Raena was based in 2019 to create private care manufacturers with prime social media influencers. After a number of launches, nevertheless, the Singapore-based startup seen an fascinating pattern: clients had been ordering batches of merchandise from Raena each week and reselling them on social media and e-commerce platforms like Shopee and Tokopedia. Final 12 months, the corporate determined to give attention to these sellers, and pivoted to social commerce.
At present Raena introduced it has raised a Collection A of $9 million, co-led by Alpha Wave Incubation and Alpha JWC Ventures, with participation from AC Ventures and returning buyers Beenext, Beenos and Attempt. Its final funding announcement was a $1.82 million seed spherical introduced in July 2019.
After interviewing individuals who had arrange on-line shops with merchandise from Raena, the corporate’s workforce realized that sellers’ earnings potential was capped as a result of they had been paying retail costs for his or her stock.
Additionally they noticed that although new C2C retail fashions, like social commerce, are gaining recognition, the wonder trade’s provide chain hasn’t stored up. Sellers normally have to order minimal portions, which makes it tougher for folks to begin their very own companies, Raena co-founder Sreejita Deb informed TechCrunch.
“Mainly, you need to block your capital upfront. It’s troublesome for particular person sellers or micro-enterpreneurs to work with the previous provide chain and classes like magnificence,” she stated.
Raena determined to pivot to serve these entrepreneurs. The corporate gives a catalog that features principally Japanese and Korean skincare and wonder manufacturers. For these manufacturers, Raena represents a technique to enter new markets like Indonesia, which the startup estimates has $20 billion market alternative.
Raena resellers, who’re principally ladies between 18 to 34-years-old in Indonesia and Malaysia, decide what gadgets they wish to function on their social media accounts. Most use TikTok or Instagram for promotion, and arrange on-line shops on Shopee or Tokopedia. However they don’t have to hold stock. When someone buys a product from a Raena reseller, the reseller orders it from Raena, which ships it on to the shopper.
This drop-shipping mannequin means resellers make increased margins. Since they don’t have to purchase their stock, it additionally dramatically lowers the barrier to launching a small enterprise. Although Raena’s pivot to social commerce coincided with the COVID-19 pandemic, Deb stated it grew its income 50 occasions between January and December 2020. The platform now has greater than 1,500 resellers, and claims a 60% vendor retention price after six months on the platform.
She attributes Raena’s progress to a number of components, together with the rise in on-line procuring throughout lockdowns and folks on the lookout for methods to earn extra revenue throughout the pandemic. Whereas pressured to remain at residence, folks additionally started spending extra time on-line, particularly on the social media platforms that Raena resellers use.
Raena additionally benefited from its give attention to skincare. Although many retail classes, together with shade cosmetics, took successful, skincare merchandise proved resilient.
“We noticed skincare had increased margins, and there are specific markets which are specialists at formulating and producing skincare merchandise, and demand for these merchandise in different components of the world,” she stated.
“We’ve continued being a skincare firm and since that may be a class we had perception into, it was our first entry level into this social promoting mannequin as nicely. 90% of our gross sales are skincare,” Deb added. “Our top-selling merchandise are serums, toners, essences, which makes numerous sense as a result of individuals are of their properties and have extra time to dedicate to their skincare routines.”
Social commerce, which permits folks to earn a facet revenue (or perhaps a full-time revenue), by leveraging their social media networks, has taken off in a number of Asian markets. In China, for instance, Pinduoduo has turn out to be a formidable rival to Alibaba by its group-selling mannequin and give attention to recent produce. In India, Meesho resellers promote merchandise like clothes by social media platforms together with WhatsApp, Fb and Instagram.
Social commerce can be gaining traction in Southeast Asia, with gross merchandise worth rising threefold throughout the first half of 2020, in line with iKala.
Deb stated one of many methods Raena is completely different from different social commerce corporations is that almost all of its resellers are promoting to clients they don’t know, as an alternative of household and mates. Many already had TikTok or Instagram profiles targeted on magnificence and skincare, and had developed reputations for being educated about merchandise.
As Raena develops, it plans to rent a tech workforce to construct instruments that may simplify the method of managing orders and likewise strike offers immediately with producers to extend revenue margins for resellers. The funding can be used to extend its workforce from 15 to over 100 over the subsequent three months, and it plans to enter extra Southeast Asian markets.