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Building a global brand centered on trust
ACCESSIBLE luxury may sound like an oxymoron to some, given the high costs normally associated with luxury products.
But homegrown luxury e-commerce retailer Reebonz, whose average purchase of its luxury products is between US$600 to US$800, is out to prove sceptics wrong.
Reebonz chief executive and co-founder Samuel Lim tells The Business Times: "South-east Asia could not get access to accessible luxury. There is only a segment of people who go to boutiques and retail shops.
"So, we opened up new markets in South-east Asia and Asia because they wanted to buy luxury but they could not get it easily."
Mr Lim acknowledged that online luxury shopping was not easy to cultivate, because it was a new behaviour.
He added that the key to gaining customer adoption across the countries is the "trust that Reebonz will take care of all issues of authenticity, returns and refunds".
"Once you have taken away all these concerns, people would have the confidence to buy from us."
Since Reebonz was founded nearly a decade ago in 2009, the company has expanded rapidly, moving into certain countries in the South-east Asian region almost immediately.
Within the first five years of operations, it also expanded to North Asian countries such as Taiwan and Korea. More recently, it started shipping to larger countries like Australia and China.
Now, the company ships to over 20 markets across the Asia-Pacific region, and has eight regional offices. It also has a count of five to six million members altogether.
On the need to expand overseas, Mr Lim said: "When we go into Internet or e-commerce models, it's no longer just the Singapore market. It is a highly scalable model, so we must leverage our ability to scale across countries."
He explained that the company did not just want to be "king of Singapore or South-east Asia".
"The market size in Singapore is limited, it is a good testing ground for us to launch and test certain ideas. If it works, we need to expand our market and establish the Reebonz brand, making it a regional - and ultimately, global - brand."
To drive expansion across multiple countries, Mr Lim said the company had to take into account the various challenges posed by the different countries. This is part of the process to "build the reputation to be a trusted destination for online luxury".
He said: "The general strategies are quite similar, but dealing with regulations in every country is different. We have to assess where we deploy resources based on the market size, sales as well as profitability."
He explained that profitability was an issue in some countries in cross- border e-commerce because of taxes and duties, and there were problems in supply chain due to a lack of clarity in declarations.
For example, in countries like Indonesia, Reebonz has to engage with local freight forwarders and partners to discuss how to release Reebonz's goods from customs, resulting in an increase in delivery time.
Different countries also have different tastes and preferences, Mr Lim noted. For example, customers in Vietnam prefer to pay by cash, and are not used to paying large amounts by credit card.
To address their concerns, Reebonz has rolled out installment payment plans with certain local banks so that they are more comfortable paying in smaller amounts by credit card.
To put customers' minds further at ease, Reebonz also has a professional team that authenticates and certifies its luxury products.
This year, the company is introducing a "sell back guarantee" to selected products - customers can sell those products back to Reebonz for credits. These credits will be priced based on the condition and brand of the products.
Around 75 per cent of Reebonz's online sales now comes from outside Singapore.
Looking ahead, Reebonz plans to enter markets such as Japan and the US, which have larger domestic markets. At the same time, it is committed to cover the rest of the Asean member nations such as the Philipines and Cambodia in the next few years.
Mr Lim said: "South-east Asia remains a big market with 600 million people, it will be growing rapidly in e-commerce. Online luxury might be the next category to tip over.
"Typically, the developing countries in Asean buy cheaper items online. Over time, they start to buy categories like online luxury. That's where we believe the market has arrived as income levels increase and credit card penetration goes up. "
But Mr Lim stressed that Singapore will still be the base for the company.
Reebonz grabbed eyeballs when it moved to an eight-storey, 200,000 sq ft headquarters in Tampines last year. Half of its 300 employees are in Singapore.
Mr Lim pointed out that Singapore's strength as a multi-cultural nation has been a big plus for Reebonz to navigate the challenges of operating in many different countries.
Despite the e-commerce competition heating up in South-east Asia, with major Chinese players making significant inroads into the region, Mr Lim believes that the online luxury retailer does not face any direct competition for now.
He said: "In our online luxury space, there is not a Chinese competitor operating in our space. They are all focused on only China.
"They would prefer it if we operate in all these countries that are complicated for them, and then they find a partner like us."
Mr Lim added that Singaporeans have been interacting with people from other South-east Asian cultures from a young age, making Singaporeans attractive employees as they generally understand people from other backgrounds easily.
Moreover, he believes that this experience with managing multiple cultures, languages and nationalities "allows us to run a global organisation" effectively.
"We are based on merit in terms of how we look at things. We do not just think of hiring our own people in every country."