Shein’s supply chain is like a river around the city, with all kinds of resources and information flowing around it. This river brings together the creativity and efforts of designers, the technology and sophistication of manufacturers, and the operation and distribution of logistics companies. Each link is closely connected to form an intricate network. Here are the five key points of the shein supply chain river.
1. Strong production and supply base
According to statistics, Guangzhou is one of the production bases of more than 400,000 garment factories in China. Half of Guangzhou’s clothing suppliers are dedicated to shein, and most of them are difficult to cooperate with other fashion companies.
In February 2022, shein announced that it would invest $2.3 billion in the Guangzhou Supply Chain Center to equip it with the latest technology and procedures. In fact, few other companies can match these total investments.
2. Good overall planning system
How does shein manage so many factories with so many styles? The answer is that shein has established its own manufacturing execution system (MES). The system records all raw materials and factory data to facilitate its production life cycle management.
3. Detailed database
shein is very good at collecting and applying consumer behavior data and supply chain data, such as analyzing user browsing behavior, collecting popular style data from social media, etc. And data-oriented, better serve its production decisions.
4. Unique design cooperation model
shein cooperates with more and more designers and social media influencers to develop popular clothing. For example, the shein X incubator project was launched in January 2021. Shein is responsible for production and marketing, and cooperates with creative people and artists from more than 20 countries to provide them with a sales platform. Designers can get a 10% commission and a long-term cooperation contract from sales.
Design is generally a fixed cost for fashion companies, but shein transforms it into a service paid according to the sales commission ratio, which constitutes a completely different cooperation method from other companies in the industry, which is not only conducive to ensuring its own trial and error space, but also further attracting powerful designers.
5. Confident negotiation ability
In China, a global clothing supply chain, shein’s huge scale is closely related to two major advantages, which gives the company strong negotiation ability.
Shein’s success is undoubtedly due to its ability to “overlook” the supply chain and the market, and to use big data for overall planning and work progress of complex links, which has enabled it to gain a firm foothold in the foreign market where many well-known fast fashion brands are “fighting”.
Shein Supply Chain uses Guangzhou as its production base, invests US$2.3 billion to configure the latest technology, uses the MES system to efficiently coordinate production, and uses data analysis to optimize decision-making; cooperates with designers to innovate and attract top talents through a commission cooperation model; huge scale and strong negotiation ability help Shein gain a firm foothold in the international market.