This week’s episode, we continue our call with Qing Gui Huang, CEO of Thailand’s leading online beauty retail company. 

As a beauty retailer, Konvy supports thousands of brands with a combined portfolio of more than 25,000 SKUs, through various channels, from their app to ecommerce platforms, TikTok, and offline stores. Konvy kicked off 2024 with the announcement of their latest funding round as they look to expand regionally, starting in the Philippines.

In part 1 of our conversation, Gui shares more about Konvy’s expansion into offline retail and TikTok Shop in 2023, as well as stories behind their decision to go beyond Thailand and take a big brand campaign to become the top of mind beauty retailer in Thailand. See the full part 1 episode

In part 2, Gui talks about all things trends. From trends in beauty products and consumption, to trends in beauty brand expansion across Asia, to trends in beauty retail experiences, he paints a picture of the industry Konvy is leading into the future.

TLDR / LinkedIn Post

5 Trends in Asia’s Beauty Markets from Thailand

(1) Men’s skincare on the rise. 

“We do see there’s a lot of people concerned about skincare. We do see a strong search volume coming from men’s skincare…In the past it’s more of coming from “never used skincare products” for men, for example, from “never used” to “have something to use”.”

(2) Expanding consumer options is still missing in today’s markets.   

“[Consumers] stick with [their routine] for 10 years. And we’re trying to build our own app or our ecosystem to introduce to people that there’s good products out there for you to try. Not everything that you are using right now is the best. Sometimes you just give yourself a push and then try some new products. If you don’t like it, you can go back, but don’t give up on trying.”

(3) Thai’s positioning in the global market is in its abundance of brands. While not as competitive as China, it’s up there in terms of brands that are emerging and pushing the industry to innovate.

“Thailand has a very strong supply chain that I always mention. And they have very strong brand genes. And because of that, the market is very competitive…competition creates the benefits that go to the customers. So the brands have to continue to innovate. The brands have to always think about what suits the market better. Because of that, brands are very strong in Thailand.”

(4) But having a strong brand is not enough to expand regionally. But that’s where Konvy comes in with their distribution capabilities that make it less risky for beauty brands to go overseas. 

“Usually this initial investment is quite big. Because in the first few years, I would say it’s definitely a losing business for them. This also takes a lot of effort for them to build the team. At the same time, they have their backyard in Thailand already competing heavily…So a lot of the brands do not seek active expansion to other countries.” 

(5) While AI, AR, even Web3 technologies seem far removed from the regular consumers’ lives — it’s only the last few years that ecommerce really took off in Thailand, it will be key for players like Konvy to start building up capabilities to lead the next wave of retail experiences, in the same way they did all those years ago. 

“We’re all preparing. People who could capture this would probably capture the next five to 10 years of business. That’s how I captured ecommerce before anyone else in Thailand…Now there’s no one doing anything about beauty, AI, and all of these augmented realities. That’s the time for us to start to get in. If we’re seeing this game as a 20 years, 50 years game, getting before people two to three years is nothing, so we should prepare.”

About our guest

Qing Gui Huang is CEO and co-founder of Thai ecommerce beauty brand platform Konvy. He is a US-educated Chinese serial entrepreneur who, after building online fashion businesses in Beijing, in 2011 he moved to Thailand spotting the opportunity to start an ecommerce platform for beauty brands which he did in 2012 with his co-founders through Konvy. He received his Bachelor’s in Management and International Business from Purdue University.

Transcript

Private Label Thesis and Beauty Brand Trends in Southeast Asia

Paulo J: Now I wanted to get into some trends, and beauty in particular. And zoom into Konvy’s brand ecosystem. 

Maybe you can share a little bit about how that brand ecosystem has evolved in the last year. Are there any specific trends in terms of new products that you’re seeing that have become more popular on Konvy’s platform? 

Konvy also has some white label brands as well. Any new white label brands that you’ve explored over the past year?

Gui: The way we started our private label was to capture markets that are there and have yet to be captured. Our motto for business, both for our e-commerce retailing or our private label, was to innovate to foresee what’s out there but not to be the second followers. 

So for the private label, we do see there’s a lot of people concerned about skincare. We do see a strong search volume coming from men’s skincare. People started to care more about the products they use. 

In the past it’s more of coming from “never used skincare products” for men, for example, from “never used” to “have something to use”. And they stick with that for 10 years.

I want to take one of the sharings that came from my employee from the Philippines. She has been using a product for a long time. I wouldn’t name the product, and she thought that’s a norm to have after washing using the cleansing water, that the skin is dry. 

And she just applied different types of skincare routines on her face. Until recently, when we entered the Philippines, we brought some of the best-selling products in Thailand into it, to let them try it. And then, as a content creator, she has to try it herself. So that’s her first time. 

She stopped using her own routine cleansing process, and started using the product that we introduced. And this time I visited the Philippines last week, and she told me that this is her first time cleansing her face, and afterwards it’s not dry. It could be moisturizing and it’s refreshing. 

Because of that, she started to share her experience of how that could have changed [earlier]. The last three years, she’s probably hurting herself using the products. So those are the values that we do see that the market is still missing. 

And we’re trying to build our own app or our ecosystem to introduce to people that there’s good products out there for you to try. Not everything that you are using right now is the best. Sometimes you just give yourself a push and then try some new products. If you don’t like it, you can go back, but don’t give up on trying.

Paulo J: You’re basically sharing the Konvy DNA with your customers as well — to go out of their comfort zone, try something new, see if it works.

Trends across Beauty Markets in Asia 

Paulo J: I also wanted to talk about trends in terms of expansion because this has been a significant angle as well for you guys to go regionally. It’s to essentially grow with the brands that you work with.

I think you mentioned in our last podcast that there have been a lot of brands, both locally and say from Northeast Asia, like Korea, Japan, China that are also interested in going beyond Thailand and going to other Southeast Asian markets. 

What are some of the trends there that you’ve seen from these brands and how are you helping them expand regionally as well?

Gui: Thai brands are very strong in the regions. There’s a lot of customers coming from Laos, coming from Cambodia, and also from the Philippines and Malaysia. They come to Thailand to buy products. 

And it’s not that they don’t have products to buy in their own country. It’s just that Thailand has a very strong supply chain. They have very strong brand genes. Because of that, the market is very competitive. 

I wouldn’t say Thailand is as competitive as China, but I would say that it’s probably one of the top five in the world for beauty markets. Because of that competition, it creates benefits for the customers. 

So the brands have to continue to innovate. The brands have to always think about what suits the market better. Because of that, the brands are very strong in Thailand. 

Indonesia probably has, as a population, triple times more than Thailand, but they have half the number of Thai brands in the market. So if you ask yourself, this are fewer options for you. 

Imagine Thailand there’s 20 men’s skincare brands and in let’s say in Indonesia probably there’s only 10. For you, [as a consumer], there’s only 10 brands to choose from. That’s quite a few.

Because of that, we are thinking of taking some of the strongest Thai brands out there in those markets and let them compete for market share. We think that the products do have advantages over local ones in other countries. 

But it’s difficult for Thai business owners to go to other countries. One, you don’t know if it’s going to fail or not because predominantly you have to invest a lot of money to make a brand popular. 

Usually this initial investment is quite big. Most brands do not have the courage to do this initial investment. Because in the first few years, I would say it’s definitely a losing business for them. This also takes a lot of effort for them to build the team.

At the same time, they have their backyard in Thailand already competing heavily while you are diversifying your energy to other countries. Are you going to lose market share in your own country or not? 

So a lot of the brands do not seek active expansion to other countries. Again, Konvy can be these players to help them go to other countries. For them, they’re giving us a sole distributorship. They go there and they’re risk-free. 

They’re risk-free. They just provide us with the products. We do everything for them. That’s why this year we made a big announcement two weeks ago at our offline event. 

There’s a lot of brands starting to contact us, wanting to work with us. But I also tell them that we cannot help everyone. We try to be selective of a few brands and then let’s see how it goes. So we’re being very selective right now picking which Thai brand to help expand.

Paulo J: I had a quick follow-up question. Especially in the Philippines for example, Korean beauty brands and Korean beauty care have been really popular recently. Globally speaking where does the ThaibBrand equity when it comes to beauty stack up globally? And do you see it rising or trending?

Gui: If we look at the beauty market across the world, there are so-called European brands, European big international brands. There are Japanese brands that stand for quality. There are Korean brands that stand for trends, very hip-hop related, kind of style. Now there are the Chinese brands, very strong in packaging, very strong in formulations that are emerging. 

But the beauty market overall is not growing as fast as how the landscape has evolved. Take Thailand, for example, where the beauty market increases maybe seven to eight percent per year, but the number of brands occurring in the markets is rising very fast. I can see 20 percent, 30 percent of new brands occurring, on a yearly basis. So where are they going to steal the market share from? 

So let’s say if there’s a lot of new Thai brands, and the market share has seven percent growth, then they’re going to steal it from international brands. They’re going to steal it from other Thai brands, Korean brands, Japanese brands, and Chinese brands. So that’s how I see it.

Paulo J: Thai’s advantage is there’s just a lot of interest in developing these different kinds of brands and products as well, again, with the infrastructure that you mentioned.

Future of Beauty Retail

Paulo J: My last question on trends is in terms of the channels and the whole retail experience. You did talk about virtual reality at one point. You also mentioned LLMs and AI. Maybe you can speak to some of these trends that you’re excited about, and how you think they could really impact the industry overall, and even Konvy’s own experience for its customers.

Gui: A few years ago we were working with Facebook, on Facebook Shop. Another year we were working with Google Shop. 

And now, these last two years with ChatGPT, and all these kinds of AI being released in the markets, I think it’s a completely different scale of understanding of how the market would evolve.

Web3, AI, augmented reality — all these are very far from normal people’s lives. Especially if I’m looking into countries like Myanmar, Laos, Cambodia, they’re just starting to use Facebook right now. They’ve been using Facebook for two years and now you’re talking about AI, you’re talking about all these things. It’s complicated. 

Just talking about programming or e-commerce business in Thailand, where Thailand is already one of the most innovative digital markets in Southeast Asia, and where ecommerce is still quite new. 

Technology to enable ecommerce for most businesses is also very new. Now we’re talking about just building a team for TikTok. It’s difficult. So if you’re talking about AI, it just seems so far away from them. 

But for me as a person who is trying to lead in innovation, I have jumped into AI studies. I’m learning machine learning. I’m learning about large language models. We’re all preparing. People who could capture this would probably capture the next five to 10 years of business. 

That’s how I captured ecommerce before anyone else in Thailand. Because there’s no ecommerce. I did ecommerce 10 years ago, and now there’s no one doing anything about beauty, AI, and all of these augmented realities. That’s the time for us to start to get in. 

We want to get in three to four years before anyone else. If we’re seeing this game as a 20 years, 50 years game, getting before people two to three years is nothing, so we should prepare. 

Paulo J: Even if it may not be a central focus, from the consumer end, I think it’s clear that you guys are already laying down the groundwork. And who knows, we might have a co-pilot in the future recommending new skincare routines based on different inputs which would be pretty interesting.