[WIRED] Shein Buying Everlane Actually Makes Perfect Sense

[papy]

Chinese ecommerce giants conquered the global market largely by selling cheap stuff at eye-watering scale. Companies like Shein and Temu thrived in part because of the “de minimis” loophole, a US trade rule that allowed packages worth under $800 to enter the country tariff-free and with relatively little customs scrutiny. That system became the backbone of a new era of cross-border ecommerce, enabling Chinese companies to ship cheap stuff directly to American consumers faster and more efficiently than many traditional retailers could manage.

But after US president Donald Trump imposed sweeping new tariffs on Chinese imports and ended the de minimis exemption, the economics underpinning that model began to falter. Chinese companies quickly realized they could no longer rely solely on flooding Western markets with bargain-priced products. If they wanted to keep growing internationally, they needed something more durable: a good old-fashioned brand.
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In this new economic and political environment, Chinese companies are no longer content being the invisible factories behind Western brands. They want to own the brands themselves.

Shein Buying Everlane Actually Makes Perfect Sense

[Tallytony]

@papy

In this new economic and political environment, Chinese companies are no longer content being the invisible factories behind Western brands. They want to own the brands themselves.

Idk. China makes a fortune with all the sellers buying the same thing from the 40 thieves and selling it under 30 different brands at the same time. But I imagine that it makes a more consistent (and even bigger) fortune from the eventual brand that does land and becomes a fan-favorite, leader of the pack, distant from the competition.

We offer white-label, third party filling, whatever you want to call it, sometimes of products that we don’t sell under our label, sometimes of our exact formulas. My own products and brand are my favorites because they are the ones I can control. But per unit, they aren’t always the most profitable

[lake]

My take is a little different, but one would expect that.

China shares a problem with many Amazon sellers. Not enough dollar margin on many of the products made in their factories.

Historically, the way commodities which have poor margins move to higher margins and higher profits has been branding. Not all brands have value, we all know that many Amazon sellers brand and do not see their products increase in value or margin.

The marketing talent Shein will need to make this acquisition work for them is different from what helped their reach their current level of success. It will be interesting to see whether they can rise to the challenge.

[Tallytony]

@lake

My take is a little different, but one would expect that.

I 100% agree with everything you just said.
Including the painful part about the profitability of commodities.

I doubt that you’d ever given it any thought. But I agree with you way more often than not.

[lake]

I have spent my carrier, avoiding commodity business which I am not any good at.

Value added was the key to every job at every company I worked for or owned, And significant margin was essential to succeed.

In the 1980s, my wife and I were running a two person company with a million dollar in sales per employee. We were constantly asked when we would hire some help. The answer was we would add a person when we had a plan for another million in sales in place.

Obviously, our percentage margins as well as our dollar margins were high enough to justify busting our butts.

We took our vacations between Christmas and New Year’s each year because our major corporate clients were closed during that period.

Eventually, the eroding dollar margins killed that business.