In a statement, Gobi Partners said that this round of financing will be primarily used to strengthen Hermo’s product base, bring on new team members, enhance marketing efforts, and establish regional offices outside of Malaysia to drive market expansion and supplier relations.
“Hermo will focus on building its presence in the Indonesian market and continue to drive operations momentum in Singapore. The company plans to work closely with suppliers to directly source products,” the statement read.
“This will allow Hermo to guarantee supplies, improve margins, and ultimately provide better products, discounts and deals for consumers. Leveraging the company’s three years of operations, Hermo will also utilise big data to better work with brands and improve product offerings,” it said.
Prior to this round of financing, Hermo received angel and seed investments from Singapore-based Crystal Horse Investments and local Malaysian angel investor Tan Swee Yeong. The amount raised in these fundings totalled MRY450,000 ($100,000).
Hermo has over 3,000 active stock keeping units at the moment, with over 150,000 monthly active users;
From October 2014 to September 2015, Hermo’s revenue reached MYR10 million – a three-fold year-on-year growth.
The e-commerce business was set up in February 2012, co-founded by Ian Chua, PS Chong and Ian Mok. Chua and Chong had recognized similar models in China such as VIPShop and Jumei, and believed that Southeast Asia was ripe for a homegrown premium cross-border cosmetics platform.
Hermo is a leading platform within its vertical, ranked on Alexa as the top beauty e-commerce site in Malaysia.
The e-commerce business targets premium-grade cosmetics products, offering competitive prices and focus on after-sales services. Currently, it has direct relationships with major international brands, including partnership with L’Oreal.
It noted that Korean brands are most popular among users, though the reception towards Japanese, Taiwanese and Chinese brands is also strong.
Its user base is currently 95 per cent female, and nearly 50 per cent of orders are completed on mobile.
“As Malaysia’s leading beauty vertical, we are excited to bring on Gobi Partners as our investor. Moving forward, we will expand regionally to meet the needs of more women in Southeast Asia. We believe that Hermo will be able to help more brands reach consumers as mobile technology gains momentum in the region, filling gaps between supply and demand in this market,” said Chua, who is also chief executive officer of Hermo.
Partner at Gobi Partners, Kay-Mok Ku said Hermo has differentiated itself from other e-commerce companies in that it has achieved profitability for over a year now.
“It is also focused on Asian beauty products that are in great demand in Southeast Asia,” said Kay-Mok Ku, Partner at Gobi Partners, “In particular, we believe that Hermo will continue to benefit from the Korean Wave. We will work with them to establish improved supply chain relationships with suppliers and manufacturers from Korea and other major cosmetics markets.”