They say that beauty is in the eye of the beholder.
In this case the beholder is EV Growth – a VC fund set up by East Ventures, Sinar Mas, and Yahoo Japan – which has just led a US$12 million investment into Sociolla, an Indonesian beauty products marketplace.
Also participating were Japanese beauty and fashion company iStyle – which led Sociolla’s January 2017 series B round – and an unnamed “major institutional investor from Singapore,” according to a statement.
Sociolla said some of the capital will go towards marketing for its partner brands. This will include overseas marketing for regional brands that Sociolla acts as distributor for, as well as foreign brands looking to enhance the profile of their products in Indonesia.
The startup said that it already has more than 150 brands available through its site, while it has signed distribution agreements directly with seven beauty brands from across the Asia-Pacific region.
In the fashion, lifestyle, and beauty categories, brand becomes a more important driver of purchase decisions.
Another portion of the funding will be used to hire tech talent for Sociolla Connect (Soco), a new social platform it launched earlier this year. Soco will integrate the startup’s two existing sites – its ecommerce marketplace and Beauty Journal, its media platform featuring beauty and lifestyle-related content.
Co-founder and chief marketing officer Chrisanti Indiana explained that Soco will personalize Sociolla for shoppers and create a user community.
They’ll be able to sign up and complete an individual “beauty profile” at Soco. This will provide them with product recommendations and content relevant to their profile and interests.
Shoppers will also be able to generate their own content. “[Users can] interact or share with other fellow beauty lovers inside Soco,” she added.
Multi-category players like Amazon, Lazada, and Shopee dominate the market, competing against each other on price and shipping costs.
But specialist beauty and fashion-centric platforms like Sociolla, Althea, Pomelo, and Zilingo are still pulling in big funding from investors.
Albert Shyy is principal at Burda Principal Investments, the VC arm of German publishing group Hubert Burda Media, and co-lead investor in Zilingo’s recent US$54 million series C raise.
He told Tech in Asia that while the likes of Amazon and Lazada are crowding out the marketplace, their multi-category dominance forces smaller players to have a more specific focus and value proposition for consumers.
He said, “Usually [their strategy is] branded, it’s content, it’s around loyal users and building a community.”
US-based Glossier is a prime example. In addition to being an online marketplace for beauty products, it also has a blog and a loyal user base of millions.
“It has also become a significant brand in itself, especially among millennials,” Shyy said. “And those are the areas where Amazon – and in this market, Lazada and Shopee – have difficulty penetrating.”
He added, “Oftentimes in the fashion, lifestyle, and beauty categories, brand becomes a more important driver of purchase decisions. And more importantly, there’s the retention of the consumer. [They’re] not just buying, but consuming content, feeling like they’re part of the community, feeling they’re part of the vision or social mission that some of these companies also have.”
Shyy thinks that global expansion is a realistic goal for Asia-Pacific startups adopting this model – so long as they have the right brand message and execution. He also believes they can gain momentum and continue to grow. Consolidation “is not the only endgame possible for these guys anymore,” he said.
He continued, “It’s not like the general ecommerce trajectory where [investors] need to keep feeding them capital every six to 12 months.” Since their margins can be much higher and they can exhibit more user retention and engagement, niche ecommerce startups like Sociolla have a good chance of breaking even or hitting profitability at a relatively early stage.
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