Raena was founded in 2019 to create personal care brands with top social media influencers. After several starts, the Singapore-based startup quickly noticed an interesting trend: customers ordered batches of products from Raena every week and resold them on social media and e-commerce platforms such as Shopee and Tokopedia. Last year, the company decided to focus on these sellers and switched to social commerce.
Raena announced today that she has raised $ 9 million in Series A, which Alpha Wave Incubation and Alpha JWC Ventures are co-directing with AC Ventures and returning investors Beenext, Beenos and Strive. The last funding announcement was an initial round announced in July 2019 of $ 1.82 million.
After interviewing people who set up online stores with Raena products, the company’s team found that sellers’ earnings potential was limited as they paid retail prices for their inventory.
They also saw that the beauty industry’s supply chain couldn’t keep up, despite the growing popularity of new C2C retail models like social commerce. Sellers typically have to order minimum quantities, which makes it harder for people to start their own businesses, Raena co-founder Sreejita Deb told ..
“Basically you have to block your capital in advance. It is difficult for individual sellers or micro-entrepreneurs to work with the old supply chain and categories like beauty, ”she said.
Raena decided to turn around to serve these entrepreneurs. The company offers a catalog mainly containing Japanese and Korean skin care and beauty brands. For these brands, Raena represents an opportunity to enter new markets such as Indonesia, which the startup estimates offer a market opportunity of $ 20 billion.
Raena resellers, who are mostly women between the ages of 18 and 34 in Indonesia and Malaysia, choose which articles to post on their social media accounts. Most of them use TikTok or Instagram for advertising purposes and set up online shops at Shopee or Tokopedia. But you don’t have to keep an inventory. When someone buys a product from a Raena dealer, the dealer orders it from Raena, who ships it directly to the customer.
This drop shipping model means resellers get higher margins. Since they don’t have to keep inventory, the barrier to starting a small business is drastically lowered. Although Raena’s fulcrum for social trade coincided with the COVID-19 pandemic, Deb said sales grew 50 times between January and December 2020. The platform now has more than 1,500 resellers and claims the platform has a seller retention rate of 60% after six months.
She attributes Raena’s growth to several factors, including the increase in online shopping during the lockdown and looking for ways to generate additional income during the pandemic. While many people were forced to stay at home, they also spent more time online, especially on the social media platforms that Raena resellers use.
Raena also benefited from his focus on skin care. Although many retail categories, including color cosmetics, have had success, skin care products have proven to be resilient.
“We have seen skin care have higher margins and there are certain markets that are experts in formulating and manufacturing skin care products and the demand for those products in other parts of the world,” she said, adding, “we are continues to be a skin care company and because this is a category we saw it was our first entry into this social selling model. 90% of our sales are skin care products. Our top selling products are serums, toners and essences. This is a lot makes sense because people are at home and have more time to devote to their skin care. “
Social commerce, which enables people to earn an extra income (or even a full-time income) by promoting products through social media, has gained momentum in several Asian markets. In China, for example, Pinduoduo has become an excellent rival for Alibaba through its group sales model and focus on fresh produce. In India, Meesho resellers promote products through social media platforms such as WhatsApp, Facebook, and Instagram.
Social trade is also gaining in importance in Southeast Asia. According to iKala, the gross value of goods tripled in the first half of 2020.
According to Deb, Raena differs from other social commerce companies in that most resellers sell to customers they don’t know instead of focusing on family and friends. Many already had TikTok or Instagram profiles focused on beauty and skin care and had reputations for being knowledgeable about products.
During the development of Raena, there are plans to hire a tech team to develop tools that will simplify the order management process and also do business directly with manufacturers to increase profit margins for resellers. The funds will be used to grow the team from 15 to over 100 over the next three months, and there are plans to enter additional Southeast Asian markets.