Startup Story: Raena As Pintu The Gateway to Dropshipping Beauty Products in Indonesia

Sreejita Deb, founder and CEO of beauty-focused social commerce platform Raena, has the confidence to run her own company. With an MBA from Harvard Business School behind his name, with experience at big tech companies like Google, Amazon and mobile advertising firm InMobi in India, his home country, he decided that 2018 was the time to launch his own business.

“Social commerce is one of the trends I've found. With the increasing use of social media [in the region], basically everyone can open an online store, and social media platforms will continue to grow,” Deb told KrASIA. “I see that as a draw. This fits perfectly with what I did when I worked for an e-commerce company.”

Deb considered a place to launch her new venture. Two countries were chosen—India and Indonesia. These two markets are the top choice because they are “very mature” in terms of using social media platforms, Indonesia with its 150 million active users and India counted as much as 230 million active users at the end of 2018.

After browsing Instagram user statistics, he decided to start in Indonesia, as it has a higher share of female users compared to India. “Here is the ideal place to build a women-empowered social network where women can buy from one another. That's roughly the core idea. This is something I want to work on for the next 15 years of my life,” said Deb.

Sreejita Deb, Co-Founder and CEO of social commerce platform Raena. Documentation by Sreejita Deb

Deb's first business project is an e-commerce platform and beauty brand incubator for Indonesian influencers. He needed a co-founder, and after placing an ad on LinkedIn, he hooked up with Guo Xing Lim, who was Alibaba's business manager at the time. The two launched The Creator Co in early 2019.

Although initially targeting the Indonesian market, Deb and Guo decided to set up the company's headquarters in Singapore, as it was “more suited to the company's aspirations on a regional scale. Also, hub a great fit for product, technology, and marketing functions because of the broad talent pool,” said Deb.

In April 2019, the company changed its name to Raena. Three months later, he received initial investment of USD 1,82 million from Beenext, with participation from Beenos, Strive, and investors angel other. In the same year, Raena successfully signed deals with several Indonesian influencers to develop new beauty brands, including Moonella Sunshine Jo, a child influencer with over 1,2 million followers on Instagram. Raena develops several products with the Jo family under the Lalabee brand, such as moisturizing balms, shampoos, and soaps.

After Raena released her first original product, Deb saw people orderingbatch every week and then resell it on social media and e-commerce platforms such as Shopee and Tokopedia. “They [resellers] controlled almost 70% of our product sales at that time. We recognize people are buying from retailers because they offer an interactive experience that is key to beauty, content and trust,” he said, referring to the chat and consulting options offered by major e-commerce platforms.

Deb decided to take advantage of this development. In 2020, he pivots and builds an e-commerce platform for beauty products with resellers as his main clients. “While the number of influencers is limited, there may be millions of resellers we can leverage.”

Focus on resellers

Raena no longer develops original brands with influencers but provides beauty and skin care products from South Korea, Indonesia, Japan, and the United States to a network of retailers formed by students, housewives, and others looking to supplement their income with online sales.

This platform aims to solve three main problems that are often faced by retailers: limited access to manufacturers, competitive prices, and difficulties in distribution.

"Although resellers can sell thousands of units every month, big brands don't pay much attention to it because they focus more on big retailers," said Deb. “Thus, these resellers do not get special price privileges. They also have to think about capital and stocking, like where to put all the unsold items.” Raena runs the model dropshipping to resolve the issue.

The company provides a catalog of available products that resellers can choose to “store” their online store, which is usually on Instagram, Shopee, or Tokopedia. When a customer purchases a product, the reseller places an order from Raena, who will ship the product directly to the customer. This system simplifies the entry point for retailers as they don't have to spend capital to acquire actual merchandise before their stores can go online. Raena handles inventory, packaging and shipping logistics for her clients. Retailers earn 60% of every completed transaction, says Deb.

The company also offers marketing services for brands. “We run campaigns on our platform to give them visibility,” but Raena has not yet benefited from this offer, says Deb. Commission fees from resellers are the company's main source of income.

Raena gives Indonesian people a choice to become a reseller of skin care products / Raena

Raena already has more than 10.000 resellers on her platform. More than 45% are active resellers, said Deb, without disclosing their average monthly transaction on the platform. “Not everyone can become an entrepreneur, and not everyone can become a reseller. Some of them will rotate," he said. “But we focus on active resellers, helping them increase revenue. That's our best practice metric.”

One way to help retailers grow their businesses, says Deb, is through education. Raena actively shares informational content on her Instagram page and holds regular webinars on marketing and the latest trends. This way, merchants can know more about which products sell well, and how to market them effectively. “For example, sellers can find out which products are effective for removing acne or brightening dull skin, then they can do more targeted marketing.”

Retailers can earn an average of $300 per month through the platform, says Deb. However, in some cases, the income can far exceed this amount. Deb mentions the case of one reseller, who thanks to a network of 83.000 followers on Shopee, has managed to earn a monthly gross income of around USD 3.000 just six months after joining Raena.

Taking advantage of e-commerce on social media platforms

Menurut a study 2020 by marketing firm RedSeer, beauty is the second largest category in the social e-commerce space, right after the fashion bracket. The report also says 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 available in Indonesia in October 2019. This year, in April, TikTok launched the functionality livestreaming e-commerce. Following these developments, Deb says she is optimistic about Raena's future.

“I think it's an advantage for us when social media platforms launch e-commerce features. Let's say they provide shelves and a cash register," he said. “We are essentially giving sellers access to products to market on these digital shelves. All of these platforms provide more shelves and cashier counters to fill, thus making our business model richer.”

After funding round Series A worth USD 9 million in February co-led by Alpha Wave Incubation and Alpha JWC Ventures, Raena is now focused on growing her team in Indonesia from 70 to more than 100 members. The company has an ambitious goal of reaching 100.000 retailers on the platform by the end of this year.

The company wants to sign exclusive contracts with 15 new brands by 2022. “We will use the funds to double what we are doing now,” said Deb.

-This article was first released by KRASIA. Re-released in Indonesian as part of the collaboration with DailySocial