China Consumer

A rough time in the rag trade

Bytedance tries and fails to take on SheIn, then exits fast fashion – very fast


It is often said that imitation is the sincerest form of flattery. So it should not have come as a big surprise that SheIn, a low profile Chinese fashion retailer that has dethroned Zara and H&M as the world’s leading ultra-fast fashion company, is being copied by aspiring rivals.

Bytedance, the owner of Douyin and TikTok, is one of the imitators. Last November, it registered the online domain of Dmonstudio, according to web hosting platform GoDaddy. Like SheIn (for more on which, see WiC542), Dmonstudio was presented as a fashion shopping app that offered a one-stop shop for cheaply-priced women’s apparel. Also in November, Bytedance began advertising the new platform on Facebook, extending the marketing campaign to Instagram a month later.

But despite its grand ambitions to topple SheIn (which was founded in 2008, originally to sell cheap wedding gowns), sales on the app were so miserable that it has already ceased operations. Last week, news surfaced that the Dmonstudio is already defunct, although Bytedance has not commented officially on the reasons for its closure. (For the record, it is not the only internet giant trying to replicate the success of SheIn. Alibaba also rolled out AllyLikes, a fast-fashion online retailer, last October.)

SheIn – currently the second most downloaded iOS shopping app in the US and Canada – makes its clothes and accessories through contract manufacturers in China, and ships them worldwide. The Nanjing-based unicorn is reportedly valued at around $50 billion and is said to be on its way to an initial public offering in New York.

Before its demise, Dmonstudio was widely viewed as one of the more threatening rivals to SheIn. The majority of its management had been poached from SheIn, reported Pandaily, and industry insiders expected that the relationship with Bytedance would bring plenty of traffic from blockbuster partners like TikTok.

So what happened? For a start, prices on Dmonstudio weren’t as competitive as SheIn’s, which somehow manages to make money on $3 miniskirts and $5 T-shirts. Industry experts say SheIn was hard to keep up with in terms of designs: it adds around 1,000 new items (in terms of styles and multiple colour choices) a day, a level of output newcomer Dmonstudio struggled to match.

Dmonstudio was yet to build up a loyal following as a brand either, struggling to get headline attention from consumers. Millions of shoppers were unaware of its existence. According to e-commerce and industry knowledge service platform ebrun, the platform scored just 8,000 visitors to its website each day before it was closed.

“As early as 2014, SheIn had already started to advertise on mainstream social media in the US. In the past 10 years, it has greatly benefitted from traffic from Google, Facebook and YouTube as well. Its very precise marketing strategy has brought enormous traffic to its official website and mobile shopping app,” Yiyu Guancha explained of SheIn’s success.

Dmonstudio was part of a strategy to supercharge sales in cross-border e-commerce (selling goods made in China to the international markets).

“For TikTok, which has nearly a billion young users around the world, the failure of Dmonstudio may not be a big deal, but for Bytedance, which is eager to accelerate the realisation of overseas traffic, the repeated trials and failures of cross-border e-commerce is still an alarm bell for the social media giant. It proves that traffic alone cannot conquer the world,” says Yiyu Guancha.

Bytedance has blundered in other bids to expand its product offering – its chat app Feiliao and a Snapchat-like video app called Doushan both bit the dust, to name two of its failures. And this week it revealed another major exit, this time from the securities business. On Tuesday it announced the sale of its financial services subsidiary Beijing Wenxing Online Technology, which has operated the Dolphin Stock app since 2017, which has around 320,000 monthly active users. It sold the subsidiary – its debut foray into finance – to ChinaLin Securities.

However, the South China Morning Post thought Bytedance’s retreat in this area was less to do with a failed business execution rollout and more to do with its management’s “pulling back from some business sectors under scrutiny from Beijing” as part of the ongoing antitrust probes into the internet sector.

© ChinTell Ltd. All rights reserved.

Sponsored by HSBC.

The Week in China website and the weekly magazine publications are owned and maintained by ChinTell Limited, Hong Kong. Neither HSBC nor any member of the HSBC group of companies ("HSBC") endorses the contents and/or is involved in selecting, creating or editing the contents of the Week in China website or the Week in China magazine. The views expressed in these publications are solely the views of ChinTell Limited and do not necessarily reflect the views or investment ideas of HSBC. No responsibility will therefore be assumed by HSBC for the contents of these publications or for the errors or omissions therein.