Hera Capital bets on winning e-commerce strategies in Asia

E-commerce is much more than the online channel for a physical shop, says Sebastien Guillaud, Partner, Hera Capital, a private equity investor which focuses on retail companies.

“Online transactions are more significant for traditional retail, triggering internal changes and improvements which on one hand are mandatory to exist in a digital world, but on the other, benefits the offline business such as increased delivery service quality, better customer service support and improved supply chain delivery,” says Guillaud.

Source: Hera Capital. Guillaud.

According to Guillaud, moving traditional retail portfolio companies online fosters fast improvements in supply chains and customer relationship management systems. “This move ends up creating significant shareholder value for such companies, even when online revenue is slow to pop up,” he notes.

The two-year-old Hera Capital has six investments, chosen based on an internally-developed Investor-Readiness Scorecard built around seven pillars, ranging from team and leadership to strategy and business models to financial discipline.

“We will be announcing a seventh investment by the end of July 2014. We see huge growth and shareholder value potential in all of them and are committed to supporting each and every one of them carry out and deliver their business plans. 

“Our most recent investment took place in May 2014. It was a US$2.7 million investment in Reworld Media, an international media company based in France and Singapore, and we are pleased to announce that the company has just been successfully listed on the Alternext Paris stock exchange market on June 16,” he revealed.  

According to Guillaud, five retail strategies most likely to work well in Asia today are:

i) the growing importance of a well-funded venture capitalist (VC) in digital marketplaces to introduce new brick and  mortar brands across emerging markets in Asiaii) an increased role for daily deals websites educating Internet users in Southeast Asia to start transacting online

iii) the emergence of last-mile delivery companies dedicated to helping retailers deliver their delivery time and value proposition
iv) the role of sophisticated affiliation programmes to embed direct selling best practices to recruiting members and clients, and reduce acquisition costs
v) the impact of blog reviews, word of mouth and social media user generated content to make or break brands

Four of the six companies that Hera Capital has invested in over the past 18 months directly relate to the listed strategies:

• Sophie Paris, a major direct selling fashion retailer in Indonesia and the Philippines.

Hera Capital invested mainly to support this company in its digital transition while respecting its main asset, which is the strength of its extensive distribution network, Guillaud said. 

“We are very excited about this company moving online for two reasons: its brick and mortar direct selling distribution network solves the major problems faced by e-commerce players in emerging Southeast Asia countries - poor infrastructure and low credit card penetration,” said Guillaud. 

“Moving online led to changing its enterprise resource planning (ERP) systems, recruiting new top supply chain experts and launching Zappos-like "extreme customer-centric" workshops – all of which created an interesting business opportunity,” he added.

• Bel Perfumes is a company based in Thailand which creates and distributes perfumes and other cosmetics with the support of local top celebrities, especially those with huge fan bases.

“The main reason behind our investment is the idea that the remarkable social media presence of the celebrities would be a great asset to drive foot traffic in stores without spending any marketing dollars. A perfect illustration of what social media can bring to offline retail,” Guillaud observed. 

• Wildfire Asia, which has developed a digital platform called ActSocial that helps brands identify influential consumers on various social media platforms to engage with them and encourage them to share trusted user content on a large scale.  

“This enables impactful ROI driven word of mouth marketing campaigns for brands willing to grow faster especially in China,” Guillaud explained.  

• Crème Simon, founded 1860, is one of the oldest skincare brands from France and a leading skincare brand in France until the 1960s.

“We set up a company in Singapore in order to buy over the brand and rejuvenate this beautiful sleeping beauty for a global relaunch. Crème Simon will be launched in Singapore in July 2014 and will be facing a very competitive market. Crème Simon was built on a solid digital marketing base with robust distribution strategies, supported by a sophisticated affiliation programme, complementing its offline strategy,” Guillaud said. 

Sebastien Guillaud will be speaking at ad:tech asean, an interactive media, digital marketing and social media conference in Asia, on “Hybrid Commerce – the Evolution and the Future” on 8 July.