Amazon is still the biggest name in e-commerce. But the buzz these days is about Shein.
China-based Shein surged past Amazon as the most-downloaded shopping app in the United States, after China removed export taxes to offset the 2018 U.S. trade tariff. The move sparked rapid international growth, with annual sales growing by 250% during the pandemic.
But another key factor is Shein's proprietary technology that harvests customer app searches to design and produce apparel in 10 days coupled with several gamification techniques to effectively keep a young audience engaged and buying. The latter, according to the Business of Fashion, reflects fashion brands, traditionally reliant on straightforward cashback schemes, adopting an approach of tech giants.
This trend suggests a natural progression of companies looking for new ways to increase consumer engagement and excitement, says Ralph J. Tyser Professor of Marketing Maryland Smith’s Amna Kirmani at the University of Maryland’s Robert H. Smith School of Business. Shein users, for example, can collect coins by such actions as posting a product review, and the likes of Blume and Girlfriend Collective award points for following their social media accounts. “Consumers love games and tend to be competitive,” she says. “And they have played these ‘games’ with so many other products and brands.”
To further understand the appeal, consider the strategies in loyalty programs of airlines, online games and a retailer like Starbucks. “They have perfected the way to increase both engagement and spending by their customers,” Kirmani says. “They use basic consumer psychology principles, such as creating targets or goals that take the consumer to the next level of a hierarchy (e.g., increasing your status tier). This increases commitment [on the basis of] ‘one reachable goal at a time’ and by giving awards, rewards or badges that indicate status and provides a basis for social comparison with other customers.” Collectively, she adds, “this makes consumers feel unique and special and keeps them coming back for more.”
But pitfalls go with this. The game, for example, may become more important than the product and brand. “Extrinsic rewards may undermine the shopper’s intrinsic motivation to buy the brand,” Kirmani says. “If a shopper attributes a purchase, or log in, to the reward, this may replace that individual’s liking for the product and the shopper’s love for the brand may go down.”
This, she adds, “can put companies in the position of having to keep giving you more rewards to satisfy their customer’s fix, just as in any addiction. It’s an endless cycle.”
Also, in some game apps, “it becomes so difficult to move up after a while, that the player becomes frustrated and gives up” Kirmani says. “Then there is no reason to return to the game, and this could happen for fashion brands as well if a customer reaches a high tier and finds it impossible to go higher.” And, if all companies are engaging in gamification at such a level, “it becomes harder to get other brands’ consumers to switch to your brand.”
On the other hand, gamification produces significant benefits for the company. “Data, data, data… Data is the new currency,” Kirmani says. “Gamification is an excellent source of data about customer habits, your advertising and promotion strategies, and what makes customers tick.” Brands also can use nudges to get people to buy more. “Starbucks, for example, gives 25 stars for buying x, y and z in a short period of time,” she says. “You can perfect these nudges to maximize response.”
But for consumers, there’s a downfall here. “The house always wins,” Kirmani says. This parallels the ethical issue faced by casinos using exactly the same strategies on perceivable gambling addicts, she adds. “What if the customer is poor or a shopping addict (in the medical sense of the term)? You are feeding that addiction, which can lead to negative consequences.”
Media Relations Manager