How this Hong Kong beauty e-commerce pioneer is still thriving after 22 years
Seated at a conference on search engine optimization (SEO) in New York, USA, Raymond Fong (pictured) — then a freelance IT consultant for beauty retailer Strawberrynet — glanced across the hall and came to a realization: none of his fellow attendees were from Hong Kong.
This was in the early 2000s.
At that time, e-commerce was still very much in its infancy. The idea of shopping usually meant strolling down the glitzy streets of Hong Kong’s Tsim Sha Tsui shopping district, where high-end retail brands would base their flagship stores.
To stay ahead of its competition, Strawberrynet became one of the first beauty retailers in Hong Kong to venture online, according to Fong who joined to take charge of the IT department in 2005.
“The internet browsing speed was slow and there was no proper online payment gateway for processing online payments then. The retail processes for e-commerce were manual and cumbersome,” explained Fong.
As competitors emerged and technologies improved, Strawberrynet has continued to evolve to stay relevant. From one brick-and-mortar store in Tsim Sha Tsui, the brand has grown its digital presence to become the world's largest online beauty store, offering over 32,000 products from across 850 brands.
Strawberrynet — the brainchild of its founder and chief executive Rodney Miles — found its footing early on with a clear positioning.
Rather than focus on selected mainstream brands, the beauty retailer sought to establish itself as a “full-range supermarket” with an extensive collection of fragrances, skincare and cosmetics products at discounted prices.
Its stable of products has grown quickly over the years, thanks to Miles’ strong ties with key suppliers. Products are sourced and directly imported from a diversified supplier base across Europe, the U.S. and Asia — which is key to the retailer’s business model that emphasizes product affordability and range.
The strategy seems to have paid off as the retailer’s roughly 4 million users have continued to support the business amid a challenging year for global trade, shared Fong.
Strawberrynet is not resting on its laurels with competition in the marketplace heating up with the arrival of brands like Sephora and Lookfantastic.
All year round, especially ahead of its traditional year-end peak season, its purchasing team stays abreast of fashion trends to keep its offerings fresh, identifying the hottest products and brands to gain first-mover advantage.
Much like how the brand first hopped on the e-commerce bandwagon, the hunger to look out for untapped opportunities has always been apparent.
Instead of conquering the domestic market, the Hong Kong retailer dedicated its early growth efforts to entering markets that were less accessible, or that had not been explored by fellow local retailers.
In 2001, for instance, the brand was offering free shipping — a rarity at that time — to customers from Australia and New Zealand. These customers still account for the largest share of Strawberrynet’s revenue until today.
“Israel is another one of our largest markets where there are known challenges for shipping goods. We were one of the first to localize our website with a full Hebrew translation and offer convenient shipping options to our customers in the country,” said Fong.
Competing with other well-resourced beauty retailers means speed is essential for Strawberrynet in nearly every aspect.
“A lot of online shoppers focus on delivery time. Ten years ago, they may be able to wait for two to three weeks. But now, if we cannot compete with the speed of delivery, we'll lose our business,” explained Fong, who turned to DHL Express for Strawberrynet’s logistical needs.
Partnering with DHL Express has so far helped the retailer to boost reliability and to avoid shocks, like in a recent incident with a logistics provider in Australia during the peak of the Covid-19 pandemic.
“We were informed by them that they would shut down their services in 24 hours due to the pandemic restrictions and flight cancellations. Our orders remained stuck in the warehouse,” shared Fong. “Fortunately, DHL supported us in fulfilling product deliveries during this critical situation, helping us uphold the service promise to our customers.”
While such unforeseen events may be tough to predict, staying updated and adhering to the latest customs regulations in different markets is par for the course for Strawberrynet.
Of particular interest is the shipping of fragrances, which had traditionally been prohibited by logistics providers because of its classification as Dangerous Goods (DG). However, with the help of DHL Express, fragrances bought off Strawberrynet can now be shipped to consumers around the world following a rigorous verification process.
“Our sales and operations teams assess the fragrances based on its alcohol percentage, conduct a DG audit, and also check with our teams in Strawberrynet's major markets to ascertain local customs regulations before shipping,” said Chee Choong Ng, Managing Director, DHL Express Hong Kong and Macau.
For the Hong Kong-based business, the change in the DG restriction for fragrances arrives at an opportune moment when the Covid-19 pandemic is still raging.
“At the moment, cosmetics and beauty items are not a necessity so we’ve not observed significant growth during this pandemic,” said Fong. “But everyone is staying at home, so naturally more people are shopping online.”
Fong is confident that the company will be able to weather this storm better than most. An expansion into a new market, Canada, is still on the cards as the retailer casts its net wider to explore new growth opportunities — with the help of DHL Express as its global logistics provider.
“The pandemic has highlighted how important it is for us to better support our customers like Strawberrynet to go global. We will continue to help them navigate the complexities and fulfill their logistical needs in new and existing markets through the pandemic and beyond,” assured Ng.
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