The company has been expanding rapidly across Southeast Asia and deployed a creative marketing strategy to facilitate the efforts
Althea, an e-commerce platform delivering South Korean beauty products to Southeast Asian consumers announced today it has raised a US$3.5 million Series A from a series of investors.
Participating VCs were Asset Ventures, Posco Ventures, 500 Startups, Tekton Ventures, Cherubic Ventures and other undisclosed firms.
Based in Kuala Lumpur and Seoul, the first platform launch was in Malaysia in July 2015. Afterwards, Althea expanded into the Philippines, Singapore and Indonesia.
With an aggressive expansion plan, Althea is hoping to launch in Thailand and Vietnam by the end of the year. Althea CEO Frank Kang told e27 they are looking into emerging markets like Myanmar and Laos as well the Greater China region of Taiwan and Hong Kong.
Surprised by such dramatic movement, e27 asked Kang how Althea is able to enter new markets so quickly.
“Actually our business model itself is extremely scaleable because we consolidate all our logistics and sourcing in Korea. So we directly ship into each country. So theoretically if we have a platform and marketing we can open in a country,” he explained.
Because all the products are sourced from one country, Althea uses a strategy called “cross-border individual e-commerce custom clearance”. Or in layman’s terms, if the consumer doesn’t buy over a country-specific threshold he/she can avoid the tariff.
For example, in Singapore, goods imported by post will receive a Goods and Services Tax relief for shipments valued under S$400 (US$291). If someone purchases more than S$400 (US$291) worth of goods, the tariff is added to the total value of the shipment.
“In Korea, at this moment, we are the only company that can send [Korean beauty] throughout Southeast Asia with this cross border logistics model. There are some companies that can do this in individual countries…but there is no company that can cover the entire region,” said Kang.
Currently, the company claims to have over 500,000 monthly active users and an annualised run rate of over US$10 million (annualised run rate is projection of future revenue generation based on current performance). Althea say it is growing on average by 30 per cent monthly.
Previously, the company raised a seed round from a Korean VC named Bon Angels and 500 Startups.
Althea is deploying an interesting marketing strategy; devoting major time and resources to engage social influencers in the beauty scene.
To highlight the emphasis, Althea Head of Editorial Tammy Lim is also a well-known beauty blogger. She founded the website The Butterfly Project — an enterprise to bring both brands and bloggers together on one platform.
“So we spend a lot of time trying to find and search for these beauty influencers and they act as beta testers before we launch in every market,” said Kang.
Through surveys, the influencers also help Althea stay on the cutting edge of the Korean beauty industry and with a team in Korea, Kang wants Althea’s long-term brand to be the go-to destination to purchase the current trending products.
Opportunity not missed
Kang was lucky in a sense, he had a front row seat to watch a hole open up in the e-commerce marketplace.
As the Head of Global Partnership for South Korea’s Ticket Monster, a company that used to export beauty products across China and Southeast Asia, Kang watched as the company was purchased by the American private equity company KKR.
“Management decided to focus more on the domestic market in Korea. That is why we thought this is a great opportunity. Maybe as a startup it would be better for us to explore [the Southeast Asian market],” he said.
As Althea expanded, it found itself exceeding its expectations in the new markets. And while it is certainly better to overperform than underperform, it does still present a challenge.
“So as all growing startups, sometimes in operations and actual support, it is hard to catch up with the growth. For example, logistics, picking, packing, shipping, we grew faster than expectations and our team in Korea can get overstretched,” said Kang.
But, he added, it is a good problem to have.
Looking forward, as a relatively young startup, the company is hoping it can grab a foothold as the go-to brand for young Southeast Asian consumers looking for Korean beauty products.
“We want to solidify our leadership in K-beauty in Southeast Asia,” said Kang.
Photo courtesy of Althea.
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