Thai online fashion retailer Pomelo has raised a follow-on funding round, bringing its total Series A funding to $11 million. This round led by Singapore-based Jungle Ventures, which had previously led the company’s Series A too, with participation from existing investors.
New investors were also brought in, and they include Andre Hoffmann, 500 Tuk Tuks – a fund of VC major 500 Startups – and Jonathan Price.
Pomelo said it will use the funds to continue to their expansion in Southeast Asia. Currently, the company is focused on Thailand, Singapore and Indonesia but has customers in over 44 countries across the globe.
Frost and Sullivan has projected e-commerce in Southeast Asia to grow from $7 billion in 2013 to $34.5 billion in 2018, a CAGR (compound annual growth rate) of 37.6 per cent.
Clothes, shoes and accessories constitute at least 60 per cent of this massive retail opportunity. With its unique vertically integrated business model, Pomelo can leverage on a team that is growing its brand to the level where it may potentially emerge as a preferred and profitable consumer brand in fashion e-commerce in this market.
“We strive to provide the absolute best in terms of online fashion through our unique vertically integrated supply chain. E-commerce is clearly approaching a tipping point in Southeast Asia and we’re lucky to be one of the leaders in the fast growing fashion vertical.” said Pomelo co-founder and CEO David Jou.
Additionally, Pomelo continues to strengthen its management depth having added Meg Mistry as Brand President and James Lamrock as Regional VP (Operations). Mistry was previously Regional Creative Director for Zalora, while Lamrock was chief logistics officer at Luxola, which was acquired by Sephora.
Jonathan Price also joins in an advisory capacity. Currently a Senior Advisor at TPG, he was previously the Managing Director of The Body Shop Asia and Global COO of Targus.
With the World Bank predicting that the Asia Pacific (APAC) region will continue to account for one-third of the global e-commerce industry, spurred by the Alibaba’s $25 billion IPO and Amazon’s investment of US$5 billion into India as of January 2016, these investment patterns suggest a shift from investment-led to consumption-led growth.
According to a Mastercard report, this competitive landscape is driven by “an increasingly connected middle class, and innovation in mobile and digital technology will influence the development and direction of online retail for consumers, merchants, payment providers and issuers,” characterised by the increasing integration of social media and data to drive sales, mobile commerce, emotionally-based micro-moment marketing and the use of reward programmes and CRM systems to sustain customer engagement by merchants.
The consolidation of digital wallets in the coming years is also another characteristic of this e-commerce landscape, with Bain & Company also raising questions of whether Southeast Asia can fulfil its e-commerce market potential.
Southeast Asia represents a market rapidly approaching a tipping point, according to Bain & Company. As at March 2016, 100 million consumers in Southeast Asia have made a digital purchase, while 150 million are researching products or engaging with online sellers.
Bain notes: “Online retail penetration may be small, yet consumers are highly influenced by digital content. For example, penetration is a mere 1.2% in the Philippines, but 34% of those who have made a purchase online in that country reported they were influenced by online content prior to making their purchase.”
In addition, specific categories such as clothing & footwear (24%) and travel (18%) are purchased online in Southeast Asia. The emergence of distinct online consumer segments reflects an increasing sophistication amongst its consumers.
While the Southeast Asian region is going to encounter challenges in ibecoming a flourishing e-commerce marketplace, given it encompasses a region of fragmented market that are diverse in terms of ethnicities, languages, consumer preferences and regulations, its sizable and digitally sophisticated population translates to a broad acceptance of e-commerce.
To date, Southeast Asia lacks a solid regional payment and logistics infrastructure, which enabled and drove China’s growth in digital retail. Another issue is the lack of trust by consumers in e-commerce. However, this will change as the economies of the region matures and its logistics infrastructure improves.