Indonesian online beauty retailer Sociolla, better known in its home market as Social Bella, is poised for “2x growth” even as it continues to enter new geographies and business segments, said its co-founder Christopher Madiam in an interview with DealStreetAsia.
“We are expecting the same rate of growth this year compared to last year, and definitely an even better rate of growth onwards as we witness a recovery from the pandemic,” Madiam said about Sociolla’s revenue forecasts for 2021.
The Indonesian retailer generated $43.5 million in revenue in 2020, nearly double that of 2019, according to company financials on DealStreetAsia’s Data VANTAGE platform.
Sociolla, a platform selling exclusive skincare labels like Australia’s Sukin and South Korea’s COSRX, has had a rather busy year.
In late-2020, Sociolla stepped out of its home market of Indonesia to enter Vietnam and today runs online and offline stores across three cities – Ho Chi Minh, Hanoi and Danang. The firm also launched Lilla by Sociolla, a new online brand selling m0ther-and-child care products.
It’s busy fundraising as well. DealStreetAsia reported earlier this month that Sociolla was in talks with major investors for a $150 million round that will likely turn it into Indonesia’s next unicorn. That’s months after closing a $56.6 million round led by L Catterton in May. Sociolla’s investors currently include the likes of Temasek Holdings, EV Growth and Jungle Ventures.
Madiam declined to comment on its fundraising progress.
It’s no wonder why Sociolla is so hotly contested by investors. The firm is fast emerging as a category leader in what it calls a growing “Shecosystem” in Southeast Asia – a $59-billion market opportunity with a 9.4% CAGR projected growth rate, fuelled by a new generation of image-conscious, mobile-first, female consumers with the purchasing power to spend on themselves and their loved ones.
Timing has a part to play as well. Indian beauty site Nykaa recently led the way with its blockbuster IPO to raise 53.5 billion rupees ($712 million) at an over $13 billion valuation just earlier this month, further proving the case for a potential Southeast Asian winner in Sociolla.
Madiam explained that Sociolla’s recent foray into the mom-and-baby segment will allow the firm to further grow its average basket size or average order value (AOV) per customer. He noted that while Indonesia is poised to benefit from rising middle-income trends, these will bear fruit over a longer time horizon – one Sociolla is fully prepared to take.
“Indonesia is still a market where consumption per capita on beauty and personal care is low compared to countries like Singapore, South Korea and Japan. In Indonesia, women spend about $30 on beauty products in a year, not one month,” he explained.
That said, Sociolla already has a higher AOV than many of its other retailer and marketplace counterparts due to its focus on beauty products. Madiam declined to share specifics but highlighted that its AOV has risen by 23% from pre-pandemic days.
The number of registered users has also grown by over 2x over that period, with strong customer loyalty with over 40% one-year retention rate.
Eye on metrics
Apart from B2C retail, Sociolla also runs a lesser-known B2B arm from which it generates revenues as an exclusive distributor of over 50 beauty and skincare brands such as South Korea’s Mediheal, Ariul and AHC, Australia’s The Goat Skincare, Japan’s DHC, Lululun and Hatomugi, and France’s Klorane.
Its clients include pharmacy and health chains like Guardian and Watsons, with a reach of 55,000 point-of-sale outlets across Indonesia, Madiam said.
Moving forward, Madiam said the firm will continue to keep an eye on metrics like organic sales, traffic, customers retained and cash burn. It will also spend less time on performance marketing and more on community building.
He added that Sociolla is open to merger and acquisition (M&A) opportunities across logistics, supply chain, inventory and warehouse management, in addition to areas like retail. The firm runs a network of warehouses from which it controls its inventory, and considers it an important aspect of its business during this stage of growth.
“Brand building is not about marketing. It’s also about distribution. It doesn’t matter how well I can do my marketing or appoint a brand ambassador to promote my product. If the product is not available, my marketing immediately flops,” said Madiam.
Sociolla will also roll out a dedicated Lilla by Sociolla app in early-2022, and plans to open more offline stores in Vietnam next year.