Big opportunities for small players: Beauty start-up ABX taps into gaps in retail left by larger competitors

By Amanda Lim contact

- Last updated on GMT

ABX has identified pockets of opportunities to expand in the offline retail space in the midst of COVID-19. ©GettyImages
ABX has identified pockets of opportunities to expand in the offline retail space in the midst of COVID-19. ©GettyImages

Related tags: retail, South east asia

Singapore-based start-up Asian Beauty X (ABX) has identified pockets of opportunities to expand in the offline retail space in the midst of the novel coronavirus (COVID-19) pandemic.

ABX is an omnichannel distributor specialising in Asian beauty brands. Last year, the company launched with an online platform and four South Korean brands.

Since then, the company has increased the number of brands it represents to 10 and expanded offline in its home market through partnerships with department stores Robinsons and Yuehwa.

Managing director Justin Lee told CosmeticsDesign-Asia​ the company saw opportunities to extend its business into the offline space as the outbreak of COVID-19 shook up the retail landscape.

“As the COVID-19 pandemic has driven many previously retail focus players into the e-commerce sphere, the pandemic has also opened up numerous opportunities in the offline space, gaps in the market left behind by our larger competitors who have had to pull out or scale back their operations in retail in order to cut costs and realign their businesses.”

Lee continued: “These opportunities are great for small players or new entrants into the markets as opportunities previously out of reach suddenly become feasible options for expansion and growth.”

In the last few months, the company has seen monthly online traffic grow by more than 300% year-on-year with more consumers picking up online shopping habits.

Despite the importance of its online platform right now, the company believes brick-and-mortar stores will continue to be an important channel for cosmetics.

“The strength of offline retail over online is in its ability to deliver a tactile shopping experience, providing a space for shoppers to wander and to discover, and in delivering instant gratification,” ​said Lee.

State of retail

Despite the lifting of lockdown measures in Singapore, the preventive measures that have been put in place across the country have hindered the recovery of the retail market.

For instance, shoppers and diners are expected to check-in and out of every establishment they visit, which may hinder window-shopping activities.

“Measures such as the requirement – and hassle – to check-in and out, and the queues that it can create have made offline shoppers more targeted. It now takes a lot more effort for offline retailers to get shoppers into the store than it did before,” ​said Lee.

Furthermore, telecommuting arrangements that have dampened average daily footfalls, contributing to decreasing sales performance in the offline space.

As such, the company still expect retail sales to “take a beating this quarter,” ​said Lee.

However, the company sees its brick-and-mortar expansion as a pivotal move for the company.

“Having an omnichannel approach is still important for discovery as 80% of retail purchase decisions in the beauty space are still influenced by some form of offline interaction along the customer journey. This is especially so for young brands in the market who may not have the credibility of a vast following of loyal customers to help continue to drive sales and growth online,” ​said Lee.

He added that with the uncertainty in the market, the company will proceed with its offline expansion deliberately.

“However, with still no real light at the end of the tunnel, these opportunities also represent a risk that needs to be balanced with the expectations for the future. For now, we continue to tread cautiously,”​ said Lee.

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