With a year-on-year growth of 250%, does going overseas mean setting up a street stall in the United States?

This article introduces how to operate a brand overseas and is recommended for friends who are interested in brand overseas expansion.

SHEIN, TikTok, Temu, MINISO, Insta360... In the past two years, more and more Chinese companies and brands have achieved great success in overseas markets. Daofa once discussed the current situation of Chinese brands going overseas in the article "New Approach to Brands Going Overseas, Is the North American Lower-tier Market More Suitable than Southeast Asia?". Merchants going overseas can be divided into the following three categories:

The first category is traditional brands that go overseas with the help of distributors. For example, well-known traditional brands such as Lee Kum Kee and Qia Qia Melon Seeds sell their products wherever Chinese people are through overseas Chinese supermarket channels, without much need for brand promotion.

The second category is brands that go global with the help of platforms. Most of these brands are white-label brands that sell goods on platforms such as Amazon and Lazada to earn price differences, but their products are not differentiated and have no brand assets.

The third category is brands that have built their own independent websites or mainly adopt the DTC model. Typical examples are 3C brands such as Anker Innovations and Xiaomi.

They choose to dig deep into market segments that have not yet been fully developed by large companies, open up the market with differentiated products, and only need ordinary traffic-driving actions to increase sales of independent sites, and then carry out brand building work with independent site users as the core. This type of brand will become the final form of Chinese brands going overseas.

From Daofa's observation, pan-DTC brands going overseas have already broken through the three major categories of consumer electronics, entertainment, and e-commerce platforms. Many companies in traditional industries have also gone overseas through innovation in products and business models, and have achieved phased results. S.deer, a women's clothing brand from Nanjing, is one of them.

Founded in 1994, s.deer currently has more than 1,500 self-operated stores in China. As early as 2016, s.deer opened its first overseas store on Opera Avenue in Paris, France. In 2022, s.deer entered the US market through Amazon and built an independent brand website, with single products priced at around US$100 to US$150.

Through marketing methods such as cooperation with influencers, s.deer has successfully created a brand mindset that takes into account both workplace and party wear, and has gradually entered the wardrobes of highly educated American women. In the first two months of 2024, s.deer's revenue in the US market increased by 260% year-on-year. In order to optimize the experience of American consumers, s.deer built its own overseas warehouse in the United States for the first time, providing a 5-day delivery service.

What challenges do traditional industry companies face when going overseas? When is the best time to go overseas? How to use products to drive brand awareness in overseas markets? With these questions, Daofa Research Institute interviewed Mr. Li Jinhao, Director of the Cross-border E-commerce Division of s.deer, to share his experience and thoughts on brand going overseas.

01 Going overseas means setting up a stall in the United States

Mr. Cai Gonghe, the founder of s.deer, set the vision of becoming an international brand at the beginning of its establishment. Therefore, he has been continuously exploring different models for the brand to go overseas, including opening offline stores in France and opening up the US market through online channels.

The cultural and market differences between China and overseas are the biggest challenges that s.deer encounters in its overseas expansion. These differences range from preferences and pursuits for styles to differences in styles and sizes, all of which test the brand's insight and understanding of overseas consumer needs.

Based on these objective differences between China and overseas, Li Jinhao believes that cross-border business is actually a false proposition. Going overseas to do business is essentially no different from setting up a street stall.

With the development of the Internet, brands have made a leap from selling products in offline stores to selling products through online e-commerce channels. With the development of global trade, brands have made another leap from selling products on domestic e-commerce platforms to selling products on overseas e-commerce platforms across borders.

But no matter where a brand does business, it is actually selling goods. The focus is always on what kind of goods local customers like, what marketing methods to use to reach customers before sales, and what kind of services to provide after sales. When Chinese brands go overseas, they actually set up their companies in China, but set up stalls in the United States. They should avoid doing American e-commerce with a Chinese mindset.

In order to better achieve the goal of localization, s.deer registered a company in the United States and established a cross-border e-commerce division in Nanjing, which is affiliated with the American company. It is independent of the head office and is responsible for formulating overseas strategies, including market research, channel development, marketing strategies, etc. Dedicated execution teams have been set up in both China and the United States to cooperate with each other to bridge the gap.

s.deer chose the United States as its first overseas destination for two main reasons: first, the United States has a huge consumer market and a mature e-commerce system; second, compared with other countries, as an immigrant country, American consumers have a high acceptance of international brands. For brands, the US market is a good platform to test consumers' acceptance of products.

In the US market, s.deer's target audience is similar to that of white-collar workers in China. They may be managers in charge of marketing, elites at work, and need to attend social events after get off work. Therefore, s.deer's main style in the US is work party wear, which takes into account both workplace and social scenes. The restrained tones of black, white and gray fit the formality and seriousness of the workplace, but the design sense in tailoring and pattern will not appear too dull and rigid in social occasions.

During the early market research, s.deer found that the US market was full of colorful party wear, but few brands launched designs that took into account different scenarios. s.deer's products hit this pain point that has not been well solved, and can take into account two important scenarios in customers' lives.

02 Use products to drive consumers’ awareness of the brand

Relying on the trend-catching ability accumulated over 30 years of brand creation, s.deer can continuously launch high-quality products that meet the needs of local consumers and use products to drive consumers' awareness of the brand. Although it is engaged in e-commerce business, s.deer rarely creates hot products because the ultimate goal is to provide consumers with a reason to choose a brand, rather than selling products for the sake of selling products. The marketing strategy is also formulated around building the brand.

In Li Jinhao's opinion, the key to marketing in overseas markets is to accurately position the brand first, and then promote the brand around its own advantages. Compared with ordinary fast fashion brands, the unique design concept is the biggest difference of s.deer. When consumers think of black, white and gray, or think of going to a party after get off work and don't know what to wear, they can think of s.deer, and consumption becomes a natural thing.

In terms of specific practice, s.deer's approach is to first find the crowd and scene, and then create content through overseas celebrities, so that consumers can feel that the brand is relevant to their needs and can help them solve problems.

As a bridge between brands and American consumers, influencers play a very important role. In Li Jinhao's view, influencers have a high appeal in a certain community, and the most important criterion for selecting influencers is to understand and judge whether the other party truly recognizes s.deer's product design and brand concept.

In practice, s.deer mainly completes cooperation with influencers through the following three steps. First, judge whether the style of social media is in line with the brand's tone through the content posted by the influencer in the past. In the subsequent cooperation negotiation, s.deer will spend two to three days to communicate immersively with the influencer, and it will take an average of ten days to complete the cooperation. Finally, s.deer will give a commission higher than the industry average to show its recognition of the creative content.

There was a KOL on Tiktok who took the initiative to contact the s.deer team because of her love for the design style, hoping to establish a cooperative relationship. Although she didn't have many fans, s.deer was willing to cooperate with her. Li Jinhao believes that the most important thing is to see her love for the brand, which can infect the people around her, and then have the opportunity to influence more consumers.

s.deer has adopted a multi-platform content marketing strategy. Instagram, Facebook, YouTube and TikTok are all platforms for brands to communicate with American consumers. However, s.deer has a slightly different positioning for each platform, which is also determined by the target population.

On YouTube, s.deer has many long-term KOLs, who mainly introduce and review products. On Facebook, s.deer will pay more attention to KOLs and content that can drive sales. The goal of Instagram is to build brands and create fashion trends. Although TikTok is very popular among young people in the United States, their spending power cannot afford s.deer's pricing for the time being, so the brand has currently opened outlet-like stores to provide clearance or discounted products.

Amazon and the brand's independent website are s.deer's most important sales channels. The reason why it chose to enter the US market through Amazon is that it has a huge user base and a mature logistics system, which can provide consumers with a good shopping experience when the brand first enters the market and the supply chain or logistics are not yet established.

The main purpose of building an independent website is to better manage the brand image, serve consumers well, and collect customers' suggestions for optimizing products and services. Unlike domestic consumers who mainly shop through e-commerce platforms, most American consumers actually shop through independent websites because the experience, price and products of independent websites are the best among all platforms.

s.deer is also working hard to get closer to this goal. When asked if there has been any milestone since its overseas expansion, Li Jinhao told Daofa that in April this year, s.deer will start using its own warehouse and will finally be able to provide 5-day delivery service to American consumers.

03 Paddling the local oars and raising the sails of technology

What pitfalls will the brand encounter when facing the unknown overseas market?

Judging from the practice of s.deer, Anker Innovations and other predecessors who have gone overseas have accumulated a wealth of experience. In this process, the infrastructure and supporting services for going overseas have become more and more perfect. Today, when Chinese brands go overseas again, they only need to follow the path pioneered by their predecessors to avoid possible "pitfalls", but how to make each step more profound is a problem that brands need to consider.

These questions include how to make good use of China's supply chain advantages? How to conduct consumer research and grasp the pain points more accurately? As long as each step is 1% more accurate than others, together, we can go a little further than others.

In Li Jinhao's opinion, the biggest pitfall may be " Don't use Chinese thinking to enter the American market. You must use American thinking to enter the American market. You must hoist the sail of technology and paddle the local oars."

On the basis of localization, we make good use of technology to improve efficiency and accelerate growth. In terms of clothing production, s.deer gradually adopts fully digital production technology. Taking the sample production of the clothing industry as an example, s.deer now applies 3D technology to sample production, and all clothing has its own digital ID in the database. This is done in order to provide consumers with online fitting services through independent websites in the future. Consumers only need to enter their personal information to see the fitting effect.

At present, most clothing brands provide size charts in online channels for consumers to refer to. In fact, consumers have no idea about clothing length and chest circumference. If 3D or VR technology can be used to optimize the online shopping experience, consumers' satisfaction with the brand will naturally increase.

s.deer's investment in technology and product development does not stop there. Building its own warehouse in the United States and providing 5-day delivery service is a matter of course for consumers, but there are actually many difficulties to overcome in the implementation process.

First, how to allocate reasonable inventory to the United States. Second, how to connect overseas warehouses with domestic warehouses and even supply chain factories? These problems can only be solved by developing customized software. In this process, s.deer also learned a lot of innovative models and solutions from its predecessors such as SHEIN, including how to reduce human intervention, use the system to rate suppliers, and manage the time and schedule of delivery.

When a brand goes overseas, technology and science must come first and the infrastructure must be built well. Only then will it be possible to achieve relatively stable growth and enhance the experience of overseas users. This is the ultimate goal for any brand.

Author: Rao Rao, WeChat public account: Knife Skills Research Institute