---
title: "HSBC: Shein's GMV is expected to exceed 100 billion in 2027, with the supply chain as its core competitive advantage. | Four Little Dragons Going Global Series"
type: "News"
locale: "zh-HK"
url: "https://longbridge.com/zh-HK/news/109156824.md"
description: "HSBC believes that SHEIN's global expansion trend is accelerating, and it is expected that SHEIN's annual GMV will reach $100 billion by 2027. The competition from Temu cannot be ignored."
datetime: "2024-03-04T11:26:05.000Z"
locales:
  - [zh-CN](https://longbridge.com/zh-CN/news/109156824.md)
  - [en](https://longbridge.com/en/news/109156824.md)
  - [zh-HK](https://longbridge.com/zh-HK/news/109156824.md)
---

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# HSBC: Shein's GMV is expected to exceed 100 billion in 2027, with the supply chain as its core competitive advantage. | Four Little Dragons Going Global Series

* * *

China's cross-border e-commerce is making a big splash, as platforms like AliExpress, SHEIN, TEMU, and ByteDance, known as the "Four Dragons Going Global," are quietly reshaping the global e-commerce landscape.

Since its establishment in 2012, SHEIN has been deeply rooted in the fast fashion women's clothing track, aiming at overseas markets, mainly targeting Europe, America, the Middle East, and Southeast Asia. In just a few years, it has stood out from the intense global competition and established a flexible supply chain in the fast fashion industry.

Recent data disclosed by SHEIN to investors shows that its profit in 2022 was $700 million, a decrease from $1.1 billion the previous year, but it has been profitable for four consecutive years. From 2017 to 2020, SHEIN's revenue grew rapidly, with a compound annual growth rate of 180%. In 2020, SHEIN's revenue growth rate reached a staggering 300%, reaching $10 billion.

Statistics show that in 2022, SHEIN is the fast fashion website with the fastest traffic growth in North America, with an average annual traffic of 183.45% and a GMV of $30 billion. SHEIN expects that **by 2025, its revenue will double, reaching nearly $60 billion.**

****

HSBC believes that SHEIN's main competitive advantage lies in its use of multiple marketing channels for brand promotion, **with its most core competitiveness lying in its flexible supply chain and logistics services**. Under neutral conditions, it is estimated that SHEIN's annual GMV will reach $100 billion by 2027. In the future, competition from TEMU cannot be ignored due to the similarity between the two platforms, making competition inevitable.

## **Innovative and Flexible Supply Chain**

HSBC points out that in SHEIN's development process, its innovative "Small Batch Fast Response" supply chain model has become one of its greatest competitive advantages. Each piece of clothing is ordered in small batches, usually dozens, and then waits for the buyer's response. If a short sweater vest is popular, SHEIN will add orders. This system is also known as the "Large-Scale Automated Testing and Reordering (LATR)" model:

> "Small Batch" means that a small quantity can put a style of clothing into production. "Fast Response" means immediate production based on market sales. It allows SHEIN to quickly analyze the big data generated by customer responses, provide instant feedback, and quickly decide which styles to increase order quantities and which styles to stop production.
> 
> 
* * *

HSBC pointed out that the fast fashion model of small orders and quick turnover helps reduce inventory costs, lower product prices, and provide consumers with more choices. This approach enables brands to achieve frequent new releases and cost-effectiveness, which is why SHEIN can launch around 1 million SKUs annually, while Zara only offers 12,000 SKUs and tends to focus more on popular items.

Guohai Securities stated in a research report that **after reducing inventory costs, SHEIN has a price advantage over its peers in multiple popular categories**:

> The fast fashion model allows SHEIN to have a much faster speed of new releases than its competitors. From September 2nd to September 7th, 2023, SHEIN introduced an average of 2,725 new items per day, while Zaful only had 45 new items during the same period. After reducing inventory costs, SHEIN has a price advantage over its peers in multiple popular categories. For instance, the average price of tops is $10, while Forever21, H&M, and Zara are priced at $16, $23, and $36 respectively.
> 
> The strategy of placing small orders multiple times also increases the probability of hitting popular items. According to the company's 2018 business plan, SHEIN has a hit rate of 50% and an unsold rate of around 10%.

At the same time, Guohai Securities believes that **SHEIN leverages its rich industrial chain resources to reduce costs and increase efficiency**:

> SHEIN's headquarters and supply chain center are located in Panyu District, Guangzhou. Clothing orders are distributed among small and medium-sized manufacturing factories in Panyu District, where the garment industry is a traditional advantage. According to Guangzhou Commerce data, as of October 2022, Panyu District has over 34,000 clothing companies, including 7,281 clothing manufacturing enterprises.
> 
> SHEIN has access to over 1,000 Chinese suppliers, with around 300-400 core suppliers located in Panyu, Guangzhou. By positioning its office in the core supplier area, SHEIN has improved information transmission efficiency and transparency, thereby reducing management and transaction costs with suppliers.

## **SHEIN Utilizes Multiple Marketing Channels for Brand Promotion**

HSBC pointed out in the research report that SHEIN's brand influence is closely tied to its effective use of a vast network of influencers in its marketing strategy, making it one of the earliest companies globally to explore influencer marketing.

Media analysis indicates that SHEIN has been using influencer-driven marketing since as early as 2011, leveraging KOLs to promote its brand. It has conducted promotional activities on international social platforms such as Facebook, Twitter, and Instagram, forming deep partnerships with these platforms. Additionally, SHEIN collaborates with renowned designers to create co-branded collections, enhancing the company's appeal from multiple angles.

Guohai Securities highlighted that the combination of "influencers + marketing alliances" has led to increased brand sales:

> 1.  SHEIN continues to collaborate with celebrities and influencers of various scales to accelerate brand exposure, traffic, and sales:
> 
> For top-tier stars like Anitta, the collaboration theme of "environmentally friendly materials" is closely linked to the core culture of sustainable development, aiming to enhance brand awareness and social responsibility. Furthermore, SHEIN partners with small to medium-sized bloggers with tens of thousands of followers to increase product exposure through reviews, outfit recommendations, and other forms, thereby boosting sales.

-   Establish marketing alliance channels to increase traffic and sales with a "low-cost, wide-net" strategy.
-   Recruit a large number of KOCs, bloggers, and amateurs through alliance platforms to widely post SHEIN-related articles to enhance the density of external links. This increases the likelihood of customers browsing posts, clicking links, and placing orders. Pay alliance clients 10%-20% commission based on results and provide other benefits. Compared to the gradually commercialized internet celebrity marketing, the price of "amateur" alliance clients is lower, and the effect is faster. Brands only need to pay for results, such as clicks, leads, sales, etc., making it a low-risk strategy.
-   ![Image](https://imageproxy.pbkrs.com/https://wpimg-wscn.awtmt.com/42e3fffc-02e2-4722-9ef5-a7c44a246e50.png?x-oss-process=image/auto-orient,1/interlace,1/resize,w_1440,h_1440/quality,q_95/format,jpg)

Guohai Securities pointed out that SHEIN's meticulous operation on social media promotes user retention:

-   Accumulated tens of millions of fans on mainstream overseas social media platforms such as Ins and Facebook, and operates accounts separately according to different regions to increase brand exposure. As of September 2023, SHEIN has posted over 25,000 posts on Ins, far exceeding other fast fashion brands in activity. Through extensive interaction, it narrows the distance between the brand and users, enhancing customer loyalty and brand attractiveness.
-   In addition, SHEIN has also carried out meticulous operations on platforms such as Pinterest, with a fan base 4-5 times larger than other fast fashion brands, making its social media layout more extensive and completing private traffic precipitation through multiple channels.

## **SHEIN Values Logistics Services**

HSBC pointed out that SHEIN's rapid development is closely related to its logistics system. 95% of SHEIN's products are shipped directly from domestic central warehouses to overseas. The process includes supplier-central warehouse-cross-border transportation-consumers. In major markets such as Europe and the United States, SHEIN has established distribution centers to shorten delivery times:

-   In terms of central warehouse construction, SHEIN has set up domestic warehouses and overseas warehouses, with two types of overseas warehouses. One is for overseas operations, responsible for shipping, accounting for only 5% of shipments. The other is an overseas transit warehouse, only responsible for returns. Establishing an overseas return warehouse can save the return circulation steps back to the country, and after secondary processing of returned goods, they can be resold.
-   ![Image](https://imageproxy.pbkrs.com/https://wpimg-wscn.awtmt.com/af822a14-8510-4694-8d49-7c987c5173c4.png?x-oss-process=image/auto-orient,1/interlace,1/resize,w_1440,h_1440/quality,q_95/format,jpg)

Anxin Securities pointed out that in addition to overseas distribution centers, Shein has begun to accelerate the construction of overseas supply chains. Factories have been established in Brazil and Turkey, with plans to build factories in Mexico. In the future, Brazil will radiate Latin America, Mexico will radiate North America, Turkey will radiate the Middle East and Europe. Shein previously announced a heavy investment in Latin America and accelerated the localization process in Brazil. It has signed partnership agreements with 330 suppliers and logistics service providers in 12 states in Brazil. By 2026, 85% of its sales in Brazil will be composed of locally produced products.

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