SHEIN announces platformization, is the DTC approach a panacea or a black hole for cross-border e-commerce?
SHEIN platformizes Is DTC a cure-all or a pitfall for cross-border e-commerce?
SHEIN has achieved over 100% revenue growth for six consecutive years and has an estimated valuation of over 100 billion US dollars. Recently, it has also announced its platformization, and many European and American DTC brands are constantly financing and going public, prompting cross-border merchants to turn their attention to the “DTC route”.
Many sellers who have suffered losses on Amazon have set their sights on DTC, hoping to seek change and break through, but often the results are disastrous.
The fundamental reason is: insufficient understanding + opportunism.
Many people do not understand that cross-border e-commerce platforms and independent websites are completely different, even if sellers on platforms that sell several billion dollars a year, they can only start from 0.5 at most when doing independent websites.
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Many Amazon sellers who have sold well in the end only treat the independent website as a way to attract traffic to Amazon;
Many opportunists also see the independent website as a hot opportunity. When the platform is not good, they look at the independent website, and when the independent website is difficult to do, they shrink back to the platform, their attitude is wavering, and they do not regard the independent website as a long-term investment.
1. How to correctly take the DTC route
There are also independent websites: independent websites and brand independent websites.
But if you have to say what is the essential difference between “brand independent websites” and “independent websites”, in fact, there isn’t one.
However, the biggest difference of “brand independent websites” is that they focus on “repurchases” on independent websites!
Relatively speaking, other independent websites except for brand independent websites are generally explosive product websites and grocery stores.
Their characteristics are fast volume, instability, and quick closure. For example, selling counterfeit goods, selling explosive products, the sales cycle is short, the sales amount is unstable, so the supply chain, customer service, and logistics cannot be optimized synchronously, and the product quality is a problem, lacking long-term planning and operation of the brand.
A brand independent website means: reliable product quality, stable marketing channels, stable repeat customers, and good reputation. In short, the characteristics of a brand independent website are “stability” and “accumulation.”
What’s important for a brand website is to find the right user positioning and product selling points, design your business model and brand story, and focus on repeat customers.
So compared to explosive product websites, the time and money investment in the early stage of a brand independent website are higher and the return period will also be longer. Many beginners usually ask me, “Should I start with an explosive product website and then switch to a brand website after I have a certain amount of traffic?”
Maybe in everyone’s mind, an explosive product website is a low-investment, low-threshold but profitable entrepreneurial project that is very suitable for beginners to enter the market.
But think about it, if explosive product websites are so profitable, why wouldn’t the old hands who have been in this industry for many years already take advantage of it? Can newbies still have a chance to make money?
2. Pros and Cons of Explosive Product Websites and Brand Independent Websites
There are many disadvantages to explosive product websites:
1) First of all, brand websites and explosive product websites have different operating ideas, requiring different abilities, and accumulating different resources and knowledge over the long term.
Explosive product websites require the ability to choose explosive products and precise advertising placement, and long-term accumulation is also based on these two abilities. However, explosive product websites are in a constant rush mode and need to keep finding explosive products, otherwise, they cannot continue to make profits and almost cannot accumulate resources.
Brand websites require more comprehensive abilities, including product selection, customer positioning, brand building, business models, explosive product operations, and the ability to use multiple marketing strategies.
When it comes to accumulation, operating a brand website not only enhances one’s comprehensive business ability and understanding, but also more importantly, accumulates your brand assets. As your user base grows and your brand recognition increases, it becomes easier to operate the brand website in the later stages.
2) Secondly, a “hot product” website (grocery store) may not necessarily be profitable, even if it runs into a hot product, it is difficult to stabilize.
3) Finally, the “hot product” website has a lot of problems and is not suitable for long-term development, with great risks.
For example, payment channels are restricted, FB advertising channels are restricted, supply chains and logistics cannot be guaranteed, there is no repurchase, profits are low, and many high-quality low-cost marketing strategies and traffic niches cannot be used.
Many newcomers to independent cross-border e-commerce websites may feel that there is no repurchase and it is not a big deal. As long as the ROI can break even, it can be profitable, right?
This problem may not be obvious during normal times, but it is fully demonstrated during the annual Black Friday online sales event.
During Black Friday, the CPM doubles, or even multiples, which is not something that ordinary sellers can bear. The reason why brand websites usually advertise heavily during this time is to activate old users and encourage them to repurchase! So a high CPM is cost-effective, as reactivating old users is much cheaper than acquiring new ones.
However, for “hot product” websites, acquiring new users during this time will result in a loss of money, so many “hot product” websites simply stop advertising and wait until the big sales event in two months to start selling again. However, they miss the opportunity to make the highest profits during the big sales event, as users are waiting to buy during that time. Waiting until users have spent all their money is not a good strategy.
Summary: Branding websites and explosive product websites are actually two different things. The initial intentions are different, which leads to two different paths from the beginning. Due to different abilities, cognition, and resources accumulated, the results are vastly different in the long-term development.
Repeat purchases not only increase revenue, but also increase the brand’s influence in the minds of users.
So, how to create an independent brand website? Start from the brand.
We divide the creation of a brand into two parts: first, the formation of the brand, from 0 to 1 to create a brand. Second, the forging of the brand, to continuously increase the value of our brand.
By configuring an appropriate team, constantly creating explosive products (including explosive products, events, content, and advertising), continuously exploring traffic opportunities and optimizing supporting services, we can continuously increase our brand assets.
The formation of the brand is the most basic step, which requires: finding accurate user positioning and gathering places, discovering corresponding products and selling points.
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