SHEIN Case Study: How Can DTC Brands Beat Amazon and Win the eCommerce Market?

The direct to consumer (DTC brand) is currently worth over $21.25 billion U.S. dollars. Which, despite being a progressive figure, lags in comparison to Amazon ($1.7 trillion). The DTC system aims at eliminating middlemen in business by providing the product directly to consumers, setting them up for a head-on collision with eCommerce developers like Amazon that operate using a platform business model.

The focus of the platform business model is to orchestrate sales by introducing sellers to a large audience. The DTC brand business model is still an underexploited one, and brands like SHEIN are making use of this market potential and raking in profit. For eight consecutive years, SHEIN has increased its revenue by 100% and is currently the largest cross-border eCommerce store stemming from China with a valuation of $15 billion.

SHEIN recently surpassed Amazon as the most downloaded shopping brand, which definitely counts for something. If DTC brands follow SHEIN’s strategy, big eCommerce brands like Amazon might well become background noise.

Current eCommerce trends worldwide

1. Pandemic spurring eCommerce across globally despite its adverse general economic impact

2020 was a year of decreased economic activity due to the global lockdowns and movement restrictions that ensued from COVID-19. Some businesses failed and went bankrupt during this isolation period, but the eCommerce market boomed.

The lockdown resulted in many businesses going digital and consumers turning to online shopping for the bulk of their needs—this further aided globalization and eCommerce traffic growth across various overseas markets. The eCommerce global market saw a surge from 14% in 2019 to 17%, with a steady growth streak.

This market growth naturally spills to DTC brands, with SHEIN being a significant beneficiary. There are projections for growth continuity due to sustained shopping habits cultivated during the lockdown.

Marketing strategies via social media apps increase consumer interest in products, and DTC brands have a higher turnover against demand than platform brands (i.e., Amazon).

2. Development of cross-border eCommerce infrastructure

A limiting factor to cross-border eCommerce in the past was weak logistics and transport infrastructure. But after more than a decade of development in these areas, cross-border eCommerce is near perfect.

Most DTC eCommerce brands have established cross-country local contacts to help simplify logistics, customer service, capital, and merchandise flow. Brands like SHEIN have swooped to take advantage of it, as they now ship to 220 countries and regions worldwide.

3. Terminal marketing gradually progressing

As consumer demands continue to balloon, large DTC brands such as SHEIN need to find creative ways to move manufactured wares to the end consumers. And one of the solutions that have proved helpful for these brands is by adopting terminal marketing.

Terminal marketing facilitates the movement of large amounts of fashion merch from the one convergent point to the end-user.

4. Disruption of the cross-border eCommerce independent website model

Instead of relying on a single platform (website) model, DTC brands like SHEIN are going all guns blazing and adopting a multi-pronged approach.

For starters, they rely on multiple marketing channels, placing focus on social media and influencer marketing with special emphasis on vertical markets (single niche operations).

Other strategies different from the conventional cross-border model include mass distribution, regional market focus, cash in delivery, and many more.

DTC Model and SHEIN

The reason behind SHEIN’s recent worldwide growth lies in how the brand has perfected its DTC strategy. The backbone of SHEIN’s DTC strategy was to create an ultra-fast-track beauty brand with small-batch customization faster than top names like Zara.

SHEIN focused on the Gen Z and Millennial market space by producing affordable products revolving around trending interests. SHEIN being a DTC brand, owes much of its success to this model and its ability to adapt the strategies needed for growth.

Many other DTC brands exist, but none has succeeded in replicating the growth that SHEIN has witnessed. As such, SHEIN stands as the perfect case study of what is possible with DTC brands.

SHEIN’s progress can be attributed to several facts, but the essential ones are:

1. First-hand product and user data

 By adopting a DTC model that eliminates the middleman, consumers now gain access to merchandise manufactured by the company (SHEIN) itself. The absence of a middleman means that both parties can directly interface with each other to improve service delivery.

At the same time, a DTC model enhances the collection of all forms of user data and the utilization of analytics. SHEIN has perfected the art of scouring the web and social media platforms for real-time data and analytics, which it uses to get ahead of its competitors.

It then acts on this information to optimize its production, often churning design concepts and final end-products in three to five days, when other fast-fashion brands struggle to complete these cycles in weeks.

2. Global Access

Unlike other mainstream brands from China that tend to take advantage of the huge local population, SHEIN had modified its DTC strategy for the global market from the beginning.

A key component to SHEIN’s DTC globalization strategy is creating eCommerce websites and social media for its individual markets. In that end, content is localized, and consumers can pay for orders in their local currency, making the platform feel like a local brand to its international audience.

As we mentioned earlier, SHEIN now operates in 220 countries providing inexpensive but high-quality products for its consumers.

3. Brand Strength

Targeting Gen Z, who is highly opinionated and make up a good number of the eCommerce users across the world, while at the same time harnessing the power of social media, SHEIN has been able to develop a formidable brand in a short time.

SHEIN takes it a step further by engaging the services of local influencers who are both key opinion leaders and consumers to promote their services. They also offer coupons, discounts, referral programs, and many other incentives that DTC brands can offer to attract consumers and promote brand loyalty.

4. Exceptional operational efficiency

SHEIN’s fast global success is no fluke. By adapting its DTC strategy across all operations (manufacturing, marketing, PR, etc.) in a streamlined manner backed by data insights, SHEIN has been able to stay ahead of its competitors consistently.

Consumers can now get the latest trendy wears at their doorsteps in under ten days, which speaks to how efficient SHEIN’s operation has become.

Although eCommerce giants like Amazon may pose to be significant opponents due to their sheer size and consumer base, SHEIN has proved that it is possible to adopt the DTC model and dominate these giants if you have a proper game plan and execute them well.

SHEIN disruption of the fast-fashion space by matching the peculiarities of the Chinese market to global demand means that other eCommerce brands can follow suit, especially if they utilize the functionalities of a DTC platform like AllValue.

AllValue is a SaaS that equips brands with the necessary tools to fully take advantage of the DTC model to achieve sustainable growth.

AllValue guarantees top-of-the-line eCommerce services to boost eCommerce website traffic for small and big organizations. The features include affordable pricing irrespective of eCommerce problems, quality marketing, and reliable customer management.