Discover the primary & support activities that go into a successful value chain analysis for Shein. Read to know who is involved, and what tactics are used.
Learn more about these strategies with our comprehensive Shein value chain analysis guide which is free to read.
Shein Value Chain Analysis – Everything Analyzed
Fashion trends change every season, and so do the business models of companies in the fashion industry.
A relatively new player, Shein has been making waves and disrupting the fashion industry through its e-commerce platform.
Shein is an online fast fashion retailer that offers trendy yet affordable clothing, accessories, and home decor.
If you’re a shopper, you might be wondering how Shein can sustain its competitive advantage in an industry where sustainability, ethical working conditions, and fair trade practices are becoming increasingly important.
In this blog post, we will analyze Shein’s value chain to identify the company’s strengths, weaknesses, opportunities, and threats (read Shein SWOT Analysis here).
For Shein, its primary activities include inbound logistics (sourcing raw materials and fabrics), operations (designing, producing, and packaging products), outbound logistics (shipping, storage, and distribution of products), marketing & sales (advertising and customer outreach), and after-sales (installation, training, repair, customer service, & shopping experience).
Let us discuss them in detail:
Inbound Logistics
First on the list of primary activities is inbound logistics. This involves the sourcing and procurement of raw materials, fabrics, and other inputs that Shein uses to design and create clothing.
Shein’s inbound logistics is geared towards sourcing products from suppliers in China, Vietnam, and other developing countries where textiles and raw materials are cheap and labor costs are low.
The company focuses on quick inventory turnover, which means faster shipping times and a smaller risk of stock accumulation.
By sourcing raw materials at low cost, Shein can produce trendy clothing and accessories at affordable prices.
Operations
The next primary activity is Operations, which essentially involves turning these raw inputs into final products that will be sold on the Shein platform.
They use optimized operations to reduce per-unit costs, which in turn helps them offer their products at lower prices compared to their competitors.
Shein has a sophisticated warehouse management system (WMS) for inventory control and advanced automation like RFID (Radio Frequency Identification) technology to ensure speedy and accurate processing of orders.
⇒ Read Shein STAKEHOLDER Analysis
Outbound Logistics
After manufacturing, outbound logistics comes next. This activity involves the storage and delivery of products to customers.
Shein is known for its fast shipping times; they offer expedited shipping as well as standard shipping options.
They use a range of freight carriers, depending on the destination, to optimize speed, reliability, and cost-effectiveness.
Marketing & Sales
Shein’s marketing strategy is driven primarily by social media channels, where it engages with customers and influencers to promote and showcase its products.
The company has a well-recognized and globally recognized brand. They also prioritize personalized customer service and support through their chatbots & live customer service representatives.
The company’s website and mobile app have a simple yet effective user interface, which makes it easy for customers to browse through and shop for products.
After-Sales Services
The last primary activity of Shein’s value chain analysis is after-sales services. The company places a great deal of emphasis on customer satisfaction and has a dedicated team of customer service representatives to address any issues that customers may have.
Shein offers free returns and exchanges, as well as a “Shein points” loyalty program for loyal customers.
The after-sales service stage is crucial, as it helps the company build customer loyalty and repeat business.
Support activities, on the other hand, include procurement (purchasing raw materials and outsourcing processes), human resources management (recruiting, training, and retaining a skilled workforce), technology development (website design and development, data analytics), and infrastructure (facilities, equipment, and logistics).
Let us discuss them in detail:
Procurement
The first step in Shein’s value chain analysis is procurement- the process of sourcing raw materials. The company’s procurement strategy is unique, as most of the materials used in production are sourced directly from factories in China.
This enables the company to save on costs, as well as maintain control over the quality of materials used. Shein has a rigorous quality control process and only sources materials from suppliers that meet its standards.
Technological Development
Technology plays a critical role in Shein’s value chain. The company invests heavily in technology to enhance the customer experience, optimize its operations, and streamline its supply chain.
Shein’s technological development team is responsible for developing and maintaining the company’s e-commerce platform, mobile application, and other digital tools.
The team also works closely with other departments to develop and deploy data analytics and artificial intelligence tools to improve decision-making processes.
Human Resource Management
Human Resource Management (HRM) is another support activity of Shein’s value chain that focuses on managing and developing the company’s human capital.
Shein’s HRM team is responsible for developing policies and procedures that attract, retain, and motivate employees.
The team also handles training and development, performance management, compensation and benefits, and employee relations.
Shein’s HRM function is critical in ensuring that the company has the right talent to execute its strategy successfully.
Infrastructure
Infrastructure refers to the support services that a company needs to operate effectively, such as logistics, facilities management, and security.
Shein’s infrastructure function is responsible for ensuring that the company’s facilities, equipment, and technology are working efficiently.
The team also oversees the company’s transport and distribution network, ensuring that products are delivered on time and in good condition.
Infrastructure is vital in driving operational performance and customer satisfaction, as it ensures that Shein’s logistics operations run smoothly.
Conclusion
In conclusion, Shein has taken a different approach to the fashion industry by offering affordable yet trendy clothing through its e-commerce platform.
Shein’s value chain analysis shows that the company has optimized its primary activities to minimize costs and bring products to customers quickly.
However, the company faces several challenges, including a lack of transparency in its supply chain and the negative impact fast fashion has on the environment and communities.
Moving forward, Shein can invest in transparency and sustainability, which will likely improve brand perception and customer loyalty.
Whether you are a consumer or working in the fashion industry, this analysis shows that value chain strategies can play a crucial role in the success or failure of fashion companies.
Also, Shein’s support activities play a crucial role in enabling the company to deliver value to its customers.
Procurement, technological development, human resource management, and infrastructure are four of the most critical support activities in Shein’s value chain.
These activities allow the company to optimize its operations, enhance the customer experience, and ensure sustainability throughout its supply chain.
Understanding the role of these support activities in Shein’s value chain is essential for anyone looking to invest in or partner with the company.
As Shein continues to grow and evolve, it is likely that these support activities will remain instrumental in its success.
By understanding our above SHEIN value chain analysis, you can learn a lot from the way Shein operates. Share with your friends/colleagues whomever you think this analysis will help.
