About Kassenzone
E-commerce is a topic close to the heart of Etribes managing director Karo Junker de Neui. That's why Kassenzone podcast host Alexander Graf didn't have to ask twice whether she would like to regularly take over the most successful German podcast on e-commerce and digitization for individual episodes. Every week, CEOs from retailers, brands and manufacturers talk about their unique business models and e-commerce strategies. In “Kassenzone with Karo,” Karo would like to take a look at the future in particular and discuss upcoming macro trends and changes under the motto “E-Commerce 2030.”
What is SHEIN's recipe for success?
In the latest episode, Karo Junker de Neui (managing director at Etribes) and Alex Graf (CEO at Spryker) welcome a very special guest: Peter Pernot-Day. He is Head of Strategy at SHEIN and was a guest on the box office zone live podcast during OMR.
SHEIN operates a consumer-to-manufacturer business model, using data analytics to quickly identify fashion trends, design new products based on these trends, and outsource production to a network of small manufacturers and suppliers. This model enables SHEIN to bring thousands of new fashion items to market every day at low cost by shortening design and production cycles, utilizing economies of scale, and maintaining a lean supply chain.
Alex and Karo were very interested to learn more about SHEIN's status quo in the German market, the company's localization strategy, and its brand strategy. They also wanted to know how SHEIN itself feels about the sustainability concerns and potential political regulations that SHEIN is repeatedly confronted with in the German market. Alex and Karo's critical questions as well as their honest interest in the business model led to an open and insightful discussion about SHEIN's price advantages and the associated success of the Chinese online retailer — about which everyone should form their own opinion.
We have summarized Peter's theses about SHEIN's success and his big bets for tomorrow's e-commerce for you:
- “Brick-and-mortar retail has a huge advantage: It is immersive. E-commerce has never been able to replicate that. SHEIN's success lies in its ability to interact with customers and offer personalized curated pieces.”
- “SHEIN's omnichannel strategy consists of a highly functional app and short-term pop-up stores at selected locations with high visibility.”
According to Peter, “The company's success does not lie in unfair advantages such as evaded taxes or unsustainable business processes. The power lies in digital tools with which the company optimizes production and supply chains, aggregates packages for logistics and thus enables extremely high savings for customers. SHEIN does this by minimizing inventory levels, tightening production to actual demand, and using first-party data effectively. In addition, SHEIN saves costs through its exclusive focus on e-commerce and manageable branding activities.”
- “SHEIN's individual dealer system is another major cost advantage. The fashion retailer cooperates with independent manufacturers in China who are connected to a digital merchant management system. Thanks to the network of producers, SHEIN can source textile in large quantities at low cost locally and thus keep material costs low.”
Peter's “big bets” for e-commerce of the future are:
- Image search: In future, the individual photo search will make it easy for users to upload pictures of any desired object to the respective shopping app and receive suggestions with similar looking products.
- Live shopping: SHEIN Live Shopping replicates offline shopping experiences into the online world. Making materials or handling them come alive increases viewers' willingness to buy.
- Generative AI: Retailers such as SHEIN are already using Generative AI to identify new trends and in-demand styles at an early stage and to produce as needed, thus saving costs through smaller inventory.
