Raena Secures $9M Series A for Skincare & Beauty Social Commerce

Raena's Evolution to a Social Commerce Platform

Founded in 2019, Raena initially aimed to develop personal care brands in collaboration with prominent social media influencers. However, the Singapore-based startup observed a noteworthy pattern: consumers frequently purchased products in bulk and subsequently resold them via social media and e-commerce sites such as Shopee and Tokopedia.

Series A Funding and Market Opportunity

Raena recently announced the successful completion of a $9 million Series A funding round. This round was co-led by Alpha Wave Incubation and Alpha JWC Ventures, with additional participation from AC Ventures, Beenext, Beenos, and Strive. Previously, the company secured $1.82 million in seed funding back in July 2019.

Identifying a Gap in the Beauty Supply Chain

Through direct engagement with online store owners utilizing Raena’s products, the company discovered that seller profitability was limited by the necessity of purchasing inventory at retail prices.

Furthermore, despite the increasing prevalence of C2C retail models, particularly within social commerce, the beauty industry’s supply chain hadn’t adequately adapted. Traditional supply chains often impose minimum order quantities, creating obstacles for aspiring entrepreneurs, as explained by Raena co-founder Sreejita Deb to TechCrunch.

“Establishing a business often requires significant upfront capital commitment. This presents a challenge for individual sellers and micro-entrepreneurs operating within categories like beauty,” she stated.

Pivoting to Empower Social Commerce Entrepreneurs

Recognizing this opportunity, Raena strategically shifted its focus to supporting these entrepreneurs. The company now offers a comprehensive catalog primarily featuring skincare and beauty products from Japan and Korea.

For these brands, Raena provides a valuable avenue for expansion into new markets, notably Indonesia, which the startup estimates represents a $20 billion market opportunity.

The Raena Reseller Model

Raena’s resellers, predominantly women aged 18-34 in Indonesia and Malaysia, curate selections from the catalog to showcase on their social media platforms. TikTok and Instagram are the primary channels for promotion, leading to sales through online stores on Shopee or Tokopedia.

A key benefit is the absence of inventory holding. When a customer purchases through a reseller, the reseller simply places the order with Raena, who then handles direct shipment to the customer.

Benefits of the Drop-Shipping Approach

This drop-shipping model allows resellers to achieve higher profit margins. Eliminating the need for upfront inventory investment also significantly reduces the barriers to starting a small business.

Despite the pivot coinciding with the COVID-19 pandemic, Raena experienced a remarkable 50-fold revenue increase between January and December 2020. The platform currently boasts over 1,500 resellers and reports a 60% seller retention rate after six months.

Factors Contributing to Growth

Deb attributes this growth to several converging factors, including the surge in online shopping during lockdowns and the increased desire for supplemental income during the pandemic. The extended time spent online, particularly on social media, also played a crucial role.

Raena’s specialization in skincare proved advantageous, as this category demonstrated resilience while other retail segments, such as color cosmetics, faced challenges.

“Skincare consistently offers attractive margins, and certain regions excel in the formulation and production of skincare products, creating demand in other parts of the world,” she explained.

“We’ve maintained our focus on skincare, and this expertise informed our initial approach to social selling. Currently, 90% of our sales are skincare-related,” Deb added. “Our most popular products – serums, toners, and essences – align with the increased time people are dedicating to their skincare routines at home.”

The Rise of Social Commerce in Asia

Social commerce, enabling individuals to generate income through their social networks, has gained significant momentum across several Asian markets. Pinduoduo in China, for example, has emerged as a strong competitor to Alibaba through its group-buying model and focus on fresh produce.

In India, Meesho empowers resellers to sell products like apparel via platforms like WhatsApp, Facebook, and Instagram.

Southeast Asia is also witnessing rapid growth in social commerce, with gross merchandise value tripling in the first half of 2020, according to iKala.

Raena’s Distinctive Approach

Deb highlights a key differentiator for Raena: the majority of its resellers sell to customers they haven’t previously known. Many already have established TikTok or Instagram profiles centered around beauty and skincare, and have cultivated a reputation for product knowledge.

Future Plans and Expansion

Looking ahead, Raena intends to expand its technology team to develop tools that streamline order management. The company also plans to establish direct relationships with manufacturers to enhance reseller profit margins.

The new funding will facilitate the growth of the team from 15 to over 100 within the next three months, and support expansion into additional Southeast Asian markets.