Shein’s Consumer-To-Manufacturer AI Program Matches Local Demand at Scale

AI is becoming an even greater enabler and differentiator for retailers who have access to valuable troves of their customers’ data. This type of first-party goldmine is helping fast fashion retailer Shein become China’s ‘TikTok for e-commerce.’ The Chinese brand uses artificial intelligence as its central insight engine to determine trends and predict consumer demand patterns and shifts, applying these plucked learnings to create an optimized, end-to-end business with near-zero inventory. Boasting advanced technology and a tech-driven supply chain setup, Shein has managed to cut the time it takes to create a collection and deliver it to customers from three weeks, which was the former best-in-class rate boasted by competitor Zarato a groundbreaking period of just a few days.

Whenever Shein’s AI engine picks up a change in demand or interest in some new trend, the supply chain can react in real-time. Shein’s integration of technological innovation gives consumers more value through more creativity, a wider assortment, and a faster time-to-market, while the brand’s fully digital inventory operations cut down costs by magnitudes. The fast-fashion brand has truly figured out how to use AI to create radical customer-centricity, growing to a globally significant business in just a decade by leveraging a unique digital model that includes social media for audience creation, e-commerce for convenient branding access, and fintech for financing transactions into a convenient one-stop reality.

Retailers in general are increasingly leveraging customer insights to make informed decisions. Beyond marketing messaging and product R&D, retailers are utilizing first-party customer data to test and optimize their merchandising mix, brand partnerships and even store locations, meeting demand on a localized level. Shein’s business model addresses the fundamental challenge of the fashion industry, namely that of meeting consumers’ near-constant demand for a broad assortment of affordable, stylishly-trendy options in real-time, while simultaneously somehow reducing inventory pressure.

To get consumers interested in its clothes, Shein deploys a comprehensive marketing strategy that combines social media, user-generated content, search engine optimization, short videos and live streaming. The company starts selling a product or accessory line by making very small orders powered by influencer-based promotion, making further orders only if the sales trends are deemed good. The brand’s contracted third-party manufacturers can see supply and demand for each style through Shein’s supplier platform, allowing them to have real-time insight into sales and inventory and empowering them to react accordingly. In 2021, the fast fashion retailer’s approach to dynamic product offering overtook Zara and H&M in fast fashion sales and outstripped Amazon as the most downloaded shopping app in the US, and has most recently reached a $100 billion valuation.

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This article originally appeared in the PSFK iQ report, Consumer Data Integration.

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