Cosmetics startup Luxola acquired by LVMH-owned Sephora

Visual of Luxola site

Singapore-based e-commerce platform Luxola, which was launched in 2011, has been acquired by French luxury goods conglomerate LVMH, following an undisclosed investment into Luxola by LVMH’s cosmetics subsidiary Sephora. The financial details of the acquisition are undisclosed.

According to Crunchbase data, Luxola raised $15.6 million across four rounds of venture funding. The last funding it raised was a Series C round in May 2014 involving F&H Fund Management and QueensBridge Venture Partners, who invested $3 million in the venture. Gree Ventures has also previously invested.

Commenting on the transaction, Alexis Horowitz-Burdick, CEO of Luxola, said “Sephora’s investment enables us to take this vision further. With greater market reach and brand depth, we will offer an unparalleled customer experience.”

Currently employing 120 people, Luxola brands itself as an online shop for various beauty products and accessories, with a presence across 11 markets and retailing over 250 brands.

Anne-Véronique Bruel, president of Sephora Asia, stated: ”Investing in Luxola is a unique opportunity to penetrate the online beauty market and accelerate Sephora’s growth in Southeast Asia. We are thrilled to welcome Luxola to the Sephora family.”

Also Read: M&A, IPOs on the rise over the next 3 years: Baker & McKenzie

Online shopping landscape

While Indonesia presents the largest market for e-commerce in the region, with its growing middle class driving consumption, Singapore and Malaysia are also crucial markets. According to an ASEAN Briefing report on regional e-commerce, Singapore’s online shopping market has grown significantly, from S$1.1 billion ($881 million) in 2010 to a projected S$4.4 billion ($3.5 billion) for 2015.

Approximately 40 per cent of the total sales originating from Singapore-based websites in 2014 were led by the sales of events tickets and insurance; and a community of Singapore-based e-commerce startups sustained through cross-border sales in the entertainment and publishing industries.

With mobile shopping possessing significant growth potential, Luxola is well placed to leverage on the city-state’s treaty network, connectivity, high cross-border trade and the ability to ship consumer goods valued below $320 without any duties.

An e-commerce industry cluster is already emerging in the city-state, with clustering behaviour driving the growth of e-commerce ventures alongside other virtues of the city-states startup ecosystem. Notable retailers like Reebonz (luxury products and services) and Redmart (household items, groceries) are already established in the city-state.

Credit: ASEAN Briefing

Future markets where Luxola may expand its footprint are Indonesia and the Philippines, growth markets presenting tremendous opportunities. However, they also present challenges to online retailers at this point, mostly due to issues with infrastructure.

For Indonesia, demand from Greater Jakarta drove most of the initial growth in e-commerce. However, with orders from beyond Jakarta growing, there are big opportunities for growth in second and third-tier cities throughout Indonesia, as the infrastructure improves and middle class expands.

However, Indonesia’s online shopping industry is hindered by the current state of internet infrastructure. Indonesia’s inefficient transportation channels also present a challenge. While online shopping is more attractive to urban dwellers and rural residents, goods deliveries can suffer from deficits in maps, lack of clarity in addresses and unreliable courier services.

The Philippines is another prospect for Luxola expansion, as it stands out from other Southeast Asian markets by virtue of the population of internet users, which stands at an estimated 38 million as of 3Q 2014.

This makes it the largest English-language online market in Southeast Asia, with foreign online retailers having to do less work to adapt their websites to the local market. Social media use is also pervasive in the Philippines. This makes it especially lucrative for online sales, as over 70 per cent of the Philippines’ GDP came from consumption in 2014. By contrast, most ASEAN markets operate as export-driven economies.

The Philippines also presents compelling logistics opportunities, with a maturing market sustaining e-commerce activity, indicating a strong logistics base and established supply chain. Firms like FedEx and DHL have brought down prices and streamlined the delivery of consumer goods in the Philippines.

These considerations are likely to play a role in Luxola’s future development. And they are also likely to gain centrality as factors in the strategic planning of investors and entrepreneurs for market entry into the e-commerce markets of both nations.

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Singapore Reporter/s

In Singapore, we are looking to double our reporting team by this year-end to comprehensively cover the fast-moving world of funded startups and VC, PE & M&A deals. We want reporters who can tell our readers what is really happening in these sectors and why it matters to markets, companies and consumers. The ability to write precisely and urgently is crucial for these roles. Ideal candidates must have to ability to work in a collaborative, dynamic, and fast-changing environment. We want our new hires to be digitally savvy and ready to experiment with new forms of storytelling. Most importantly, we are looking for hard-hitting reporters who work well in a team. Collaboration and collegiality are a must.

Following vacancies can be applied for (only in Singapore).

Following vacancies can be applied for (only in Singapore).   

  • A reporter to track companies/startups that have raised private capital, and have the potential to become unicorns. SEA currently has over 40 companies with a valuation of over $100 million and under $1 billion.
  • A reporter who can get behind the scenes and reveal how funding rounds are put together, or why they’ve failed to materialise. She/he in this role will largely focus on long-format stories. 
  • A journalist to track special situations funds, distressed debt and private credit (from the PE angle) across Asia.

Singapore Reporter/s

In Singapore, we are looking to double our reporting team by this year-end to comprehensively cover the fast-moving world of funded startups and VC, PE & M&A deals. We want reporters who can tell our readers what is really happening in these sectors and why it matters to markets, companies and consumers. The ability to write precisely and urgently is crucial for these roles. Ideal candidates must have to ability to work in a collaborative, dynamic, and fast-changing environment. We want our new hires to be digitally savvy and ready to experiment with new forms of storytelling. Most importantly, we are looking for hard-hitting reporters who work well in a team. Collaboration and collegiality are a must.

Following vacancies can be applied for (only in Singapore).

Following vacancies can be applied for (only in Singapore).   

  • A reporter to track companies/startups that have raised private capital, and have the potential to become unicorns. SEA currently has over 40 companies with a valuation of over $100 million and under $1 billion.
  • A reporter who can get behind the scenes and reveal how funding rounds are put together, or why they’ve failed to materialise. She/he in this role will largely focus on long-format stories. 
  • A journalist to track special situations funds, distressed debt and private credit (from the PE angle) across Asia.