Thai fashion start-up Pomelo’s omnichannel offering promises to bring style to Southeast Asia at the right price. Business Chief spoke to CEO David Jou to find out more
CEO and co-founder David Jou hails Pomelo Fashion as a new type of fashion brand promising to “make fashion fun again” and the start-up is set to shake up the Asian market by offering an omnichannel experience with investment from big names like JD.com and Jungle Ventures. “We’re a vertically-integrated, digital fast fashion brand: we do everything from design, material sourcing and trend research all the way to providing the delivery service for our customers.”
The international Thai start-up was co-founded by Jou following a stint as Managing Director and co-founder of Lazada Thailand, but entrepreneurship had been part of his life since university, when he started an on-demand shipping and storage company for students. He comments that being able to get involved in all sides of the business from sales and marketing to management was “a liberating experience… being able to take an idea and turn it into something tangible”. Jou then moved into financial consulting – “it taught me what factors, financial or otherwise, add value to a company” – but was still itching to get back to enterprise when he was offered the chance to enter the ecommerce business by Rocket Internet co-founders Oliver and Marc Samwer, who were developing Lazada among other ventures in emerging markets which showed fast digital adoption but lacked capital and human resource management. Jou would find out that Southeast Asia was “a wide-open space for all these great western business models that haven’t had a chance to make it into emerging markets”.
With Southeast Asia as a major opportunity, Jou decided to choose Thailand, where he remained to set up Pomelo. “I’ve always thought of Bangkok as an international city, simultaneously small and charming. It is a very central location for ecommerce, and the population and GDP per capita were at a level that can really support an online business, especially with accelerating tends in internet adoption. Thailand was a great place to set up: 70mn people, 30-40 % internet penetration, and social media adoption was greater than 100 % – that means there are more Facebook accounts than people.”
Pomelo – fast-growing fast fashion
In 2013 after two years at Lazada, Jou was ready to found Pomelo – and has no regrets. “I’m genuinely enjoying this part of my life. I’m able to work with talented designers, factory managers, retail people, digital marketers… it’s been a great experience to use all parts of my brain seamlessly, on a project where I ultimately have a big say in how it does.”
Pomelo is a fast-growing company, so how does Jou ensure he has the right people in his 200 strong team to maintain that growth? “That’s the million-dollar question! It comes down to defining the culture of the company first. Once you know that clearly, you know who you want to represent the brand. It makes hiring, retention, training and development much easier. As a leader, you have to be clear about what that DNA is. Secondly, you have to build out your recruitment, training and and development structure.” A common mistake, according to Jou, is waiting until it’s too late to do this. “The truth is, the earlier you invest the better. Especially when you’re small, all you have is your colleagues, and they ultimately define everything about the company. It’s critical, especially for growing businesses, to focus on the types of people they want, and hiring and training those people.”
Investment for a growing business
This strategy has paid dividends for Pomelo, which recently achieved the most successful Series B funding round for a Thai start-up. What has prompted investors to put faith in Pomelo? “Fashion is one of the biggest industries in the world,” Jou begins, “but people haven’t yet figured out how to offer trendy fashion to emerging markets through the use of digital. However, our investors understand the industry and their investment is testament to the fact we’re trying to do things differently.”
“The key to being able to connect with people is passion for the product and the experience we’re building. We focus on brand and product more than growth rates and scaling up in the traditional venture capital way of thinking. We are going to make omnichannel work in the emerging markets, crack fast fashion and displace those old, big companies who have been in fashion for so long and done things in a certain way.”
Jou feels that Pomelo will succeed over traditional high street brands like Zara and H&M through an understanding of the Asian market and a willingness to disrupt. “Everybody’s sick of seeing the same stuff in every mall. Someone needs to disrupt these guys, and I think it’ll be someone from Asia. 70% of fashion is consumed in Asia, and it is all produced here, but all the brands are from Europe and the US, which does not make sense. It also has to be a company that is digital first. H&M and Zara for example are great companies but digital is not in their DNA. Transition from a traditional brand to digital is extremely difficult, almost like changing your DNA.”
A third point to success in emerging markets is to provide value, which Jou says Pomelo achieves by being an integrated brand. “We’re doing everything from design to fulfilment of the product; that’s the only way you get something high quality at a great price for your consumer.”
The Southeast Asian market
How does Jou intend to deliver on this promise of fast fashion for the Asian market? “It comes down to accessibility. The Asian consumer wants trends localised to their climate and lifestyle. In the states 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’s key we’re able to provide that assortment of trendy fashion, at a price point that works whether you’re in Bangkok, Chiang Mai or Phuket.”
Another downfall for big western players, Jou stresses, is price point. Often high street brands raise their prices in emerging markets to combat overheads, making products less accessible when the average income in Southeast Asia is taken into account. This means what might in the US or UK be seen as a high street brand will be considered aspirational in Thailand. “That same gap occupied in the west doesn’t exist here,” says Jou. “We’re trying to provide a really great fashion experience at a price point that makes sense for the market.”
The final ingredient for success is climate. “In terms of climate, it’s about fit and sizing. The more you can localise it the happier customers will be. They want great fitting clothes to match the average size and physique of local customers, and breathable clothing for warmer or humid climates.” Pomelo can keep this in mind from the design stage.
For Pomelo, a key challenge for businesses in emerging markets is the reverse supply chain. “I think it’s really at the heart of the ecommerce problem fashion has. When people purchase apparel and shoes, fit and sizing are an important factor. In our vast online following, when we look at those who have yet to make a purchase, they say the #1 roadblock is always fit and not wanting to deal with returns. That’s 95 % of it. In 2016, we realised we are not an online brand but a digital brand. Both online and offline can be improved through technology. We have an offline presence we are rolling out very quickly – it’s an omnichannel experience. We don’t think about ecommerce versus instore, but rather both as ways to reach and interact with customers.”
Thailand was recently named the leading country for smartphone adoption rates which many have suggested points to a future of ecommerce, but Jou is quick to clarify how this information should be utilised. “I think ‘time spent on device’ is a more interesting factor in indicating the reach of digital media. It’s not necessarily a great indicator that ecommerce adoption rates will be high in the medium term – that definitely has more to do with the brick-and-mortar offering ecommerce attempts to replace.” Jou adds that the existing offerings in a given country will have an impact on how fast ecommerce takes off. While Thailand’s offline offering is more developed, for example, “ecommerce is very attractive in Indonesia as offline alternatives are poorer in terms of assortment, availability and quality.”
The future for fast fashion
With aspirations to provide trendy yet affordable fashion to emerging markets via omnichannel, and big names counting on the brand for returns on investment, what’s next for Pomelo?
First, the brand will continue to broaden its product rang, which is set to include menswear. “We’re looking to broaden our available styles with the emerging market consumer in mind, and generally speaking create that one-stop-shop experience.” Jou also says the brand will look at channel expansion and a wider offline experience, with barriers he has defined such as fit, sizing and returns in mind. “This can be easily addressed by combining technology with the offline footprint, which makes sense for the markets we operate in.”
In addition, Pomelo will expand geographically through multi-vector growth. “Currently we’re in Thailand, Indonesia and Singapore, and are setting up our cross-border warehouse in Hong Kong which will allow us to reach customers across the world cost-effectively and efficiently,” says Jou, giving Nigeria, the Middle East, India, Japan and Vancouver as examples he has his eye on. “This will be possible due to recent innovations in the logistics space, and it’s going to be really exciting.”
Overall, Jou remains confident that by remaining focused on brand, goal and digital DNA, Pomelo Fashion will be able to overcome any challenges thrown up by international expansion. “The most important thing is not to lose focus – that’s true for anyone. Losing focus on what’s important leads to sub-optimal decisions. We like to emphasise the True North concept: whatever you’re doing, consumer experience has to come first. That means saying no to certain growth factors or products, and instead ensuring something is perfect – not just 80% as some businesses do, but ensuring a high quality product and experience we feel great standing behind.”