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 Zara, to 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 brand 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 U.S., and has most recently reached a $100 billion valuation.
This article originally appeared in the PSFK iQ report, Consumer Data Integration.