Why Does Fast Fashion Cross Border E-Commerce SHEIN Open Offline Shops

SHEIN, a fast fashion cross-border e-commerce company with an annual sales of nearly $24 billion, recently opened an "offline store" in Tokyo, Japan. This is the world's first offline physical store (except for flash stores), which caused the industry to once boast that "SHEIN, which focuses on online, has finally extended the battlefield to offline".

However, SHEIN denied this statement for the first time and emphasized that the offline store in Tokyo is positioned as a "sightseeing activity space".

In other words, this store is not a traditional store for sales, but rather a long-term marketing with the help of offline space, giving users who dare not place orders online an offline experience. At the same time, consumers can also effectively reduce the return rate of orders placed in the local market after trying on goods in the store and placing orders through the SHEIN e-commerce platform.

In the description of Japanese consumer Lin Nai who went to visit the store, this new SHEIN store located in Cat Street, Harajuku District, Tokyo, Japan, has set up a commodity display area for customers to select and try on. In addition to the main women's clothing, it also displays men's clothing, pet products, cosmetics, accessories and other goods. These goods will not be sold directly. Customers entering the store need to scan the QR code and enter the SHEIN App to place an order.

In addition, there are three fitting rooms and a photo and card punching point in the 200 square meter store space, as well as some simple interactive games (such as publishing card punching photos on SNS and the topic # SHEINTOKYO, you can win the egg twist lottery, and the prizes are small jewelry, pins, shopping bags, etc.).

According to the store staff, SHEIN will hold fashion shows and designer activities here later.

It has to be said that SHEIN is indeed a master in the field of overseas marketing. This global fast fashion brand was one of the first companies to receive social media dividends. Since 2009, from Google, Facebook, Youtube to TikTok, it seems to be able to predict in advance, get on board the big ship, play online celebrity marketing and alliance marketing, and hold the key to online traffic.

Now every offline marketing action of SHEIN is also closely watched by the industry, hoping to smell the next round of overseas marketing.

In 2001, we tested the "strategy" of each flash shop in 13 countries

SHEIN's frequent efforts in offline marketing cannot escape the "flash store" model.

According to incomplete statistics of Ebon Power, SHEIN has opened flash stores in the United States, Mexico, France, Britain, Italy, Ireland, Spain, the Netherlands, Brazil, Japan, India, Singapore, Australia and other countries and regions in the past two years. These flash stores can last for days or weeks. Without exception, no matter in which country, the enthusiasm of local consumers for SHEIN flash stores has never been higher.

Before opening the "sightseeing activity space" in Harajuku District, Tokyo, SHEIN also tried the "flash shop" model in Japan.

The store "SHEIN POPUP OSAKA", which was opened in Shinsaibashi, Osaka, Japan, for a limited period of time, was operated from October 22, 2022 to January 27, 2023, and displayed about 800 items, including men's and women's clothing and household pet products. According to Japanese media reports, there were 4000 people queuing on the opening day, and the number of people queuing the next day reached a small peak of 6000.

Like the Osaka store, SHEIN's flash stores in Spain, Brazil, Ireland and other countries also have a long queue. Local consumers who had gone to experience the experience wrote on Instagram: "The line goes around the whole building, and there is no end in sight", "The line lasts for 4 hours, just for the purpose of entering the store to visit and shop", "I am lucky, and only queue for 20 minutes".

Compared with the enthusiasm of "foreigners", the perception of Chinese consumers after visiting SHEIN flash stores on the spot has been "reversed".

A number of Xiaohongshu users who travel abroad or live overseas commented sharply: "The quality of clothes is relatively ordinary", "It belongs to the collection of seeing the light and dying", "There are many Taobao styles", "It's a bit like throwing the sun", "It belongs to the official line pulling grass", "After taking the free ice cream coupon, I stood in line for half an hour, and was disappointed" "Go straight to the second floor and leave after eating the ice cream".

But what is interesting is that SHEIN flash stores, which are not fit for the taste of Chinese people, live in a "taste" overseas, and SHEIN has also increased its marketing model in two years. A person in the cross-border e-commerce industry told Yibang Power that SHEIN had introduced a "reservation system" in Miami, the United States. As a result, more than 3000 bookings were sold out in two hours.

"Just like you used to be unable to understand how to spell a lot and how to understand the fledgling SHEIN, now you can't understand the more grounded marketing game." Steven, who operates an e-commerce platform in Europe, believes that "whether it is sufficiently localized" is the key to the success of the flash store model.

For example, American consumers are lashing out at the resource waste and environmental pollution problems of fast fashion, and have increasingly high requirements for green environmental protection and sustainable development. In the flash store opened by SHEIN in Los Angeles at the end of 2021, customers need to buy a ticket of $5 online before entering at the selected time, but they can carry and donate clothes they don't want. Each piece will be deducted by a coupon of $1, up to $10.

In October this year, SHEIN launched a second-hand trading platform, SHEIN Exchange, to keep "used clothes" circulating for as long as possible through second-hand resale. The first open place of the platform was chosen in the United States.

In the just concluded express shop activity in Sao Paulo, Brazil, SHEIN plans to sell at least 90% of the total local inventory through this activity, and give all visitors a 15% discount. It is reported that the highest priced item in the store at that time was a black flash skirt of R $166.9 (about RMB 220), and the cheap one was a short T-shirt of R $21.9 (about RMB 29).

This "sightseeing activity space" store in Japan can also be seen as a localization strategy for the evolution of flash stores into the Japanese market - offline is still the main sales channel for Japanese fast fashion brands. Taking Uniqlo Japan as an example, in fiscal year 2022, the sales of Uniqlo's Japanese e-commerce accounted for only 16.2% of the annual revenue. In addition, according to the survey of the Ministry of Economy, Trade and Industry of Japan in 2020, e-commerce channels only accounted for 8% of the annual commodity sales. The offline flash store of SHEIN in Japan has been extended to an unlimited period of time, appearing in the form of a "sightseeing activity space", which naturally becomes a natural thing.

It is not hard to imagine that for SHEIN, the flash store model is an important means of offline promotion. It is to fully understand the "pilot field" of local consumers before entering a new market, and make differentiated adjustments according to local characteristics and consumer habits. Of course, it may also be a pilot for SHEIN to expand more offline scenarios in the future.

02 What is the breakthrough of SHEIN?

At the beginning, because the location of the flash store was similar to the past special sale activities, many people equated it with a "special store". At the same time, because many flash stores will mix seasonal and out of season products, the stores will be open for a limited time and the goods will be sold in a limited quantity, so many people will have a mentality of "no temple after this village", which will stimulate a strong desire to shop.

But if you really equate flash stores with special stores, you are totally wrong. Its main purpose is not only to promote sales and remove inventory. According to its functions, it can be divided into four categories: sales type, diversion type, brand promotion type and testing type. Among them, the purposes of drainage, brand promotion and testing are often more respected.

Taking SHEIN as an example, it opened its first offline flash store in New York in 2018. At that time, SHEIN's strategy for flash stores was to continue the characteristics of online "crazy promotion", and consumers could match the online "coupon code" to offline use. In addition, SHEIN will provide discounts and rewards to the top 50 customers who enter the store. Customers who spend more than $50 in the flash store can also get free gifts and makeup bags. If customers participate in the 2-5 minute survey launched by the store, they have the opportunity to win another SHEIN gift card of about 150 dollars for themselves.

In a sense, flash stores can serve as "intelligence stations" for SHEIN testing products and markets. More importantly, the significance of brand display, user sentiment and data collection brought by flash stores is far greater than immediate income.

It is worth mentioning that flash stores are not a new concept for a long time, and there are numerous cases of success and failure. Can SHEIN, who is good at playing online traffic, use the flash store model to create a growth path offline? Before verifying the results, maybe SHEIN needs to solve several problems first.

 In addition to "discount" and "low price", how to ensure the sustainability of content creativity in flash stores?

The earliest flash store was born in overseas market in 2003. In 2004, Kawakubaoling's flash store directly drove the brand's sales growth of more than 30% that year, which broke the circle and became a common marketing method in creative design fields such as art and fashion. Since then, flash stores have also been a common marketing weapon for luxury brands such as LV, Hermes, Cartier, Dior, etc. They have used "limited time" and "limited quantity" to stimulate consumers' desire to buy to a large extent, and show the outside world the trendy items that meet the aesthetic standards of young people today.

Compared with ordinary retail stores, flash stores have a more personalized style, pay more attention to internal and external packaging, and also need to be topical. Therefore, most flash stores will create a theme based on brands and products.

SHEIN, which wins at a low price, will have more content creativity to capture the minds of local users in addition to displaying "cost-effective" goods and interactive games to the outside world? For example, the second-hand exchange activity launched in the US market.

 When consumers can experience and touch the products at a close distance, is the existing product a plus item or a minus item?

There is no doubt that flash stores are opportunities for consumers to touch products closely, so as to verify product quality and deepen brand impression. Paradoxically, some consumers even had the idea of "official offline weeding" after experiencing the goods in the SHEIN flash store, and their feelings about the products were not as expected. Is this what SHEIN expected? Is it necessary to bring higher quality and higher price SKUs into the flash store?

 If it is not for sales and profit, how to measure the input and output of flash stores more scientifically?

Compared with traditional retail stores, flash stores themselves have the ability to solve the problems of high rent and high cost of opening stores, but correspondingly, the site selection is more difficult and the daily maintenance costs are higher, including the scheduling and management of personnel around the world, as well as the exchange of goods, online and offline cooperation and other systems.

Whether the purpose of the SHEIN flash store is to attract customers online, strengthen brand promotion, test the market, or both, how to measure the success of a flash store? At what pace and speed should we promote the landing of flash stores around the world?

03 More than "flash", SHEIN's offline actions are everywhere

In addition to flash stores, SHEIN's other offline actions are also eye-catching.

The "Tokyo Girls' Fashion Show" (TGC for short) can be called a large-scale fashion show with youthful fashion vitality in Japan, which is held in March and September each year. A fashion show basically lasts about 1.5-2 hours, showing more than 20 clothing brands. The models in the show are generally highly popular models and idol actors, such as Saito Flying Bird, Sasaki, Mizuhara Hiko, Shinki Yoko, etc., who have left a good impression in TGC.

At the show in September this year, SHEIN showed up in surprise as an exhibitor in TGC activities.

In the following November, SHEIN took part in the TGC2022 North Kyushu Special Session (branch venue) with the theme of "SHEIN Personal Color Style COLLECTION STAGE" to display 12 winter fashion combinations recommended by the brand.

In Dubai, SHEIN takes a different approach to fashion shows.

In October this year, SHEIN held its first children's fashion show in Dubai. In particular, in addition to 23 models, there are also many autistic children in this fashion show. At the fashion show, SHEIN appealed to the society to care for autistic children, and promised to donate 40000 dollars to Maharat Center. These actions were very tender, and also showed SHEIN's attention to ESG to the local government and consumers.

The so-called ESG (Environment, Social and Governance) is to evaluate the sustainability of an enterprise's operation from the three dimensions of environment, society and corporate governance. For any garment giant going global, this is a must.

Of course, there are some "offline actions" that SHEIN did not expect.

According to foreign media reports, in a small town in a remote area of Mexico, an operator named Alejandra Precoma opened a boutique named "SHEIN Chipilo" without the authorization of SHEIN. In the boutique, various dresses and accessories purchased at low prices from the SHEIN platform were neatly placed.

The prices of the goods sold by this boutique are exactly the same as those on the SHEIN official website, and there is no price difference. But Alejandra Prekoma purchased 50-100 items at a time and obtained large amount of discount coupons and accumulated account points from the SHEIN platform to exchange for more discounts. Finally, he can get a 60% or even lower discount for his goods, and then sell them to the residents near the town at the original price of the platform.

Helen Thornton, the Mexican boss, also saw the opportunity to make a fortune. He also ran a boutique called "SHEIN Boutique by Hellen Sandon". According to his rough statistics, the gross profit rate in the store can be as high as 60%.

There are more than two or three such "SHEIN boutiques". Google Maps shows that the battle of "SHIEN chain stores" has been formed around Puebla, Mexico, and none of them has obtained the brand authorization of SHEIN.

Now, although SHEIN has no intention to expand its offline distribution stores, smart overseas users have already smelled the financial fortune of "reselling". Perhaps one day, these boutique vendors can really become regular, and SHEIN will eventually open its first physical store offline.