to make the same choice as Chinese suppliers.
Another case comes from Tutu Smart Jewelry (TOTWOO), a global smart jewelry founded by Wang Jieming overseas. Brand, compared with the traditional jewelry or fast fashion jewelry supply chain, the smart jewelry supply chain is obviously not that simple.
Wang Jieming, founder and CEO of Tutu Smart Jewelry, said that after years of observation, the moat of the jewelry industry is not actually designed. , but lies in product innovation and mental shaping based on a unique supply chain. For example, Debeers, which successfully defines diamond rings as a must-have for weddings, and PANDORA, which defines every bead as an unforgettable moment in life, are both original. The three major characteristics of supply chain, original products and original marketing.
Tutu jewelry is unique in that it not only creates the flash vibration of jewelry to reflect the emotional interaction between two people who are uniquely connected, but also uses APP to build it. It creates an exclusive love space for two people. What it sells is still the "love" that jewelry has carried for thousands of years, but the way of expression has long gone beyond the "love" expressed only by appearance design and material. It is because Tutu has added these "smart" elements to the jewelry that the supply chain of Tutu smart jewelry will undergo a big change compared with traditional jewelry.
The most prominent thing is that because it needs to be equipped with smart cores, it needs to be equipped with smart cores. To solve charging problems, flash problems, waterproof problems, touch interaction problems, signal problems, etc., what kind of materials and processes can solve these problems and still produce enough energy for shipment? Tutu Smart Jewelry is working on materials and foundries. The biggest challenge faced when choosing.
The specificity of the supply chain of brands such as Tutu Smart Jewelry is that , as an innovative brand, does not have a ready-made supply chain.
Let’s not mention it. The supply chain of the ultra-small smart chip part is complicated enough. As for the jewelry part, although China’s jewelry supply chain is very strong, especially in the Pearl River Delta region, gold from Shenzhen, silver jewelry from Guangzhou, stainless steel from Dongguan , etc. They are all processing factories for many international brands. But for smart jewelry, even if you provide smart cores to others, no factory can independently produce smart jewelry.
"We need to purchase some core materials ourselves and then provide them. to the factory. In order to achieve mass production while maintaining the unique craftsmanship of jewelry, we will often discuss the structure with the factory, and even help the factory to secure upstream manufacturers. "Wang Jieming said. Therefore, from this point of view alone, Tutu smart jewelry cannot directly require suppliers to have one-stop supply such as factories, design and pattern making, and garment experience like SHEIN. "For these reasons, we started to suffer. Later, we simply built our own assembly line to flexibly integrate parts from various factories. Currently, the only smart jewelry supply chain in the world that can truly achieve flexible mass production is Tutu. This has also become one of our core competitiveness," Wang Jieming said.
However, in the longer term, Wang Jieming is still confused whether the jewelry supply chain can digitize its entire supply chain like SHEIN. "Like Some small satellite-like factories in Panyu do not have very large areas and unified management as we have seen in some videos. Their small scale means that their digitization itself is difficult. " The reason why SHEIN is able to enable hundreds of small and medium-sized suppliers to digitize is because SHEIN itself can support it for a long time in terms of capital investment and technology research and development, and at the same time because SHEIN can indeed Only by helping suppliers to sell goods can we reverse guide or force the digitization of the upstream and downstream supply chains.
Like SHEIN, each industry has different difficulties in obtaining large-scale benefits from the digital supply chain. These may be seen now. A chasm that remains unbridgeable.
But in addition, Zhu Zibin also talked about another question: How long can the SHEIN model last?
According to his observation, China is actually slowly losing its early absolute advantage in the global textile industry. Due to lower labor costs, the textile industry in Southeast Asia like India and Cambodia is also rising. "The shortage of workers will really hit China's manufacturing industry," Zhu Zibin said.
The case of one of Li Wenbo’s friends in the headphone manufacturing industry also confirms the impact of the lack of workers on his headphone factory. According to its description, the headphone manufacturing factory has undergone three moves and is currently considering a fourth move. At first, he set up the factory in Shenzhen city, then moved it to the suburbs of Shenzhen, and finally moved to Jiangxi. Now it seems that Jiangxi is also experiencing some problems. "Labor costs are increasing rapidly. He actually hopes to have some automated equipment that can automate one-third or one-half of the processes and then reduce costs. If this road fails, his factory may be relocated. To Southeast Asia." Li Wenbo said.
In fact, looking back, SHEIN's success can actually be regarded as a representative breakthrough of China's clothing supply chain. If China has lost its absolute advantage in the textile industry, then why is there still a fast fashion brand like SHEIN with clothing as its core?
The question mentioned by David, the head of global supply chain of a large multinational company, when communicating with TMTpost Media App is exactly the answer to this question. David said that considering only labor costs, China is indeed higher than some regions, such as Southeast Asia. However, if manufacturing costs can be reduced through lean production of , automation, and digitization, the overall cost competitiveness can always maintain an advantage or balance.
Mourad TAMOUD, Executive Vice President and Chief Supply Chain Officer of Schneider Electric Global Supply Chain, once communicated with TMTpost in the second half of 2021 that the advantages of the Chinese market lie in its strong industrial foundation, abundant human resources, and rapid technological development. Combining these Favorable factors, Schneider Electric will maintain the overall competitiveness of the supply chain through lean production, automation, digitalization and other methods.
Mourad Tamoud introduced that Schneider Electric adheres to the "STRIVE strategy" in supply chain management, which is sustainable, trustworthy, resilient, intelligent, fast and efficient. At the same time, in order to avoid the possible risks of a single supply and to deal with the possibility of problems in the regional supply chain, Schneider Electric will make backups in other regions. They have about 200 factories around the world, and most products are supplied in at least two regions. Produced in multiple factories to ensure complementarity in the supply chain. With many active measures to improve the supply chain, Schneider Electric ranked second in the world in Gartner's "Top 25 Global Supply Chain List" in 2022.
In other words, although there is a long way to go to reconstruct the supply chain system in a digital, large-scale, and intensive way, it is indeed effective. The various costs reduced by supply chain restructuring may offset the increase in labor costs to some extent. Only in this way can companies with global operations like Schneider Electric and SHEIN maintain their supply chain in an era of frequent uncertainties. toughness.
So even in terms of operational details, SHEIN is difficult to copy, but the SHEIN model of integrating the supply chain through digitalization, scale, etc. is worthy of reference by foreign trade people in other industries. There may be only one such successful case of
from independent station, cross-border logistics to overseas warehouse
SHEIN model, but China's supply chain has many possibilities. The dividends of large-scale supply chain are flowing to all walks of life and fields, it is just a matter of time and market speed.
Currently, there are already many service providers starting from all aspects of the supply chain (refer to Table 3), trying to use technology as the basis to speed up the process of supply chain scale. Among them, the three most critical links are independent station, cross-border logistics and overseas warehouse .
Let’s talk about independent stations first.
Whether it is SHEIN or the aforementioned Tutu Jewelry, they have established independent websites and are already operating them skillfully.Wang Jieming told TMTpost App that Tutu started to set up an independent website last year and has achieved very rapid development. It only took three weeks to enter the top ten of the US bracelet best-selling list on Google Shopping Mall.
One-stop cross-border e-commerce independent website building SaaS service provider Youzan AllValue business leader Zhou Kai also said when communicating with TMTpost Media App that Youzan will start to establish the international brand AllValue in 2020. According to AllValue in the past two years, From the observation of the market, whether to build an independent website has always been a matter of choice for merchants, not a mandatory option. Merchants can still complete business transactions through third-party channels such as Amazon.com without building an independent website. However, in recent years, it is increasingly possible for independent websites to be adopted as one of the traffic channels for merchants.
"One is the technical reason. As the industry's digital capabilities mature, the threshold for building a website has become lower, and due to the maturity of tools, the operation and traffic diversion of independent stations have become easier; the other reason is due to the need to increase revenue and reduce expenditure, DTC marketing It has become a new trend in cross-border e-commerce. Building websites, building self-operated channels, and operating private domains are all the main means of DTC marketing," Zhou Kai analyzed.
But just providing independent websites with transaction functions for overseas brands is not enough. "Because many Chinese sellers have been blocked on Amazon, many people simply understand the brand going global as building an independent website, but in fact it is a very complex system, and building a brand requires patience and overcoming many difficulties." Wang Jieming said frankly.
This is because, in terms of operation model, unlike the mini-program stores established by Chinese merchants on WeChat and Douyin, overseas independent station does not rely on any traffic channel or social platform. It is a natural brand directly facing consumers. Self-operated channels need to use marketing channels such as social platforms to guide traffic to independent stations.
This is the difference between DTC’s overseas independent stations and China’s e-commerce ecology. Considering the entire chain of product buying and selling, an independent website is just a window for merchants to display their products. The product actually needs the support of other tools from promotion and traffic, to ordering, shipping out of the warehouse, to the product being searched by users. Therefore, with independent websites as the core, many solution service providers in China that serve cross-border e-commerce overseas will provide a variety of services such as transaction management, product management, member management, promotional tools, marketing tools, and operational tools in a package. However, these services are There are many possibilities from various partners.
"When a Chinese product is sent from China to North America, a stable promised timeliness can often give consumers a better experience. At this time, merchants can choose logistics and warehousing service providers through AllValue's partner system." Zhou Kai Give an example.
Among them, Cainiao Logistics may become one of the target partners of cross-border independent station service providers such as Youzan AllValue. According to information provided by Cainiao Logistics to TMTpost Media App, Cainiao Logistics began to launch cross-border logistics solutions in 2014. It has now been deployed in eHubs, overseas warehouses, distribution centers, and terminals in Europe, the Americas, Southeast Asia, and Russia. Implemented in logistics scenarios such as distribution networks.
Cainiao Logistics has nine major distribution centers around the world. Taking Europe as an example, Cainiao’s national distribution center in Italy has completed digital transformation in March 2022. Compared with local logistics distribution centers in Europe, Cainiao’s distribution center The outstanding advantage of the center is the adoption of a self-developed overseas distribution system (GXMS). The core product function "flow engine" labels the complex attributes of global cross-border parcel business, which can greatly improve the sorting efficiency of Cainiao European Distribution Center. More than double. Data shows that, combined with the construction of Cainiao's full cross-border logistics link and trunk lines, the logistics timeliness of parcels for China's cross-border merchants has been shortened from the previous 40-50 days to the fastest 12 days for delivery to overseas consumers.
After the cross-border goods arrive at the overseas destination, they will be handed over to the corresponding overseas warehouse for warehousing and sorting. The subsequent links will involve companies such as Wanyitong that provide overseas warehousing services. It is understood that Wanyitong has eight self-operated overseas warehouses in the United States, Europe, Australia and other places. Luo Jiali, director of Hairou’s innovative cross-border e-commerce division, revealed to TMTpost App that with the advancement of digitalization, Wanyitong is also Use logistics automation robots to enhance the efficiency of overseas warehouse warehousing operations.
Luo Jiali analyzed that for overseas warehouses, manpower issues are one of the key pain points. “In addition to high labor costs, the cultural quality of warehouse managers also varies. Automation methods need to be used to reduce missed shipments and shipments as much as possible. Frequency of wrong goods. "At the same time, in terms of warehouse turnover, because inventory turnover efficiency is relatively high and there are many SKUs, overseas warehouses need to use automation to increase storage density. As the first overseas warehouse customer of Hairou Innovation, after applying the ACR (box storage robot) system, Wanyitong's UK warehouse has achieved a 2-fold increase in storage density, a 3-4 times increase in picking efficiency, and a daily processing capacity of 50,000 pieces.
In the tide of China's cross-border e-commerce development, the participation of many cross-border supply chain-related service providers is expected to open up a global highway for Chinese cross-border e-commerce brands.
According to the latest data released by the General Administration of Customs of China, in the first quarter of 2022, the number of foreign trade companies in China with import and export performance was 432,000, a year-on-year increase of 5.7%. China's total exports of goods in 2021 were 21.73 trillion yuan, an increase of 21.2%. Among them, analysis data from the General Administration of Customs shows that China's cross-border e-commerce exports in 2021 will be approximately 1.4 trillion yuan, an increase of 28.3%, accounting for 6.4% of total exports, and the proportion expanded by 0.4 percentage points. The
series of data and market trends prove that cross-border e-commerce has become a new foreign trade format with great potential for future growth.
The supply chain system that matches this new business format is breaking through the shackles of the original supply chain and taking on new life through digitalization and scale. (At the request of the interviewee, Andy, David, and Li Wenbo are all pseudonyms in the article.)
(This article was first published on Titanium Media APP. Author｜Qin Conghui, editor｜Gai Hongda)
