We’re talking about Chinese companies this week. Mainly…Shein. As a couple of 30 year-olds, we hadn’t heard about this company until a year ago. Now, we can’t even frame a question around the magic of distribution without thinking about Shein.

There’s a TLDR Version at the top. Also, we highlighted additional nuances below.

P.S - Thank you for the “new kid” congratulation messages. Ahmed now thinks he did all the work.

TL;DR: The fast rise of Shein underscores the power of distribution as a winning strategy. While American brands excel in storytelling, Chinese companies like SHEIN have mastered the art of distribution, delivering on the promise of fast fashion and instant gratification in an increasingly crowded digital marketplace.

The Rise of SHEIN and TikTok: Distribution as a Winning Strategy in Fast Fashion

Distribution as a Winning Strategy

A few years ago, a conversation emerged about China, the world's largest economy, and its struggle to establish successful brands in the US market. This discussion centered around Alibaba and its inability to capture a substantial market share with American retail customers. While American products excel in storytelling, Chinese companies have leveraged distribution as their superpower. This isn't surprising, considering China's role as the world's foremost trading partner. China's primary international economic activity involves taking requirements from big companies, making those requirements into things, and then moving those things across continents.

The conversation has shifted significantly with the rise of TikTok and Shein. This week, we're focusing on SHEIN and its impressive market penetration in the US.

The Power of Distribution

China's strength lies in its manufacturing capabilities and understanding of distribution, rather than brand building. SHEIN and TikTok exemplify this approach. TikTok, for instance, doesn't stand out for community building; it capitalizes on the groundwork laid by Instagram, delivering catchier content at an unprecedented pace.

In the realm of social media, every brand has gravitated towards one channel: social media itself. Within this channel, it makes sense to identify the hottest trends and deliver them as quickly as the shifting focus of a social media user's attention span.

SHEIN's Success in the US Market

SHEIN has revolutionized the apparel business in the US by fulfilling a promise that other apparel retailers have struggled to deliver. By leveraging an extensive supply chain, SHEIN has captured nearly 40% of the fast fashion market share in just a few years. The company utilizes a vast network of suppliers and employs technology to gauge demand for specific pieces, placing orders to produce and market these items almost instantaneously.

SHEIN operates as a dropshipping business on steroids, and its main goal is catering to the whims of the most compulsive shoppers and delivering on the promise of instant gratification.

Its core product isn't scarcity, quality, or the traits of a luxury lifestyle; rather, Shein’s main offering is speed. The company builds on the work of every apparel brand that has established a customer base, aesthetic, and narrative.

If we could sum up Shein’s entire strategy, it’s this:

Let the other guys do the work, let’s get the dupes out cheaper and faster.

Why Now?

The timing of SHEIN's success is no coincidence. Ever since brand building and company storytelling shifted primarily to social media, the field has become crowded within a single channel. Companies like SHEIN have made it about curation and speed, capitalizing on the crowded landscape to offer quick and curated fashion choices that resonate with today's consumers.

Have a great week!

Ahmed and Peter