There’s no ignoring the ever-growing threat posed by online fast fashion giant, Shein. In fact, most high street value retailers have been struggling to keep up for a while now. Primark is one of the only stores continuing to cultivate low price success.
Shein is famed for often unbelievably inexpensive apparel and a growing popularity among Generation Z consumers. The brand is a force to be reckoned with for mid-price retailers like H&M and Zara, as Shein’s promise of unbeatably low price tags continue to turn the heads of trend-hungry shoppers.
So, how exactly has Shein won such a vast share of the fast fashion market, and what can other retailers do to keep up?
How Shein cultivated a loyal fanbase
Price is critical to all consumers. Unsurprisingly, this is pretty much the number one factor pulling consumers to choose Shein over other competitors. Their price pull, combined with a vast range of on-trend products, makes Shein the holy grail of fast fashion shopping right now.
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On top of this, Shein truly nails media targeting. The brand’s product ads are displayed in the right place, at the right time, to the right consumers – and crucially, they convert. How? It seems that Shein leverages data for relevant product tagging and accurate media targeting; all aligned to a product set which meets consumer needs. That’s how they’re streets ahead of other online competitors such as ASOS and Boohoo.
Shein’s direct traffic and conversion rate is also pulling in huge numbers. This is a key indicator that they’re generating some serious loyalty with customers. Clearly, prices and targeted marketing helps to drive a high proportion of the online retailer’s traffic. However, there’s also a lot to be said for Shein’s loyalty programme, which is stepping up to play a crucial part in attracting and retaining customers. Currently, shoppers collect one point for every pound spent, then redeem one pound for every 100 points collected. The scheme is made even more compelling with bonus points for leaving product reviews (five points), reviews with a photo (15 points), or reviews with sizing information (17 points).
The devil is in the details
Shein strongly converts shoppers through accurate descriptions in their product feeds. A major delight for shoppers who want to be as clued up as possible about what they’re buying – even if it is a bargain.
We know that detailed product reviews are critical for conversion, whilst also creating an addictive shopping experience for consumers and adding credibility. The ability to upload user content and see real life customers modeling the garments they’ve purchased brings with it a huge element of trust. After all, we know now more than ever before that strong trust equates to high conversion! In fact, far too many UK retailers looking to sell internationally underestimate the overwhelming impact of consumer reviews. Not Shein.
However, it’s not all fashion unicorns and rainbows.
Shein’s much slower delivery lead times (6-8 days, on average) definitely can’t compete with UK retailers’ faster supply chains – such as ASOS’ unlimited next day scheme. However, it seems consumers are deeming Shein’s products to be worth the wait. The upshot of super low prices and well-placed advertising are working their magic to make up for delays.
First-party data for the win
Shein’s high volume of direct traffic, in proportion to sales, suggests an effective use of first party data for direct marketing and CRM. Push notifications are often product centric – and you can clearly see this targeting is based on intelligent data-driven recommendation engines. Such notifications pull through complementary items that customers are sure to love. They also inspire shoppers with trends from categories they’ve not yet bought from, but are likely to, based on historical purchases.
This clever, data-driven approach to targeting existing customers encourages loyalty and engagement and increases share of wallet.
It’s clear that Shein has also massively elevated its social media strategy across TikTok and Instagram, combined with savvy influencer marketing. So much so, they were the most talked-about brand on TikTok last year. Shein has found its sweet spot when it comes to social media, and the results are speaking volumes.
Bullseye targeting with customer data
Shein has mastered the art of consistently getting the right products in front of the right people, via accurate targeting tactics. High street brands can do the same thing by leveraging customer or loyalty data.
Let’s take Spotify as an example of how retailers can use data to win share of household spend. Spotify has created hundreds and thousands of attributes against every song (e.g. ‘rap caviar’, ‘trending’, ‘travel’, ‘gym’). They then use these to recommend songs and artists that users have never listened to before, but show a propensity to do so. The results? Users can’t get enough of the personalised experience – and consume even more content.
Retailers can follow this blueprint – because, in essence, the goal is to compel customers to consume more of their product. By describing products in rich, consumer-centric ways, they can also leverage browse and buy data to identify and group products into customer need states.
Understanding how customers shop in different need states (for example, ‘black work trousers’) helps retailers predict other products they’re likely to enjoy and want to buy. The likes of Spotify and Netflix drive huge consumption of new content by inspiring people with music and films they didn’t even know they’d enjoy themselves.
The point is – it’s high time retailers started to follow suit, by working harder to inspire customers with products they’d never considered until your brand dangled the carrot in front of them. Historically, this has only been possible in FMCG. However, in today’s fast-paced world, browsing data enables this type of analytics to be applied to fashion and low-frequency categories such as jewelry and travel. From there, retailers can create similar recommendations and inspiration.
How retailers can use their own data to claw back market share
So how can retailers combat Shein’s strong media presence? By intelligently using first party data to target shoppers in digital media spaces. They also need to focus on removing wasted media spend through suppression audiences, i.e. consumers who have already bought a product or may be interested. It’s imperative for retailers to leverage data to understand where to target products, then enable media platforms to optimise using their own algorithms.
Brands can also do a better job of leveraging first party data for direct communication. We’re simply not seeing enough personalisation of products around purchase cycles and complementary products. Brands should be labelling and attributing products based on how consumers describe them through product search and reviews. This should be the basis for product tagging to optimise product ads via Google/other media platforms. For example, ‘comfy shoes’ versus ‘comfy going out shoes’.
Retailers should also link purchase data to media platforms. This ensures they’re not wasting spend on consumers who aren’t in the market. For example, if a shopper has already bought a black belt, they’re unlikely to want to buy another immediately, so don’t advertise to them. Simple!
Next day delivery is another key differentiator to combat Shein’s price credentials. For example, if Boohoo and ASOS’s products are competing alongside Shein and are targeted well, they can still win.
Winning back your share
So, all in all, it seems there’s no stopping the juggernaut of Shein – despite environmental concerns. But the good news? With clever usage of first-party data and personalisation, all hope is not lost for other retailers. By taking a more data-driven approach to enticing consumers, there’s a fighting chance for competing retailers to successfully defend, and ultimately reclaim, their prized corner of the market.
Thomas Hill, Co-Founder and Chief Customer Officer, HyperFinity
Tom has been leading data teams in retail for over 20 years across fashion, food, and general merchandise. He founded HyperFinity in 2019, to deliver retail optimisation solutions across pricing, merchandising, marketing, and media, working with clients such as Beaverbrooks, Hotel Chocolat, Asda and Costa.
As Chief Customer Officer, Tom works closely with clients and prospects to uncover how to bring them real value from data solutions. Tom’s core specialisms are focused on finding and delivering the best outcomes for retailers, whether that’s optimising products, pricing, merchandising, forecasting, or marketing. He’s also passionate about customer relationship management (CRM) and how to leverage it, as well as empowering retailers to use first-party data like transactions to make better decisions.
