Tug of war between roll-ups and VCs; the changing face of beauty commerce

The Checkout is Tech in Asia’s free newsletter that breaks down the biggest stories and trends in ecommerce. [Read from your browser]( The Checkout 🛒 Welcome to The Checkout! Delivered every Thursday via email and through the Tech in Asia website, this free newsletter breaks down the biggest stories and trends in ecommerce. If you’re not a subscriber, get access by [registering here](. Hello {NAME} , A not-so-old iPhone model, a particular Dyson vacuum, and a DSLR camera - these things on my Christmas list have sent me scurrying from store to store in Bengaluru only to hear the two dreaded words: “No stock.” If you haven’t started on your shopping list yet, make a run for it before Amazon or Shopee (pick your Achilles' heel) start telling you that the products are running low - I had to settle for a less-favored color for the phone cause the preferred one wasn’t available. The ease with which I flit between the doors of offline and online commerce may be making me pickier, but it is what it is - we live in a world spoiled for choice. So why should startups have it any different? In this week’s big story, my colleague Ardi unpacks how consumer brands in Southeast Asia are being wooed by not just VCs, but also ecommerce roll-ups. Also known as brand aggregators, these ecommerce roll-ups mushrooming just about everywhere often present startups with deals more enticing than what their VC counterparts offer. This is a fascinating trend - it’s a tug of war that can make for some solid material for a [Silicon Valley-like drama series]( based in Asia, in case someone from a streaming service is reading this. Talking about trends, our analysis for this week is a primer on how the beauty industry is hotter than ever, evolving to the demands of a world fueled by choices. Despite its blockbuster public listing in India, cosmetics and fashion retailer Nykaa still shares the headlines with newer entities, like the recently minted Good Glam Group. But even as the former works on its expansion plans - similar to what its Indonesian counterpart Social Bella has been doing - there’s a rising tide of beauty startups that are adopting the personalized approach to reach their customers. -- Nikita THE BIG STORY  [Roll-ups square up to VCs in race to land top D2C deals in SEA]( Image credit: Timmy Loen For Southeast Asia’s rising consumer brands, aggregators like Hypefast and Una Brands offer an enticing alternative to “slow” and dilutive VC funding. THE HOT TAKE  Definitions of beauty are changing - so are beauty startups Here’s what happened: It was a beautiful November for all things beauty. There was robust demand for shares of Nykaa’s parent firm, FSN E-commerce Ventures, with the company’s value [nearly doubling in its stock market debut](. This came right around the time that the industry saw one of its biggest fundraises with the Good Glamm Group, the parent firm of beauty brand MyGlamm, which became a unicorn after [its $150 million round](. Purplle, a Sequoia-backed Indian firm, soon jumped into the headlines with its [US$140 million fundraise](. Purplle plans on setting up its own retail stores by [March 2022]( much like top dog Nykaa has. And like in Nykaa’s case, the strategy of starting online and then branching into brick-and-mortar stores has served Jakarta-based Social Bella well, even when the latter expanded to Vietnam. There are questions as to whether Social Bella will step into India’s already [competitive market](. That aside, these companies can’t afford to let their guard down despite their recent highs, thanks to what their up-and-coming competitors are up to. Here’s our take: Korean beauty brands may be at the forefront of this beauty revolution with ingredients from the almost-mystical Jeju Island, but there’s a rising demand for personalized offerings that don’t fit in with the generic products sold. This is why personalized beauty startups continue to gain popularity despite being a niche market. Take the case of Adila Matra, an India-based travel writer, who reached out to a startup to customize her haircare. “Generic shampoos just hadn’t been working for my curly hair,” says Matra, who now owns a shampoo tailored for her. She chose what went into the bottle, what it smells like, and even the color. While firms such as [Function of Beauty, Proven Skincare, and Atolla]( have become popular in the West for customizing beauty products, some Indian startups that have ventured into this vertical include the likes of Bare Anatomy, Ravel, Skincraft, and even Disguise Cosmetics - which is tailored to Indian skin tones. Backed by Sequoia, Singapore-based Yours is also in the business of personalized skincare. But it isn’t just those of us with curly hair rooting for some customization - investors seem to see the potential in these startups as well. While the beauty industry as a whole raised a total of $1.7 billion for the first nine months of 2021, the personalized beauty space raised over US$1 billion in itself, according to data from PitchBook. These bets might be worth a shot: India’s beauty and personal care market, which is slated to grow at a compound annual growth rate of 6.95% between 2021 and 2026, has raked in a [little over US$22 billion in revenue]( for the year, according to Statista. Image credit: Timmy Loen Personal care startups have also been bringing in technology to the mix: Almost every company worth its salt now offers customers the option to upload a picture and try on a certain shade of nail paint or lip color. But ask around and unhappiness abounds: While companies harp on technological advances, many customers Tech in Asia spoke to say that while the product seems to match their skin tone on the screen, it doesn’t in real life. A few such experiences and the next step is to skip this “virtual trial” altogether. Moving forward, companies will have to pour in more resources toward building better features. The market is already seeing a demand for products without sulfur, parabens, or silicone, so it makes sense for companies to go a step further and expand their offerings. One size has never fit everyone. But that doesn’t make for clear skies for pro-customization startups. One not-so-small fly in the ointment: These personal skincare startups might have trouble scaling up to the size demanded by VCs. Traditional cosmetics players can eat into their share while benefiting from branding, lower customer acquisition costs, and economies of scale. These startups may need another ace up their sleeve to grow like Nykaa has: The company banks on an easier-to-expand house of brands approach, which is straight out of the fast-moving consumer goods playbook. -- Nikita  NEWS YOU SHOULD KNOW Check out Tech in Asia’s coverage of Asia’s ecommerce scene [here](.  1️⃣ India-based used cars platform Spinny is the latest Indian entrant to the unicorn club. The company [secured US$283 million]( in a series E round led by Tiger Global. The fundraise takes Spinny’s valuation to around US$1.8 billion, the company said in a statement.  2️⃣ China-based ecommerce roll-up company Nebula Brands has [raked in US$50 million]( in series B funding to fuel its expansion plans. The Thrasio-styled brand aggregator says that it is targeting the 600,000 Chinese third-party vendors on Amazon. Additionally, [here’s a look]( at the global fundraising boom ecommerce roll-up firms are witnessing.  3️⃣ India-based food delivery unicorn Swiggy has announced that it will [invest US$700 million]( in Instamart, its express grocery delivery service. This ties in with the [rise of dark stores]( in quick commerce.  4️⃣ Singapore-based ecommerce roll-up firm Una Brands will pour in [US$23.6 million]( in the next year to acquire Malaysia-based ecommerce brands and grow them into household names.  5️⃣ Colgate-Palmolive has roped in Shopee to [grow its ecommerce business]( in Southeast Asia and Taiwan. The former plans to drive ecommerce penetration of products under the oral care, home care, and personal care categories on Shopee’s platforms. FYI  1️⃣ [Companies are separating their ecommerce and retail businesses]( Saks Fifth Avenue department store in New York / Photo credit: tupungato / 123RF The idea of separating a department store’s ecommerce business from that of its retail store is gaining popularity after New York-based Saks Fifth Avenue launched Saks.com earlier this year, says The Wall Street Journal. While shoppers are unlikely to feel the difference, investors may benefit from the trend - they can choose to only invest in the ecommerce side of the business when it appears to be a faster growing segment.  2️⃣ [Alibaba’s growing competition in China’s livestreaming industry]( Alibaba pioneered the livestream shopping market, but video-sharing apps like Kuaishou and Douyin are fast becoming favorites among shoppers. The tech giant stands challenged as a new generation shops on short-video apps, says the Financial Times.  3️⃣ [Empty shelves weigh heavy]( Stores in the UK are coming up with innovative ways to tone down the sight of empty shelves caused by supply chain bottlenecks, reports The Wall Street Journal. That’s it for this edition - we hope you liked it! Do also check out previous issues of the newsletter [here](. Not your cup of tea? You can unsubscribe from this newsletter by going to your “edit profile” page and choosing that option in our preference center. In the meantime, if you have any feedback or ideas, feel free to get in touch with Terence, our editor-in-chief, at terence@techinasia.com. See you next week! [ADVERTISE]( | [SUBSCRIBE]( | [HIRE]( | [FIND JOBS]( P.S. Don't miss out on the biggest tech news and analysis. Add newsletter@techinasia.com to your address book, contacts, or safe sender list. Or simply move us into your inbox. Too many emails? 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