Shein: the world's fastest-growing ecommerce company you have probably never heard of
💡JC's Newsletter #97
Dear friends,
In JC’s Newsletter, I share the articles, documentaries and books that I enjoyed the most in the last week, with some comments on how we relate to them at Alan. I do not endorse all the articles I share, they are up for debate.
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💡Must-read
👉 Shein: The TikTok of Ecommerce (NotBoring)
Shein (pronounced She In) is the fastest-growing ecommerce company in the world. It reportedly did almost $10 billion in revenue in 2020, and has grown over 100% for each of the past eight years.
The real-time retail model that Shein pioneered cuts the time from design to production from three weeks to as little as three days (although typical times are 5-7 days).
➡️ Inspiring growth by rate. How do we keep having the same? Their flywheel is the combination of low price and instant.
Marketing:
It plugs directly into competitors’ websites and Google Trend Finder to understand what’s in-fashion, designs quickly, and links in-app and on-site user behavior to the backend to automatically forecast demand and adjust inventory in real-time, aggressively pushing ads through its paid acquisition and influencer referral machine the whole time.
➡️ Really smart to build a machine that can automate this core part of their work.
Shein was early to TikTok marketing, becoming the most talked about brand on TikTok in 2020.
➡️ How to become early on platforms? How to spot them? What are the next platforms?
Shein has access to Google’s Trend Finder product, which allows for real-time granular tracking of clothing related search terms across various countries. This allowed Shein, for example, to accurately predict the popularity of lace in America during the summer of 2018.
➡️ How to increase our knowledge on the 7% of Health Related queries ?
The key to Shein’s success has been influencers and UGC. This is where Shein’s flywheel looks even more impressive. Because Shein’s prices are so low, users can a ord to buy a ton of items, which they highlight in “hauls” videos, like the one below from YouTube: Shein Haul Summer 2021
The company also leans heavily into KOL, or Key Opinion Leaders, celebrities paid to endorse the company. According to Jing Daily, Katy Perry, Lil Nas X, Rita Ora, Hailey Bieber, and Yara Shahidi have all represented Shein over the past year. TikTok’s biggest star, Addison Rae, also promotes the company across her channels
➡️ Who are the key opinion leaders who should push Alan in your opinion?
Supply chain:
Shein had built a reputation for doing something completely revolutionary and unheard of in China’s apparel industry - they actually paid people on time.
They questioned everything about how a supply chain should work in the internet age from first principles:
What if we gave them lots of training and support, like we would our own employees?
What if we offer the best suppliers loans to help them expand quickly and grow with us?
There was one requirement: everyone had to use Shein’s supply chain management (SCM) software. Factories couldn’t run their own internal software and Shein’s in parallel. Working with Shein meant an initially uncomfortable level of transparency: plug yourself into the mothership and let Shein track everything.
➡️ I love it. It is really smart to think how to better integrate with your supply.
Gamification:
Once you’re in, Shein does a bunch more things to get you hooked:
Generous points system: earn rewards for daily log ins, design games, verifying email, and more. Matthew verified his email, left a few reviews, and already has almost $3 in points.
Incentivised Reviews: Reviews are particularly important in fashion ecommerce as a way to reduce expensive return rates. Star ratings don’t tell you much. Pictures tell you a lot. Guess what Shein incentivises with points—pictures with the user’s size information. This allows shoppers to more accurately judge if something will fit them.
User-Generated Content (UGC): Inspired by Little Red Book and Taobao, Shein encourages UGC. Users can gain followers to their profile and be showcased in the app modelling the clothes they buy, building loyalty to the brand, providing more pictures for other users to judge suitability of items, and creating a content feed that keeps users hooked. Livestream
Events & Retailtainment: Like a mini Alibaba 11.11 event, Shein has #SHEINtogetherfest featuring influencers like Nick Jonas, Mareen Morris, Steve Aoki, and Hailey Beiber.
➡️ Good marketing ideas and gamification.
🏯 Building a company
👉The community building playbook + PLG panel (Socratic Tech Newsletter)
Find your unique ‘common interest’.
Be focused around delivering interactions which are unavailable elsewhere - become the go-to-place for that conversation or content type.
Content type: you can also be unique in the way in which you connect people. Make sure to have an understanding of the native mode of communication for your audience and foster community using that format. Be it chat, voice or video - go to what is native.
Start with a small group of evangelists.
Find true believers: early on, make sure to find early evangelists who embody what you’re looking to seed within your community. As a founder, engage with them, build personal relationships and foster them into the early community. Importantly, make them feel like them being early to the community has outsized value - give them a sense of ownership, status and privilege.
➡️ How can we be more intentional about who our true evangelists are?
Seed the conversation and build positive reinforcement.
At day zero of the community, you as the community builder need to be extremely intentional about the types of behaviours and interactions you foster within the community.
Being very, very hands on bringing in group of people together around some sort of common passion or culture or set of values.
Want people to share their experience? Share your own first.
You should not only be looking to build conversation but also genuine friendships within.
Do things that don’t scale early: Onboard people in cohorts, populate the forum with the first 20 or so people, then layer in more people as the dynamics of the conversation skew positively.
➡️ Good tips on how to kickstart a community
David breaks down the measurement in the ‘SPACES’ acronym which stands for Support, Product, Acquisition, Contribution, Engagement and Success (post here for a full breakdown of relevant metrics by category.
👉'Heavy' versus 'Light' business philosophies in Chinese tech (Substack)
The major shortcoming with 'Heavy' businesses is that they earn much lower margins and returns. The usual playbook is to use 'Heavy' businesses as a loss leader wedge to cut into 'Light' businesses that offer better margins. Meituan does this with O2O ads / traffic generation.
There are companies though that embrace the ‘burden’ of an operationally complex organization. They might still be engineering-focused, but they also realize that customer value depends on controlling the entire ‘end to end experience’. Operational expertise is a source of competitive differentiation and a source of value creation in its own right.
🗞In the news
📱Technology
👉A Prehistory of DAOs (Gnognis Guild)
DAO stands for decentralized autonomous organization.
a DAO could be described then as a capitalized organization in which a software protocol informs its operation, placing automation at its center and humans at its edges.
In 2021, a DAO could be described as a voluntary association with the operating principles of digital cooperativism.
Members of a DAO can have representative ownership of its digital assets through a token, which often simultaneously acts as a governance right.
A Gnosis Safe Multisig, which is a web3 platform for creating multi-signature accounts. Multi-signature accounts allow pseudonymous groups, across jurisdictions, to pool and manage funds within minutes.
Today, with many decentralized finance software protocols guiding their development through DAOs, it's become clear that software protocols can both exit to, and build with community.
👉 The dark horse in the metaverse wars (Platformer)
Niantic announced Lightship, an “ARDK” — augmented reality development kit — designed to help developers build experiences using the same building blocks Niantic uses to build Pokémon.
Lightship offers a way to help developers understand those elements and build custom games and other experiences around them.
Niantic mostly isn’t charging to use Lightship; the exception is if developers want to use its multiplayer features, which let up to five people share the same virtual experience through their phones.
I enjoyed Niantic’s keynote today, and I think anyone even a little interested in AR and the future of gaming would benefit from watching it.
🏥 Healthcare
👉Apple adds walking stability, family and provider health sharing, and more at WWDC 2021 (MobiHealthNews)
In the newest iPhone operating system, Apple is adding real-time assessment of walking stability and fall risk, additional context for lab test results, new tools for tracking health trends for individuals as well as caregivers, and new integrations with major EHR vendors.
The Watch, meanwhile, is adding updated mindfulness and meditation features, new workout types and respiratory rate tracking in the sleep app.
To share data with doctors, Apple will integrate directly with a handful of EHRs. The initial list, which notably omits Epic, includes Cerner, Allscripts, athenahealth, CPSI, Meditech Expanse and Dr. Chrono.
The other feature, health sharing, enables opt-in sharing of health data with other iOS users, such as aging parents or young children. The shared user can see trends or get notifications so they can check in with loved ones whose vitals change in a concerning way.
➡️ As users, would you be interested in us integrating more with Apple?
👉Amazon is trying to persuade Aetna and other health plans to cover its medical-care service, but it stumbled out of the gate (Business Insider)
Amazon Care works through a mobile app, allowing people to see a care team through video chats, text messaging, and sometimes in person, including at home.
Amazon Care is approaching health plans now partly because it was asked to do so by the companies it's working with, including Amazon, its biggest client, one of the people said.
Now, companies typically pay a monthly fee for each employee to have access to Amazon Care. They also pay fees when workers use the service. Currently, Amazon Care charges patients a copay, and pharmacies or labs it works with may bill insurance separately.
It's typical for a company to get paid per-member, per-month fees by employers to offer their services to workers, outside of an arrangement with a health plan, Michael Yang, a managing partner at Omers Ventures, told Insider.
➡️ It is why I really believe in our “one stop shop” approach, where as the insurance company, we will be the entry point for every health & well-being services for employers and members.