Indonesian beauty firm turns $40k investment into profitable business in two years

Around a decade ago, best friends Cindy Angelina and Kezia Trihatmanto studied together at Pepperdine University in Los Angeles.

The two had known each other since childhood, and their friendship has sparked a revolutionary idea for the beauty industry in their home country of Indonesia.

Esqa co-founders Kezia Trihatmanto (left) and Cindy Angelina / Photo credit: Esqa

In 2014, when Angelina and Trihatmanto returned to the country, the duo had difficulty finding cosmetic products that met their beauty standards.

When they were in the US, the trend of vegan cosmetics was taking off. But the cosmetics landscape in Indonesia at that time was still dominated by older, established players like Viva or Pixy. That was the impetus for the pair to start beauty brand Esqa.

“At that time, we still often pre-ordered beauty products from the US, which could take up to a month [to arrive],” Angelina tells Tech in Asia. She’s the CEO of the company, while Trihatmanto serves as chief product officer.

Esqa, which means “pure beauty” from the Celtic word “Eska,” is focused on providing vegan beauty products.

In 2015, Angelina and Trihatmanto each invested US$20,000 to develop the company’s first product. A year later, the firm officially launched with two lip products and became the first vegan cosmetics brand in the country.

Esqa co-founders Kezia Trihatmanto (left) and Cindy Angelina / Photo credit: Esqa

The Esqa team consisted of only three people then, including Angelina and Trihatmanto. The co-founders personally handled everything for the launch, including responding to consumer inquiries.

“We didn’t expect the demand for modern beauty products to be so great. When we launched, we sold thousands of products in the first month,” says Angelina.

The company now has 70 employees, with its headquarters located in Jakarta.

Profitability since year two

Esqa partners with manufacturers from South Korea, Indonesia, and China – all of which have factories in Indonesia – for its products.

To date, Esqa has developed 120 items, including face, eye, and lip makeup, as well as a skincare line.

The company first implemented a direct-to-consumer concept by selling its products on its official website, Angelina says. But it has now expanded its sales channels to ecommerce platforms like Shopee, Tokopedia, Lazada, and Blibli and has collaborations with physical stores such as Sociolla, Sephora, and Watsons.

Esqa’s brand positioning focuses on quality products that are on par with luxury brands but come at an affordable price point, the CEO shares.

Esqa cosmetics / Photo credit: Esqa

The company has also been profitable since 2017, even before raising external funding. And according to Angelina, Esqa has experienced consistent and “very healthy” growth from year to year.

“We managed to double our revenue every year, even during the pandemic when all makeup categories were down,” says the co-founder, without giving specific figures.

To get through the slump, Esqa decided it would not release any lip products (since wearing masks was mandatory) but instead focus on cosmetics for the face, eyebrows, and eyes.

Big on social media

Marketing typically takes a huge chunk of a company’s budget, but Esqa’s marketing spend is less than 20% of its total expenses, Angelina says. To compare, other brands spend an average of 30% to 40%, she observes.

Thanks to social media, Esqa gets free publicity in the form of customer reviews. The company has 260,000 followers on Instagram and 174,000 followers on TikTok.

In comparison, local beauty brand Luxcrime has 620,000 followers on Instagram, while competitors Somethinc and Make Over each have 1.3 million followers.

Positive reviews on ecommerce platforms also boost Esqa’s brand image. On Shopee, for instance, the firm has a rating of 4.9 out of five stars from a total of 440,000 customer reviews.

Ecommerce has indeed dominated the company’s online sales, including those from TikTok Shop, which Angelina says has recently seen significant growth.

“We only started using TikTok in November last year. Now, in Q1 2023, our growth on TikTok has increased 6x,” she shares.

As a result, the company opened a studio in February specifically for livestreams on TikTok Shop, where Angelina says Esqa is very active – typically going live up to six times a day, with each session lasting up to three hours.

“Even during ‘double date’ campaigns (like 11.11, 12.12, etc.), we can stream for 24 hours. So, we made the studio as comfortable as possible for livestreamers, including having a bedroom,” she explains.

Expanding offline presence

After operating for years without external funding, Esqa raised a US$6 million series A round in November led by Unilever Ventures, with participation from East Ventures.

The company will use the fresh funds to expand its offline presence, conduct product research, and strengthen its skincare category.

With economies bouncing back from the pandemic, the company has seen a resurgence in offline shopping – the proportion of its online and offline sales only differ slightly, with 55% and 45%, respectively. Before the pandemic, sales were dominated by online channels at 70%.

“In Indonesia, 70% of retail is offline, especially in second and third-tier cities, where shopping behavior is still traditional, and consumers still enjoy shopping at local cosmetics stores,” says Angelina.

Sociolla store / Photo credit: Sociolla

Esqa plans to open five to 10 new stores in big cities where the brand is already established, including launching its first flagship store in Jakarta in the third quarter of this year, the CEO adds.

“We open our own stores so that customers can have a full experience of the brand. Especially since Indonesian women’s skin is diverse. For makeup shades, they need to try them on in person,” Angelina believes.

In addition to Indonesia, Esqa’s products have also reached Vietnam through Sociolla, which is its official distributor in the country.

The CEO says that the company’s growth in Vietnam is fairly promising, though she did not elaborate further. However, Esqa’s focus is still on Indonesia at the moment, especially with plenty of room to grow in the country’s tier 2 and tier 3 cities.

The original article was published on TechinAsia on 20 Apr 2023.

Source link