Source: Nspriement 'Influencing' Fashion The business model is based on predicting fast fashion trends in real time, vertically integrated manufacturing, viral marketing through social media influencers and a logistics network that bypasses container ships and trucks. Shein is fast fashion in the digital era. The company uses algorithms that track browsing activity on TikTok, Instagram, Google and other digital platforms. This information is turned into a limited production of on-trend clothing in about three days. Items are then marketed online and by thousands of commission-based social media influencers. Customers get their dresses, blouses and earrings five to seven days later the mail. Tapping into the burgeoning influencer community to market its goods has been pure genius. And the company borrowed from TikTok's experience by spending lavishly on digital ads to reach and remain top of mind with fickle twentysomething customers. General Atlantic, Tiger Global and Sequoia are among the big name venture capital firms that lined up for a piece of Shein, according to the report at Bloomberg. That kind of backing indicates an emerging and successful trend in retail. The $100 billion valuation ranks Shein as the third most valuable private company in the world, behind only ByteDance—the parent company of TikTok—and SpaceX, Elon Musk's rocket company. The venture capital firms understand that Shein has hacked retail with data science and social media. It's a powerful competitive advantage that will be difficult to replicate. And one major company that looks ready to capitalize off Shein's success in a big way is Meta Platforms (FB). The Meta Benefit Meta Platforms is a big beneficiary of the rise of Shein. These days, it's popular for investors and analysts to dismiss Meta as a failed experiment in social media. In fairness, a deluge of scandals at Facebook have helped this narrative gain traction. However—at its core—Meta is a digital platform of gated communities. Its properties—Facebook, WhatsApps and Instagram—are critical addresses on the global social media scene. Shein is 10 times more popular on Instagram than TikTok, according to a June 2021 report in the South China Morning Post. When influencers post pictures of their latest Shein haul of new items, IG is the location of choice. Meta earns fees by selling ads around that content, as well as larger Shein brand campaigns. Then there's Shops, a fledgling Meta program to help influencers and mom-and-pop businesses build digital storefronts inside Instagram and the other Meta platforms. Retailing is evolving. Digital is what comes next. It's cheaper, faster and does not depend on ocean-faring vessels or malls shuttered by Covid-19. Digital is direct to customer. |
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