Network Marketing: Sheen Is Turning To OBM Mode

Some suppliers who have cooperated with sheen for several years have found that today's sheen is a bit "unable to keep up" with less and less single quantity and more and more losses.

Xiaoyu, a clothing supplier, has even received orders for only 25 pieces from sheen this year.

They speculate that this may be related to Sheen's shift from a vertical stand-alone station for women's wear to a comprehensive e-commerce platform for all categories. In other words, this is the shock caused by the transformation of sheen on the supply side. As a proof of this speculation, sheen began to sell olive branches to brand merchants and expand into many categories.

In just a few years, it has rapidly developed from a stand-alone seller to a giant Unicorn with sales of more than 100 billion yuan in half a year. It has not only replaced Zara's "first brother" status in the world's fast fashion field, but also had a valuation of 100 billion US dollars, second only to star companies such as space X and byte jump.

This seems to provide a possible development path for cross-border e-commerce businesses, and more and more brands hope to become the second sheen.

But sheen doesn't want to repeat himself. Today, it is trying to break through the status quo and develop towards a platform.

Sheen's Transformation: to platform based e-commerce

Spring River warm duck prophet, the first to feel the change of sheen is the suppliers.

Since the beginning of the year, the number of sheen orders received by Xiaoyu has decreased significantly, "there are still 300 pieces in the first order last year, and only 100 pieces in this year". Xiao Yu's latest order to "the world's online merchants" shows that there are only 25 orders from s code to XXL code.

Many suppliers are faced with the same situation: orders are getting smaller and smaller, but quality control is getting stricter. Xiao Yu recently reworked a batch of goods twice or was returned by sheen. "Now I can easily deduct money. I fined 10000 at one time, only dozens of clothes."

Although the profit of supplying goods for sheen in the past will be very low, the suppliers still actively accept orders because of the high frequency of new products and the quick delivery of explosive money. This year, the new speed of sheen is also slowing down, "it's a loss in calculation.".

Two years ago, when Xiao Yu was working as a clothing stall in Shahe, Guangzhou, sheen took the initiative to find cooperation. "No one paid attention to them at that time." For more than a year, he intends to withdraw from the supply chain, because he does not want to take a look at the supplier who has already left the supply chain for a year.

On the one hand, sheen constantly raises the threshold of suppliers, on the other hand, it extends olive branches to brand merchants.

The investment manager of sheen mainly introduced the OBM mode, that is, to manage its own brand on behalf of the factory. Different from ODM OEM suppliers like Xiaoyu, OBM businesses should have their own registered brand trademarks. Sheen clearly stated that it would give priority to businesses with overseas trademarks or top brands of domestic e-commerce, and the category of investment promotion would also expand from women's wear to men's and children's wear.

In the business promotion, sheen said that it would "transfer meritorious service" to the settled businesses, including guiding them, improving the visual quality of model photos, sharing sales and fashion trends, and business learning center.

It is obvious that sheen is moving towards a platform oriented integration of cross-border clothing sellers. In the near future, it plans to establish three large distribution centers in the United States to shorten the distribution cycle. Many sellers said that Sheen's future competitors are no longer other fast fashion brands, but platform e-commerce.

"Sheen mode" doesn't work?

Some people in the industry believe that Sheen has chosen a "more difficult" road to become a platform.

The difficulty is relative to the "simplicity" of the original mature model. In the original mode, sheen is like a duck to water, and there is even a saying of "sheen mode".

From 2012 to now, in a short period of 10 years, sheen started from a fast fashion women's clothing independent station (cross-border e-commerce independent station, that is, it does not open stores on the e-commerce platform, but makes an independent website) and develops into the world's most fashionable online celebrity brand at a speed beyond the reach of peers. In 2020, its revenue will reach nearly 10 billion US dollars, with a growth rate of more than 100% for eight consecutive years.

Last year, Sheen's global sales exceeded Zara, and the number of mobile phone installations in the United States in the second quarter surpassed that of Amazon.

From 2013 to 2020, sheen completed five rounds of financing, with an estimated value of more than US $15 billion. The investors include Sequoia China, IDG, global tiger and other first-line institutions. In April this year, foreign media reported that sheen was carrying out the sixth round of financing at least US $1 billion. If this round of financing is successfully completed, the valuation of sheen will reach US $100 billion, exceeding the market value of INDITEX, the parent company of Zara.

Numerous small and medium-sized sellers, even large factories, want to make a second sheen. From 2020 to 2021, offshore e-commerce platforms frequently obtain financing. According to the statistics of at least 2 billion US dollars of e-commerce companies in the world, there are no sources of e-commerce such as "the world's e-commerce companies".

Among them, bloomchic, commons, cider, doublefs, hydrogen and oxygen, boundless (boundless cross-border) brands are fast fashion DTC (facing consumers) brands benchmarking sheen.

But the second sheen did not appear.

"In the past two years, many DTC sellers have successfully raised funds, but it is almost impossible to reach the scale of sheen." Hu Tian, a seller of independent station, tried to imitate the seller of sheen. "After a year or two, they stopped burning money.". Even large factory level "apprentices", such as the byte hopping cross-border women's independent station dmonstudio, soon ceased to exist.

Sheen mode has its own uniqueness, low price and online marketing is one of them, and seizing the times is also the key. It can rapidly increase overseas, seize the financial crisis, the U.S. middle-class consumption degradation demand, and seize the global new crown pneumonia epidemic after 2020, as well as the advertising and KOL grass planting flow dividend period with the development of social networks such as Facebook and instagram.

As time goes by, great changes have taken place in overseas marketing environment, and the threshold of cooperation with online celebrities has been greatly improved. A cross-border seller of fastsell told the world's online merchants that "it's too much to invest in the early stage of being an independent station. The main reason is that the drainage cost remains high, and the transformation is not necessarily high."

It's hard for others to create a second sheen, and it's hard to recreate yourself.

Domestic and foreign troubles, sheen must turn around

The core competitiveness of sheen, that is, the supply chain management operated for many years, is hard to copy without years of "internal skill" cultivation.

Sheen was founded in 2008, initially mainly engaged in cross-border wedding dress business. Since 2012, Sheen has transformed into fast fashion women's wear, and has made great efforts to integrate upstream suppliers to establish a supply chain system managed by digital systems. In 2015, the company officially changed its name to sheen, and moved its supply chain center from Nanjing to Guangzhou Panyu, where hundreds of garment factories gathered.

Fast fashion brand "only fast but not broken.". Sheen had been able to catch up with Zara very quickly, because it was faster than Zara. According to CICC Research Report, it only takes 7-15 days for a new product of sheen from design to finished product, and more than 20000 new spus (standard product units) can be launched every week. Hu said that the turnover speed of any fashion company is faster than that of any other company in the world.

The support of sheen is the high-speed flexible supply chain system behind sheen, which is thousands of suppliers integrated by a set of MES (Manufacturing Execution System) management system. Relying on the advantages of short payback period, stable flow and strong ability to create popular fashion, sheen integrates more than half of the clothing outlets in Guangzhou Panyu into this system.

The production capacity and production progress of all suppliers will be uploaded to the system in real time, and then the system will determine the number of new orders for each batch and distribute them to the suppliers according to the data analysis. In the process of finished product processing, the delivery cycle of sheen can be reduced to 3-7 days, and the delivery time is less than 40 hours.

This efficient supply chain system has achieved the "small order quick response" mode repeatedly mentioned by the industry, that is, each new product only produces a few hundred pieces for testing, and then adjusts the output rapidly according to the sales performance.

However, the supply chain system is facing increasing doubts. In the eyes of young people in Europe and America, the high-speed supply chain is a "sweatshop" of forced labor; It is still controversial whether the mode of low price and volume is to grow together with suppliers or overdraft the production capacity of factories; The waste and environmental pollution caused by low-cost clothing, as well as the unavoidable design plagiarism problem of rapid promotion, also make sheen frequently criticized.

In addition to the external pressure, from the perspective of its own growth, "low price + traffic" growth model has gradually touched the ceiling.

According to 36 krypton, sales of sheen in the first half of this year exceeded $16 billion (equivalent to 110.72 billion yuan), with a year-on-year growth rate of more than 50%. But in fact, this is almost the lowest growth rate of sheen in the past five years, with a compound annual growth rate of more than 200% from 2016 to 2021 (according to cicra). Sheen needs to find new growth point and improve profit margin.

The transformation to platform based cross-border e-commerce has become the choice Sheen has to make - compared with selling goods only, it is a platform with larger scale and more imagination for integrating brands, and it is also a story that the capital market likes to hear more.

Xiao Yu learned that sheen gradually slowed down its pace and raised its requirements for suppliers, which was "internal rectification". Although Sheen has repeatedly denied the IPO plan from the outside world, Hu Tian learned from the investors of sheen that "if it is certain to go public, she has been preparing for listing, and a series of compliance issues must be solved first".

At the same time, sheen is also expanding to the offshore offline market, and offline flash stores have opened in Paris, Rio de Janeiro, Melbourne and other places.

However, just as for Chinese cross-border businesses, it is not easy for "sheen model" to understand and do difficult for "sheen 2.0" to perform the myth once again in the cross-border platform with numerous giants.