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This former dropshipper did $10 billion dollars in sales last year

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May 6, 2019
Chris Xu went from dropshipping wedding dresses to creating a $47 billion clothing company that releases between 700-1,000 new items EVERY day.

Don't believe me? Here's how he does it

In 2008, the SEO expert Chris Xu saw an opportunity in dropshipping wedding dresses from Chinese manufacturers to western buyers and founded a company called ZZKKO to start taking orders.

Chris dropshipped everything from pet supplies to home goods, but his main business quickly became selling fashion clothing to gen Z - a generation used to instant gratification.

Fast forward to 2013 and Chris has changed the name to something more brandable, SheInside. Amazon recently started recruiting Chinese manufacturers to its platform and Chris decides to be an early adopter.

Joining Amazon turned out to be successful. SheInside went from 100 employees in 2013 to 800 employees in 2016. Revenue in 2016 was around $600 million. Chris decided to change the name to something that's easy to find online: Shein.

With growing revenue, Chris´ started investing in Shein´s software systems. They create a system called LATR (large-scale automated test and re-order model).

The system:

  1. Spots fashion trend
  2. Designs item
  3. Manufacturer makes 10-15 pieces of item
  4. Item tested on
  5. Re-order based on test response
Why is this revolutionary?

With this model, Shein was able to reduce their risk.

Can you imagine the risk H&M face when they order 15.000 pieces of one t-shirt and it doesn't sell? That's a lot of unsold goods.

But why did the manufacturers accept tiny orders? Here's where the story gets interesting.

Amazon's entry into China was great for Chinese manufacturers as it opened up a huge new market for them. But over time the manufacturers grew tired of Amazon´s bipolar behavior; like suddenly suspending seller accounts among other things.

Tired of Amazon´s behavior, the manufacturers started looking for other channels to sell through. And that's where Shein had the fortune of good timing. They were massively growing, had great software systems and an increasingly recognisable brand.

Also, Shein always pays their manufacturers on time. A rarity in China.

Manufacturers started flocking to Shein and as of 2021 they have a whopping 6,000 manufacturers producing items for the site. And they all launch new items based on Shein´s LATR model.

That's how Shein is able to launch between 700 and 1,000 new items every day.

They´re more of a middle man like Amazon, not the actual supply chain like H&M and Zara.

More threads like this? :) Follow me here:

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