Pomelo recently had the largest-ever series B funding round for a Thai start-up, raising $19mn.
Jou was previously Managing Director of Lazada Thailand, which was set up as to take advantage of digital adoption rates in emerging markets which lacked capital, technology and human resource investment. Why did he choose Thailand, and remain there to set up Pomelo?
“I always thought Bangkok was a very international city, while simultaneously small and charming. It’s a central location, which is great for ecommerce. From Bangkok to Singapore, Hong Kong, Ho Chi Minh… it is all within a three-hour flight. In addition, the population and GDP per capita were at a level that can really support an online business – especially with accelerating trends in internet adoption rates. Another option was the Philippines, which Jou says would have been more challenging logistically due to its many islatnds, and Malaysia where the population is small and fragmented both ethnically and culturally. “A customer-facing brand serving such a hugely diverse population would have proved difficult,” says Jou, adding: “When I looked at Indonesia [four years ago] I thought maybe it was a bit early in terms of its technology development – but I was completely wrong; Indonesia has really leapfrogged other markets in terms of how quickly it was able to develop.”
Thailand, in conclusion, was “a really great place to set up: 70mn people, 30-40% internet penetration, and social media adoption was greater than 100%, meaning there are more Facebook accounts than people”.
For Pomelo, managing an efficient reverse supply chain is paramount to giving users what they require. “I think it’s really at the heart of the ecommerce problem fashion has. When people purchase fashion products like apparel and shoes fit and sizing are such important factor. We have a ton of customers and a huge online following, but when we look at the segment of people who have yet to make a purchase, they say the #1 roadblock isn’t brand or style, it is always fit and not wanting to deal with returns. That’s 95% of it.”
“That is why in 2016 we recognized we’re not an online brand, we’re a digital brand. Online or offline, you can make it better through the use of technology. We do have an offline presence we’re rolling out very quickly. it is an omnichannel experience; we don’t think about it as ecommerce versus in-store retail, we think of it as offline and online both being ways to reach and interact with our customer.”
Jou feels that an Asia-based fashion company is set to disrupt the fashion industry as the continent consumes 70% of fashion and produces the vast majority of clothing. In the Asian market, it’s important to look at what you are replacing with ecommerce, according to Jou: “It comes down to accessibility: they want trends localized to the climate and lifestyle people in these countries lead. In the US or Australia, every major town has multiple retail outlets selling all the high street brands, but here if you’re not in one of the major cities you don’t get that assortment. It is key that we’re able to provide that assortment of trendy fashion at a price point that works regardless of whether you’re in Bangkok, Chiang Mai or Phuket.”
In the future, the brand hopes to expand its channels to reach a wider consumer base.
“We are mostly online with a small offline footprint, but as we’ve recently realized the biggest barrier to purchase is fit, sizing and hassle of returns. This can be easily addressed by combining technology with the offline footprint that makes sense for the markets we operate in.”
Next, Pomelo will expand geographically. “I like to call it multi-vector growth: all big companies have multiple vectors along which they are growing at any given time, simultaneously. Currently we are in Thailand, Indonesia, Singapore and are setting up our cross-border trade warehouse in Hong Kong which will allow us to reach customers across the world cost-effectively, efficiently and quickly. We will then be able to serve customers in India, Nigeria, the Middle East, Japan, Vancouver… all from the same warehouse. That will be possible due to recent innovations in the logistics space. That’s going to be really exciting.”