Hermo remains committed to growth

• Plan is to grow revenue by 100%-300% in three markets this year
• Will launch iOS app for Malaysian market this quarter

LEADING online cosmetics retailer Hermo is committed to growth in the three markets it is currently in, namely Malaysia, Singapore and Indonesia, and is in no rush for further regional expansion.

Its chief executive officer Ian Chua (pic) told Digital News Asia in a recent interview that while they continue to look for opportunities, their main focus is still the markets they are currently in.

“We don't really just expand, if we do expand we need to make sure that we do it correctly. So, this is our philosophy; that we don't want to go into multiple countries, lose focus, and keep on burning money and all that. That is not our style.”

According to Chua, the plan is to grow the business in the three markets by 100%-300% in terms of revenue this year.

“Our key growth pillars this year for Malaysia, Singapore and Indonesia include adopting a data-driven approach, video as a key to our content and a strong emphasis on mobile-first such as a seamless end-to-end user experience with the introduction of our shopping app.”

Hermo recently launched its Android app version for the Malaysian market and is planning to launch the iOS version this quarter, and later launch these apps in Indonesia and Singapore respectively.

When asked for his thoughts on the e-commerce scene in Malaysia, versus the rest of Asia, Chua opined that the Malaysian market is still at the infancy stage, compared to China and the United States, which are very mature markets.

“Everyone there is buying things online as a lifestyle, in Malaysia, people are still not bred this way. So I would foresee that we still need a few years to pass before we are a mature market where people view online buying as not an experience but a way of life, a social norm and as a very convenient way of buying things. We still need some time to really reach that stage,” he said.

E-commerce in Southeast Asia

Commenting on the e-commerce scene in Southeast Asia, Chua explained that there are a few different levels when it comes to market maturity in terms of e-commerce penetration (e-commerce adoption per capita and the availability of infrastructure such as payment facilities and logistics).

"The first level would be of course Singapore and Malaysia, which are more mature, followed by Thailand and Philippines. The third layer would be Indonesia, the Philippines and Vietnam, and others,” he said.

The different levels appear to pose some challenges as well. “Every country has its own culture, languages and government policies, so in terms of expanding to each country in Southeast Asia, it’s actually very hard."

“I mean, everyone is looking at this region as the next opportunity for e-commerce, because we have a 600 million population here, and all that. But if you look deeper, this market is very fragmented, so what we are currently doing is, we are still growing the team and making sure we have every infrastructure in place, so that when the time comes to expand to other countries, we will be ready.”

When asked what lessons he has learned from expanding to Singapore and Indonesia, Chua acknowledged that Singapore is actually a very competitive market, and a relatively small market, at that.

“I think it's quite a success for us to go into this market, because it has made our team stronger. Because, in order for you to survive there, you have to be very strong. Because for Hermo, we always act as a platform for the brands - so, if we have distribution channels to Singapore as well, that is what all the other international brands are looking at, so we’ve had to expand to this market.”

Lessons learnt

In terms of the lessons he has learned, Chua said that they still have to behave like a startup, which includes keeping everything lean. “How can we continue to survive, and how can we continue to expand our foothold in the Singapore market? These are the key points that we keep on discussing within our team.”

As for Indonesia, which they ventured into in July last year, it is still a learning process for Chua and his team. “I would say that we are still in the learning stage, learning how the market is going, how consumers there behave. We still keep it very lean, and try to understand the market.”

Chua remains upbeat on the potential for e-commerce in Malaysia. “What I’ve noticed is that there are more players in the market right now, in related areas such as logistics, delivery, payment facilities and marketing, as well as app-based startups in Malaysia. This is a very positive thing.”

Everyone is contributing their part towards delivering the idea of convenience to the consumers, he said. “For instance, we developed an app that makes it easier for people to shop, on-the-go, whenever and wherever. Not only does it save the user time, the user gets more interaction time on the app such as the social aspect of things. They can share their purchases and beauty reviews with other users. Essentially, we need to fulfil a need here and the app just solidifies the entire user journey for us.”

Chua noted that with big players like 11Street, Lazada and Zalora all in the market now, things are changing. “Maybe some other companies will think that these big guys are a threat to home grown Malaysian startups, and all that. But we see it quite positively, as they are contributing towards educating the market and users together in the bigger e-commerce ecosystem as a whole,” he concluded. 
 
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