Sreejita Deb, founder and CEO of beauty-focused social commerce platform Raena, always knew that she would run her own company. With an MBA from Harvard Business School under her belt, and after stints at large tech companies such as Google, Amazon, and mobile advertising firm InMobi in India, her home country, she decided in 2018 that it was time to launch her own business.
“Social commerce was one of the trends I identified. With social media usage increasing [in the region], everybody essentially could open an online store, and social media platforms would only continue to grow,” Deb told KrASIA. “I saw that as a tailwind. It fits very well with what I did in the past working for e-commerce companies.”
Deb deliberated where she would launch her new venture. Two countries were options—India and Indonesia. She mainly considered these two markets as they were “very ripe” in terms of social media platform usage, with Indonesia counting 150 million active users and India tallying 230 million active users at the end of 2018.
After combing through Instagram user statistics, she decided to start in Indonesia, as it has a higher share of female users compared to India. “It was the ideal place to build a women-powered social network where women could buy from each other. That was the core idea. It’s something I’d like to work on for the next 15 years of my life,” Deb said.
Deb’s first business project was an e-commerce platform and beauty brand incubator for Indonesian influencers. She needed a co-founder, and after posting an ad on LinkedIn, she connected with Guo Xing Lim, who was a business manager for Alibaba at that time. The two launched The Creator Co in early 2019.
Despite targeting the Indonesian market initially, Deb and Guo decided to headquarter the new company in Singapore, as it was “more suited for the company’s aspiration to scale regionally. Also, a great hub for products, technology, and marketing functions due to an extensive talent pool,” Deb said.
In April 2019, the company rebranded as Raena. Three months later, it received USD 1.82 million in seed funding from Beenext, with participation from Beenos, Strive, and other angel investors. That same year, Raena managed to sign deals with several Indonesian influencers to develop new beauty brands, including Moonella Sunshine Jo, a child influencer with more than 1.2 million followers on Instagram. Raena developed several products with Jo’s family under the brand Lalabee, such as moisturizing balm, shampoo, and soaps.
After Raena released its first original products, Deb noticed people were ordering batches every week and reselling them on social media and e-commerce platforms like Shopee and Tokopedia. “They [resellers] comprised almost 70% of our product sales at that time. We realized people were buying from resellers because they offered a conversational experience that is key to beauty, content, and trust,” she said, referring to the chat and consultation options offered by major e-commerce platforms.
Deb decided to capitalize on this development. In 2020, she pivoted the business into building an e-commerce platform for beauty products with resellers as its main clients. “Whereas the influencer number is limited, there could be millions of resellers we could tap into.”
A focus on resellers
Raena no longer develops any more original brands with influencers but provides beauty and skincare products from South Korea, Indonesia, Japan, and the United States to a network of resellers formed by college students, housewives, and other people looking to supplement their income with online sales.
The platform aims to solve three main problems often faced by resellers: limited access to manufacturers, competitive pricing, and difficulties in distribution.
“Even though resellers can sell thousands of units each month, large brands don’t really pay attention to them because they are more focused on large retailers,” Deb said. “Thus, these resellers don’t get the privilege of special pricing. They also have to think about capital and stocking, like where to put all the unsold items.” Raena runs a dropshipping model to solve those problems.
The company provides a catalog of available products that resellers can pick from to “stock” their online shops, which are usually on Instagram, Shopee, or Tokopedia. When a customer buys a product, the reseller orders from Raena, which will send the product directly to the customer. The system lowers the entry point for resellers as they don’t have to spend capital on acquiring actual merchandise before their shop can go online. Raena handles the inventory, packaging, and delivery logistics for its clients. Resellers get 60% from every completed transaction, Deb said.
The company also offers marketing services for brands. “We run campaigns on our platform to give them visibility,” but Raena is yet to earn profits from these offerings, Deb said. Commission fees from resellers are the company’s main source of revenue.
Raena already has over 10,000 resellers on its platform. More than 45% are active resellers, Deb said, without disclosing their average monthly transactions on the platform. “Not everybody can be an entrepreneur, and not everyone can be a reseller. Some of them will churn,” she said. “But we’re focusing on the active resellers, helping them grow their income. That’s our best practice metric.”
One way to help resellers grow their businesses, Deb said, is through education. Raena actively shares informational content on its Instagram page and holds routine webinars on marketing and the latest trends. This way, merchants can be more informed about which products may sell well, and how to market them effectively. “For example, sellers can learn which products are effective for clearing acne or brightening dull skin, and can then do more targeted marketing.”
Resellers can earn an average of USD 300 per month through the platform, Deb said. However, in some cases, the income could far exceed this amount. Deb mentioned the case of one reseller, who, thanks to a network of 83,000 followers on Shopee, has managed to earn about USD 3,000 gross monthly income after just six months of joining Raena.
Taking advantage of social media platforms’ e-commerce ventures
According to a 2020 study by marketing company RedSeer, beauty was the second largest category in the social e-commerce space, right after the fashion bracket. The report also said the volume of orders from social commerce channels doubled in 2020, as more sellers and buyers have migrated from selling through offline stores to online channels like Instagram and Facebook.
Social media platforms are also stepping up their commerce offerings, with Facebook launching Facebook Shops in May last year, and Instagram Shopping finally becoming available in Indonesia in October 2019. This year, in April, TikTok launched its livestreaming e-commerce function. Following these developments, Deb said she’s optimistic about Raena’s future.
“I think it is an advantage for us when social media platforms launch e-commerce features. Let’s say they are providing the shelves and the checkout counter,” she said. “We are basically giving sellers access to products to market on these digital shelves. All these platforms provide more shelves and checkout counters to fill, thus making our business model richer.”
Following a USD 9 million Series A funding round in February co-led by Alpha Wave Incubation and Alpha JWC Ventures, Raena is now focusing on growing its team in Indonesia from 70 to over 100 members. It has the ambitious goal of registering 100,000 resellers on the platform by the end of this year.
The company is looking to sign exclusive contracts with 15 new brands before 2022. “We’re going to use the funds to double down on what we’re already doing now,” Deb said.