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Really incredible business. Still with a chinese risk, but I believe even for that they've been trying to get less tied to China. It's miles ahead in compariso

Really incredible business. Still with a chinese risk, but I believe even for that they've been trying to get less tied to China. It's miles ahead in comparison to PDD, Alibaba and other Chinese firms. They are the AWS of clothing. Before AWS hosting companies existed, but they sucked and were really limited on how they work, like taking time to boot up servers etc, then AWS came. Similarly, Shein have logistics operations that enable them to ship faster and sort of operate almost like a local brand doing DTC, but with much lower prices and operating costs. Folks here that typically have no idea about business will likely complain that it's just yet another copycat selling fast fashion, without any knowledge about how it's hard to run the kind of operation that they do and how much logistics they are doing, nor don't understand D2C. They are so successful that they completely changed the fast fashion landscape. There will be similar companies like it with a similar strategy and this will likely bankrupt the likes of H&M unless they adapt their business model as well.

throwaway4good 2y ago
Agreed - this company - besides having a solid internet retail business - has big potential in being a logistic backend for other fashion brands. None of the existing retailers have the tech chops to do what Shein does in terms of logistics and supplier integration.
- thiago_fm 2y ago
  Exactly, nobody does this well; even Amazon doesn't, as it isn't their focus. Let's all be frank: third-party sellers on Amazon pay a lot. Those brands they could do logistics for would probably pay them much less than what Amazon's cut, here lies the opportunity. So, it's a market for grabs that they kickstarted and showed that it can be really profitable.
  - throwaway4good 2y ago
    In the old retail model, the markup is so high that they basically don't care about waste, factory cost, or logistics.
    - lotsofpulp 2y ago
      That does not make sense per real world profit margins. Broad market retail businesses earn sub 5% profit margins (except Home Depot, which seems to be an exceptionally well run operation). If you are spending 95%+ of every dollar you earn, then surely you HAVE to be cognizant of waste, logistics, and COGS in order to stay in business.
      - throwaway4good 2y ago
        The big costs are staff and rent. I was referring to the markup from the factory cost to the sticker price - that is very high in clothing. It can still be money losing business if you are not selling enough.
        lotsofpulp 2y ago
        It is only because the retailer cares about factory cost that the retailer can afford the staff and rent. Even paying the relatively low factory cost, the retailer can barely eke out a profit, so they must be discerning about the price to quality ratio of the clothing they are buying to retail to the public.
lotsofpulp 2y ago
> Folks here that typically have no idea about business will likely complain that it's just yet another copycat selling fast fashion, without any knowledge about how it's hard to run the kind of operation that they do and how much logistics they are doing, nor don't understand D2C. Unless there are network effects or high barriers to entry that allow Shein to extract high profit margins at scale, then they are not comparable to a “tech” company. The article says they have 4.4% profit margin, which means they are in line with existing clothing retailers. They might take business away from their competitors with lower pricing, but their potential seems capped.
- throwaway4good 2y ago
  There are both networks effects and high barriers to entry.
  - lotsofpulp 2y ago
    The proof would be higher profit margins. Even theoretically, I don’t see a high barrier to entry. Setting up a website and logistics operation seems doable such that there already exist many clothing retailers with similarly low profit margins. And I don’t see what network effects there would be, any customer can trivially change the website they are buying from and similarly, any textile worker/producing company in the world can sell to another clothing retailer. If Shein had some super advanced robots that could pump out clothes at competitive quality but at vastly lower prices, then that would be something with high barrier to entry, but then their profit margins would be higher because their COGS would be lower than their competitors.
    - throwaway4good 2y ago
      The network effects and hard to do tech is on the backend - 5,400 suppliers - integrated just-in-time/on-demand.
      - thiago_fm 2y ago
        The HN crew has trouble understanding that getting 5K suppliers isn't just about sending some people emails or creating a signup form.

throwaway4good 2y ago

Agreed - this company - besides having a solid internet retail business - has big potential in being a logistic backend for other fashion brands. None of the existing retailers have the tech chops to do what Shein does in terms of logistics and supplier integration.

thiago_fm 2y ago
Exactly, nobody does this well; even Amazon doesn't, as it isn't their focus. Let's all be frank: third-party sellers on Amazon pay a lot. Those brands they could do logistics for would probably pay them much less than what Amazon's cut, here lies the opportunity. So, it's a market for grabs that they kickstarted and showed that it can be really profitable.
- throwaway4good 2y ago
  In the old retail model, the markup is so high that they basically don't care about waste, factory cost, or logistics.
  - lotsofpulp 2y ago
    That does not make sense per real world profit margins. Broad market retail businesses earn sub 5% profit margins (except Home Depot, which seems to be an exceptionally well run operation). If you are spending 95%+ of every dollar you earn, then surely you HAVE to be cognizant of waste, logistics, and COGS in order to stay in business.
    - throwaway4good 2y ago
      The big costs are staff and rent. I was referring to the markup from the factory cost to the sticker price - that is very high in clothing. It can still be money losing business if you are not selling enough.
      - lotsofpulp 2y ago
        It is only because the retailer cares about factory cost that the retailer can afford the staff and rent. Even paying the relatively low factory cost, the retailer can barely eke out a profit, so they must be discerning about the price to quality ratio of the clothing they are buying to retail to the public.

lotsofpulp 2y ago

> Folks here that typically have no idea about business will likely complain that it's just yet another copycat selling fast fashion, without any knowledge about how it's hard to run the kind of operation that they do and how much logistics they are doing, nor don't understand D2C. Unless there are network effects or high barriers to entry that allow Shein to extract high profit margins at scale, then they are not comparable to a “tech” company. The article says they have 4.4% profit margin, which means they are in line with existing clothing retailers. They might take business away from their competitors with lower pricing, but their potential seems capped.

throwaway4good 2y ago
There are both networks effects and high barriers to entry.
- lotsofpulp 2y ago
  The proof would be higher profit margins. Even theoretically, I don’t see a high barrier to entry. Setting up a website and logistics operation seems doable such that there already exist many clothing retailers with similarly low profit margins. And I don’t see what network effects there would be, any customer can trivially change the website they are buying from and similarly, any textile worker/producing company in the world can sell to another clothing retailer. If Shein had some super advanced robots that could pump out clothes at competitive quality but at vastly lower prices, then that would be something with high barrier to entry, but then their profit margins would be higher because their COGS would be lower than their competitors.
  - throwaway4good 2y ago
    The network effects and hard to do tech is on the backend - 5,400 suppliers - integrated just-in-time/on-demand.
    - thiago_fm 2y ago
      The HN crew has trouble understanding that getting 5K suppliers isn't just about sending some people emails or creating a signup form.