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> 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 abou
by 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 agoThere are both networks effects and high barriers to entry.
- lotsofpulp 2y agoThe 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 agoThe network effects and hard to do tech is on the backend - 5,400 suppliers - integrated just-in-time/on-demand.
- thiago_fm 2y agoThe HN crew has trouble understanding that getting 5K suppliers isn't just about sending some people emails or creating a signup form.