With $2M funding, cosmetics marketplace Hermo to expand further in Southeast Asia

The Hermo team.

Cosmetics and skincare marketplace Hermo has raised US$2 million in series A funding from venture capital firm Gobi Partners, the Malaysia-based startup announced today. Some of the money will go toward expanding into new markets beyond its home nation and neighboring Singapore.

Hermo received the funding in full.

Founded in February 2012, Hermo sells premium and affordable beauty products for women. It features international brands, mainly Asian, and partners directly with brand owners and distributors.

Korean wave

Hermo has over 3,000 items for sale and more than 150,000 monthly active users. From October 2014 to September 2015, its revenue reached RM 10 million (US$2.37 million), a threefold year-on-year growth.

Nearly half of all orders are completed on Hermo’s mobile site, with Korean brands as best-sellers.

“The company is focused on Asian beauty products that are in great demand in Southeast Asia,” notes Kay-Mok Ku, partner at Gobi Partners. “In particular, we believe that Hermo will continue to benefit from the Korean wave. We will work with them to establish improved supply chain relationships with suppliers and manufacturers from Korea and other major cosmetics markets.”

Korean cosmetics exported to 129 countries reached US$1.4 billion in value in 2014, up from only US$170 million 10 years ago, shows data from the Korea Customs Service.

“South Korea is number one in Asia in terms of value of cosmetics exports, and number five globally, next to France, US, Germany, and UK,” co-founder Ian Chua tells Tech in Asia, citing data from the Korean International Trade Association.

“Cosmetics is one of seven promising industries in Korea that can post over $10 billion worth of overseas sales in the next five to 10 years. The Export-Import Bank of Korea states that one theory for the cosmetics boom is the popularity of K-pop stars and their use of beauty products,” he explains.

While there are many Korean brands on Hermo and they are currently the most popular, the company also works closely with western brands and brands from other Asian countries. It’s the first full-listing ecommerce supplier for L’Oreal in Malaysia. That’s done to suit a diverse range of styles, explains Ian.

We do not focus on one particular country to source our products, instead aiming to meet the demands of our customers. Right now, Korean cosmetics and skincare products are most popular in Malaysia. We adhere to a simple supply and demand mentality. It is all about understanding the needs of consumers and finding a way to meet those needs, and I think we’re doing a pretty good job at ensuring that our customers are getting the items they want regardless of the product’s national origin.

Indonesia next

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