India’s beauty craze a primer to SEA’s success?

In The Checkout this week, we compare the landscape of India’s and SEA’s beauty D2C sectors and make sense of Airlift’s collapse in Pakistan. [Read from your browser]( The Checkout 🛒 --------------------------------------------------------------- Welcome to The Checkout! Delivered every Thursday, this free newsletter breaks down the biggest stories and trends in ecommerce. You can find past issues [here]( or [sign up here]( to receive future newsletters. Also, If you’re not a subscriber, get access by [registering here](. Written by Thu Huong Le Ecommerce Journalist Hello {NAME} Revlon, a 90-year-old cosmetics firm and a household name in the industry, [filed for bankruptcy]( last month, citing supply chain disruptions. But analysts say the global brand failed to keep up with rising competition from newer upstart players for a long time. I don't have to say more about the cut-throat competition in the beauty industry. I am often lost whenever I enter a store. The only strategy to keep me from overspending is to stick to brands I regularly use. The craze for beauty products in Southeast Asia and India is here to stay. But what Southeast Asian players can learn from India’s more mature market, as my colleague Samreen details in this week’s Big Story, is to go directly to their customers and to personalize their offerings. Beauty direct-to-consumer startups in India have racked up nearly US$900 million in funding over the last two years. They are also smart at localizing their products - Sugar Cosmetics’ lipsticks, for example, are well-known in the country for matching the Indian skin tone. Southeast Asia’s young D2C brands are trying to replicate that success by identifying white spaces in the industry and diversifying their sales channels. Essentially, that's how you can stand against global but “aging” competitors like L’Oréal, Unilever, or Revlon in the past. In the Hot Take, I write about the collapse of one young startup in Pakistan. Quick commerce company Airlift ran out of money within just a year after it raised US$85 million. The company was ambitious but it was far from enough - does this signal stormy seas ahead for its Southeast Asian counterparts? – Huong THE BIG STORY  [India’s beauty craze a primer to SEA’s success?]( While direct-to-consumer beauty brands in India have gone from strength to strength, the opportunity in SEA may be even bigger.  THE HOT TAKE The demise of Pakistan’s quick commerce star fires stark warning to SEA players  Here’s what happened: - Dubbed the poster child of Pakistan’s startup ecosystem, Airlift [announced]( last week that it will cease operations permanently after failing to secure new funding. - Airlift, which started out as an Uber-like service for buses in Pakistan, pivoted to the quick commerce model when the pandemic hit in 2020. - The company raised US$110 million since its inception in 2019, including a US$85 million series B round in August 2021, according to [TechCrunch](. The series B round was the largest one ever raised by a Pakistani startup. Here’s our take: So what went wrong at Airlift? The startup blamed the “global recession” and “recent downturn in capital markets” for its collapse. Airlift said the company [had expected]( to extend its runway by 18 months if its series C1 round had come in. However, given the market conditions these days, that’s a big if. In the end, the series C1 round didn’t materialize. According to the company, investors pulled back at the last minute, leading to “uncertainty in wire schedules and their disbursements.” Airlift, once valued at US$250 million, ran out of money less than a year after its series B round was announced in August 2021. When it pivoted to quick commerce in 2020, the startup bet on consumers’ demand for fast deliveries. However, analysts [have pointed out]( that such demand has subsided post-pandemic as consumers tighten their spending to cope with inflation. As early as four months ago, Airlift [was operating 68 dark stores]( across eight cities in Pakistan. These are mini warehouses where quick commerce startups stock products to enhance the speed of their deliveries. Maintaining these stores, however, comes with a price. How can a business ensure the right volume to drive up its margin? Would the level of density generate enough orders to offset the rental costs in these prime locations? See also: [Dark stores light up red-hot grocery delivery market]( Supply chain disruption and rising fuel prices accelerated Airlift's demise, according to various media reports. After closing its series B round, the company rushed to expand horizontally to South Africa. In June, Airlift had reduced the number of cities it operated in as well as its headcount to cope a worsening economic climate. These efforts have proven to be too late as the firm’s capital dries up. Before Airlift’s demise, several other noteworthy startups in this quick commerce space in the US and Europe have either retrenched or collapsed, such as Gorillas, Fridge No More, and Gopuff. What does this mean for the quick commerce model in Southeast Asia? The party has just started, as we noted in this [landscape map](. With most players in the region still experimenting with their models, the troubling signs are not here - at least not yet. However, an [analysis]( by Coresight Research suggests that US consumers are “willing to trade off some delivery speed for low or no fees and competitive product prices.” That means, ironically, taking the “quick” out of quick commerce. But subsidizing won’t last forever. As Southeast Asian consumers are known to be even more price sensitive, local companies still have many challenges to overcome. – Huong  NEWS YOU SHOULD KNOW Check out Tech in Asia’s coverage of the ecommerce scene [here](. 1️⃣ [KitaBeli]( an Indonesia-based social commerce platform, [has raised]( US$20 million in a funding round led by Glade Brook Capital Partners. 2️⃣ [AnyMind Group]( a Japan-based startup that offers end-to-end services for brand-building, [has secured]( US$29.4 million in its series D round. 3️⃣ [Ada]( a regional analytics and ecommerce solutions provider, [has acquired]( the ecommerce arm of public postal service Singapore Post. The startup counts Malaysia-listed telco Axiata as one of its majority shareholders. 4️⃣ The top five export markets for Southeast Asian SMEs on eBay are the US, Australia, the UK, Germany, and Canada, according to a recent [report](. That’s it for this edition - we hope you liked it! 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