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 rapidly observed 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 concentrate on these sellers, and pivoted to social commerce.
At this time Raena introduced it has raised a Sequence A of $9 million, co-led by Alpha Wave Incubation and Alpha JWC Ventures, with participation from AC Ventures and returning traders Beenext, Beenos and Try. Its final funding announcement was a $1.82 million seed spherical introduced in July 2019.
After interviewing individuals who had been establishing on-line shops with merchandise from Raena, the corporate’s crew 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 the although new C2C retail fashions, like social commerce, are gaining recognition, the sweetness business’s provide chain hasn’t saved up. Sellers normally must order minimal portions, which makes it more durable for folks to begin their very own companies, Raena co-founder Sreejita Deb advised TechCrunch,
“Mainly, it’s important to block your capital upfront. It’s troublesome for particular person sellers or micro-enterpreneurs to work with the outdated provide chain and classes like magnificence,” she stated.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 approach to enter new markets like Indonesia, which the startup estimates has $20 billion market alternative.
Raena resellers, who’re principally girls between 18 to 34-years-old in Indonesia and Malaysia, choose what gadgets they wish to characteristic 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 client.
This drop-shipping mannequin means resellers make larger margins. Since they don’t have to hold stock, it additionally dramatically lowers the barrier to launching a small enterprise. Though Raena’s pivot to social commerce coincided with the COVID-19 pandemic, Deb stated it grew its income 50 instances between January and December 2020. The platform now has greater than 1,500 resellers, and claims a 60% vendor retention fee after six months on the platform.
She attributes Raena’s progress to a number of elements, together with the rise in on-line buying throughout lockdowns and other people in search of methods to earn further earnings in the course of the pandemic. Whereas compelled to remain at dwelling, many individuals additionally started spending extra time on-line, particularly on the social media platforms that Raena resellers use.
Raena additionally benefited from its concentrate on skincare. Though many retail classes, together with shade cosmetics, took a success, skincare merchandise proved resilient.
“We noticed skincare had larger margins, and there are particular markets which might be consultants at formulating and producing skincare merchandise, and demand for these merchandise in different components of the world,” she stated, including, “we’ve continued being a skincare firm and since that could 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. Our top-selling merchandise are serums, toners, essences, which makes quite a lot of sense as a result of persons are of their properties and have extra time to dedicate to their skincare routines.”
Social commerce, which permits folks to earn a facet earnings (or perhaps a full-time earnings), by selling merchandise by way of social media, has taken off in a number of Asian markets. In China, for instance, Pinduoduo has turn into a formidable rival to Alibaba by way of its group-selling mannequin and concentrate on contemporary produce. In India, Meesho resellers promote merchandise by way of social media platforms like WhatsApp, Fb and Instagram.
Social commerce can also be gaining traction in Southeast Asia, with gross merchandise worth rising threefold in the course of the first half of 2020, based on 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 a substitute of specializing in household and pals. Many already had TikTok or Instagram profiles centered on magnificence and skincare, and had developed reputations for being educated about merchandise.
As Raena develops, it plans to rent a tech crew to construct instruments that may simplify the method of managing orders and in addition strike offers straight with producers to extend revenue margins for resellers. The funding will likely be used to extend its crew from 15 to over 100 over the subsequent three months, and it plans to enter extra Southeast Asian markets.