The COVID-19 pandemic has forced businesses and entrepreneurs to turn to e-commerce and online marketplace in order to survive this difficult time.
Online competition between brands has become increasingly fiercer as consumer behaviours are changing tremendously in this new normal era.
Pomelo, Southeast Asia’s first digital fashion brand, is well aware of the difficulties facing many fashion brands that have to undergo their online transformation, although COVID-19 has no severe impacts on Pomelo in terms of sales volume.
David Jou, Pomelo’s co-founder and chief executive, has come up with the idea of sharing its experience and capability in innovating a new product with local brands and SMEs in Southeast Asia. This can help them stand on their feet and prepare themselves for more digital challenges in the future.
Jou said creating brand awareness and achieving stable sale growth require more than just showing the products on social media. You also need to map out business management plan and market strategies, set the brand target, choose the right tools, provide great service, train the talent and supervise overall business management from front desk to back door.
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Pomelo has accumulated and refined those capabilities since the brand’s establishment eight years ago. Therefore, for him, no one knows better than Pomelo about brand building and hitting the online sale targets.
“COVID has made it very clear in everybody’s mind the importance of the digital disruption. What we want to do? We want to take many of the abilities, the people and the technology we built and offer it to the ecosystem. That’s really the biggest evolution in our business, I would say,” Jou said.
Pomelo has enjoyed steady growth since 2020 as its user base is rapidly expanding. The huge users increase is boosted by lockdowns that restrict travel and commute, forcing more people to go online to buy their stuffs.
Its strong growth and online sale have helped Pomelo compensate for decreased offline sale, Jou said.
“In 2020 we had over 40 million visits through our app and website, which was really a big number. And then we have over 200 third-party brands on the platform. We are adding a lot more.”
As the number of third-party brands keeps increasing, Pomelo sees an opportunity to focus on the technology side. This involves turning their kit abilities into products so that they can give it to their customers as an option and then using this opportunity to build their third-party brand base. With this path, Pomelo believes that the company can expand their platform and user base in the current fast growing e-commerce industry, the CEO said.
“This year we expect to continue to expand platform, offer more and more services to our brand, add more brands and hopefully on the app side, we also continue to add more users in the rapidly growing e-commerce,” he said.
“And like last year, we will continue to grow quickly this year. It’s hard to say right now because the situation is still uncertain. But so far we are on the good track this year.”
With the third wave of COVID-19 in Thailand, Jou admits that a slow growth in sales is inevitable. However, he remains confident the overall online fashion industry can continue to move on, especially in the second half of 2021, as restrictive measures could be relaxed and even lifted in many areas. The CEO expects the business to enjoy a quick rebound after that.
“When things reopen in the second half, we see a very quick rebound, with fashion that is always pent-up with demand. If you have to stay home for more than two months, when things reopen, you really want to go out with your friends and family,” he said.
“You have share retention during the close and when things reopen, you see the strong rebound. So, I think we face the same situation with the lockdown here in Thailand. Let’s see how it goes. We expect what we call the 2020 effect — a very strong rebound when things reopen. You already see it in US and other countries where vaccination has roll out.”
Main strategy adjusted with focus on platform
To continue developing Pomelo’s products and services to meet the consumer needs, David reveals that Pomelo has changed its core strategy that will be a catalyst for the company to become a strong platform in the online world, where fashion entrepreneurs, large and small alike, can come and use Pomelo’s kits to build their own brands.
“We have over 200 brands, international companies, SMEs, Instagram brands, Local brands. When COVID hit, everybody was saying what we do now as an industry. What can we do? I think so many brands started to innovate and shift to online sale. They explore the platforms to access users and build their brands through social media,” the CEO said.
That demand is in line with what Pomelo has been working on over the years. What Pomelo has to do is accelerate these brands’ transition to the platform. Pomelo needs to rapidly reach more brands.
Currently, Pomelo offers the service of helping outsourced brands to sell products on its platform, including warehousing and delivery management. In the future, Pomelo plans to set up a system for outside brands, mostly ones built on social platforms such as Instagram, to manage their own inventory and delivery service.
Pomelo now has both giant international fashion brands and small brands. Most of the participants with the best growth are “Instagram brands” whose entrepreneurs produce, market and sell their products through their Instagram accounts. To put it more simply, the fashion brands have emerged and gained acceptance in the national, regional and global fashion markets with the use of Instagram in creating their brand story and sales promotion.
Aiming to be the Amazon of online fashion world
Pomelo’s main strength is the brand’s past success, which Jou says earns Pomelo confidence like Amazon has done with the e-commerce market. Amazon is known for its strategy that can create products and services to serve the demand of e-commerce market. Therefore, once Amazon announced that it would provide warehousing service or Amazon Web Services (AWS), business owners and brand entrepreneurs entrusted their products and services to Amazon without hesitation.
“For us, it is very similar. We started as a brand and have already done it. It’s just a question of sharing what we have learned and capabilities with others.”
Meanwhile, Pomelo’s board member Ariya Banomyong, who oversees the company’s business strategy to help drive it into its next phase of growth, adds that when talking about Amazon and others, no one is born a platform. It’s a revolution that everybody needs to learn, adapt and find the way to apply its advantages and benefits to support the development of the organizations. The present situation is the right time for Pomelo to improve their platform and enhance that platform to others, he said.
“Due to COVID, malls are closed and sales are down. We need to do something and now all the brands are trying to get online. Everyone talks about e-commerce. If it was easy, everyone could be doing it. The credibility that Pomelo has built as a fashion brand and turning to platform is the right attraction that others ask, ‘Can you do the same for us?’,” Ariya said.
Moreover, Jou says fashion is basically different from other e-commerce sectors. It is about content, curation, fitting, trying on, and also about inspiration. Other e-commerce sectors more are about price and having the biggest assortment while content is less important. So, the first criteria differ from fashion. That’s why business owners have a specific fashion platform for fashion brands and fashion customers.
Convergence between fashion and technology
Pomelo this year has shifted its business focus towards creating an online platform but the CEO insists that the brand’s fashion identity remains its major priority as a fashion company.
“We have two main business units. We have the brand and the platform. Pomela as the brand is always what it stands for. It is always trendy and accessible for everybody and it’s all about Pomelo community. It has not changed at all. We keep expanding our footprint, launching in the Philippines earlier this year and planning to launch in Vietnam later this year. Now we also have physical stores in Singapore, Kuala Lumpur and Jakarta,” he said.
Once the brand’s growth is steady and consistently speedy, Pomelo’s next goal is to strategically create a platform that is the fashion space online.
“Today, the platform side is just starting out. So, it is smaller but it grows very quickly. Within a few years, we expect it to be about 50-50 brand and platform,” the CEO said.
“We focus on both sides. We are going to keep growing and investing in the brand, coming out with great products. At the same time, we think of our capabilities and the industry. Like Khun Bee [Ariya] said, they want to get online. They want the advantage of the next chapter of growth. We want to help other brands do that specifically in the fashion base.”
Ariya also points out that most existing e-commerce platforms still cannot answer the demands of fashion brands. What Pomelo has created is a platform with obvious target audiences for the fashion market — women who love shopping and enjoy showing their fashion and style.
“Pomelo is not just aiming to become a platform. It’s also a marketplace with strong demand for the brand. Over the past year, we realize that it’s not easy to go online. You can’t go online on any platform on any marketplace. Some may not suit your brand,” he said.
“David and Pomelo are approaching over 200 brands. Not everyone like to sell their products at discount or low prices. So, it’s important to not just having a platform or to show that you are in the market. You also want some place that fits for your brand and has a team who basically understand fashion.”
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Last year, 90% of Pomelo transactions were through the app, with additional product categories including apparels, athletic wears, sports, accessories, shoes, home and living products. Apart from typical fashion products, Pomelo also launches pre-left products or second-hand goods to promote sustainability and recycling, upcycling method as well as reducing carbon footprint for sustainable growth.
Jou views that with COVID, people are asking themselves: What are the most important things? It’s friends, family, the environment, and health. That’s why Pomelo focuses on sustainability. Its customers have experienced more sustainable collections during the pandemic.
When asked what makes Pomelo stand out from others and become ASEAN’s first leading brand, Jou points to four factors.
First, it is the Pomelo super app, which has users-friendly channels, unique personalization, professional promotion program, search engine, and live streaming through social media. “Pomelo is all the customers want for their fashion passion,” he added.
The second factor involves Pomelo’s strength in technology, unlike most other fashion brands. The company has a big tech team that is constantly developing innovations to digitize the fashion industry. “Both fashion and technology are equally in Pomelo’s DNA,” the CEO said.
The third point involves meeting the customer’s demands. When speaking about Pomelo, customers do not think of discounts or promotions, but rather finding the latest look, the perfect dresses or outfits for them and their occasion. It’s about expressing their style, he added.
“We have a true fashion platform in Thailand where you can come and really have fun with fashion. That’s really our focus. Everything we do is about making our customers really love fashion and express their style.”
Lastly and more importantly, it is sustainability. More and more customers are asking brands, retailers and companies what they are doing for the environment. Customers want to see the responsibility from the business sector and their concern about the circular economy.
“That’s something we try to be working very hard on. We try to reduce our carbon footprint as much as possible. Already we have — our denim is organic cotton and we really use recycled polyester,” the CEO said.
“We are using different washing techniques to reduce the amount of water used. We are doing upcycling. On a lot of collections, we use scraped fabrics and turn them into products. We do many things on the sustainability side. This is a really important message I want to get out there.”
Meanwhile, Ariya added that what also makes it stand out from others is that Pomelo is not only focusing on innovation and technology, but also putting most of the efforts in improving users’ database and management system as well as maintaining its unique fashion identity.
He pointed to two keywords — platform and super app — in Pomelo’s mission to promote the participating fashion brands.
“Right now, there are 200 brands — that’s a very good number. I’m sure David has much more ambitious goal than 200 brands across the region.”
According to the executive, unlike other online marketplaces, Pomelo “has done a good job” about curation and condense creation. “It’s everything about fashion. Fashion is more content driven and that’s what we are trying to package for the brand,” he said.
Setting sights on becoming top fashion platform
In David’s view, the online fashion industry has great opportunities and trends to grow. Currently, the size of Southeast Asia’s online market is about US$25 billion, accounting for approximately 6% of the overall e-commerce business in the region.
On the other hand, China’s lifestyle and fashion products represent 30% of total online sale. Therefore, ASEAN’s online market for fashion products still has a lot of room to grow.
Pomelo is in a good position to invest in both the brand and platform, thanks to the funds of US$52 million raised from various investors like Provident Growth Fund, JD.com and Central Group during series C round.
“Pomelo really wants to build an omni-channel fashion platform for Southeast Asia. Based here in Bangkok, we have an amazing team of over 600 people. We have raised $52 million — the highest amount raised for an independent start-up in Thailand,” the CEO said.
“Certainly, we will keep investing in resources, talent, technology, and the brand absolutely. Finally transforming to [become] unicorn would be great. But again, the important thing is to focus on becoming the leading platform, continuing to focus on the fashion super app strategy and continue to expand the brand across Southeast Asia.”
Jou promises that Pomelo will continue to add more varieties of third-party brands so that it can serve all the customers’ demands. Having both international and domestic brands to choose from, shoppers will have more pleasure time when engaging with the platform. At present, most of the brands that Pomelo has partnered with are local brands with their unique stories.
“To become a super app, we have to cover all those segments. So, we cover everything from international to Instagram and everything in between,” said the CEO.
Pomelo is not worried about the emergence of more online platforms, especially from e-commerce giants, he said. For Pomelo, more platforms can help complete and diversify the ecosystem, which finally benefits the market and customers. Online fashion brands and mainstream e-commerce giants can coexist peacefully in Japan, Europe, the United States and India. Meanwhile, support from Central Group and JD.com is expected to help Pomelo improve its platform technology and online marketing.
Omni-channel is an innovative business strategy combining technology with marketing tactics to link all channels to access customers directly, rapidly and pleasingly. Pomelo plans to increase more of its “Tap Try Buy” stores that it initiates to solve a pain of buying fashion items online — customers are unsure about their size and unable to try the clothes.
With Tap Try Buy, when making an order online, customers can visit a physical store to try their products. If they are not satisfied, customers can leave the products there. Pomelo now has about 116 Tap Try Buy locations across Thailand.
“Tap Try Buy comes in to maintain the product quality. Tap Try Buy is omni-channel. What people dislike most about buying fashion online is that you cannot try the product. You don’t know if it fits, how it looks and feels. With Tap Try Buy, you can buy anything you like and try it. This is one of our most popular ways to shopping. Obviously, it has been affected by COVID, but we really think omni-channel approach is the future,” the CEO said.
Ariya concludes that many retailers have shown much interest in omni-channel as a business strategy in recent years. However, for him, no one else has been able to create a successful omni-channel as Pomelo did. Tap Try Buy is the first and only solution for online fashion brands, he said.
By taking this significant step forward, Pomelo is in the right direction and the right timing to achieve its goal of becoming the top platform and super app of the online fashion world.
Interview by Asina Pornwasin
Article by Nongluck Ajanapanya