JD.com-backed Thai fashion e-commerce site Pomelo is expanding its online-to-offline retail concept to Singapore
Pomelo is part of a wave of companies promoting so-called online-to-offline commerce, a business strategy to draw potential customers from online channels to make purchases in physical stores
Pomelo Fashion, the Bangkok-based fashion e-commerce site that counts JD.com as an investor, is looking to open its first micro-retail store in Singapore as it seeks to expand its online-to-offline business model in Southeast Asia.
The company, started by former Lazada Thailand managing director David Jou, positions itself as a digitally native fashion brand that is vertically integrated – that is, it works with manufacturing partners and handles its own sourcing of materials to design to retailing.
Pomelo is betting that by enabling shoppers to narrow down their choices online and then sending the chosen pieces to physical retail stores for trying on for fit, it is able to marry the convenience of online commerce and offline service.
The company is also able to rent smaller spaces at prime shopping districts with high traffic to make it convenient for its customers to try on the pieces they have selected online. This type of business model can also significantly cut down on the number of returns.
“Discovery for fashion is going online, where you’re not constrained by having to display the entire catalogue,” David Jou, Pomelo co-founder and CEO, said in an interview last week in Bangkok. “But e-commerce for fashion is plagued by the problem of returns because the clothes don’t fit or they don’t look good. Having the online-to-offline model cuts down returns because the consumer only buys what they have tried on.”
Pomelo is part of the wave of companies promoting the so-called online-to-offline commerce, a business strategy to increase the conversion from browsing to buying by blurring the line between online and physical retail. Customers can be drawn from online channels to make purchases in physical stores, or complete their buying online after checking out an item in a bricks-and-mortar space.
In China, Alibaba Group, the parent company of the South China Morning Post, has called this strategy New Retail. Its chain of Hema supermarkets, for instance, allows shoppers to place orders online for live seafood ahead of time for pickup or delivery, or to be cooked and consumed on the premises. Amazon has moved to integrate its various online offerings with its network of Whole Foods stores in the US.
JD, the Chinese e-commerce operator, led a US$19 million investment round last year into Pomelo, which also counts investors like 500 Startups, Hong Leong Group and Jungle Ventures.
Pomelo currently has two micro-retail sites in Bangkok, one at Interchange 21 at Asok and the other at All Seasons Place in the central business district. The company has identified 800 locations for potential micro-retail sites in Thailand, which “have to be on your daily path” for convenience, Jou said.
In Singapore, the company has previously operated a pop-up store and is now looking for space to open its first site.
Jou, who holds an American passport, was born in Germany to Korean parents. He started his first company called The Boxing Co. in 2003 in university, providing shipping storage services for university students across the US. He went on to work for Bain & Co. in New York and then focused on private equity investments with New Mountain Capital.
Like many other college graduates, he has backpacked across Southeast Asia and also lived in Beijing and New Delhi. His move to Southeast Asia came about after he met Rocket Internet’s founding Samwer brothers in 2011 in midtown Manhattan to discuss opportunities in the region.
Rocket Internet founded Lazada Group, which was later sold to Alibaba. Jou left Lazada after two years as managing director to start Pomelo.
On the investment by JD.com, Jou said that he saw China as a big opportunity for demand as Chinese consumers are increasingly looking for high-quality independent brands and lots of tourists are coming to Thailand.
Thailand is predicting 38 million tourists this year, with more than 10 million coming from China.
Asked whether there are plans to turn Pomelo into a platform for other services, Jou said: “The world needs fewer platforms and more that are singularly devoted to user experience.”