TET: What is the current business model and outlook?
Apart from the beauty products business that has been growing continuously, we have added new businesses to enhance product variety and diversify risks. In 2018, a subsidiary; Dream Dermatology Co., Ltd. was established to engage in distributing a cosmetic dermatology brand Oxe'Cure that was acquired from Well Grow Med Co., Ltd. We have executed marketing activities and rebranded the product to improve the business gradually. Meanwhile, we have always been on the lookout for new opportunities to add to the portfolio. At the beginning of 2020, we expanded to the beauty equipment business, with the acquisition of shares of Kuron Co., Ltd. who owns the brands Lesasha and Sparkle.
For Lesasha, the hair styling equipment brand, it is considered the leading hair equipment brand in Thailand, earning us higher revenue contribution from Thai customers, given the fact that the majority of users are Thai people, compared to skin care products, where the majority of customers are Chinese.
Another popular brand under Kuron Co., Ltd. is Sparkle, a toothpaste for whitening teeth, which has solid and loyal customer base, with a rather consistent sales revenue, owing to almost 20 years in the market. Furthermore, we are of the view that Sparkle is a very good brand. Starting from the name itself, which is amazing and reflective of the product's key attributes. Hence, what we are going to do is to strengthen the brand and expand customer base, while keeping risks low because we already have quite a strong base.
TET: How has the new business unit strengthened or built synergy for the organization?
What we have always been trying to communicate is that Do Day Dream PCL is not just about Snail White, but it is the first brand we marketed and it has been performing well. At the end, our identity is health and beauty products, so we are always open for opportunities for anything that has to do with health and beauty.
Food supplements are also in our interest because we believe that people have become much more health conscious. The same applies to beauty services. It can be noticed that during the COVID-19 pandemic, even though massage shops were forced to close down temporarily, when they opened back up, lots of customers could not wait to get the services because we still prefer to get these services outside of home. Hence, the service business is hardly likely to be disrupted since humans are still key components to provide services, unlike product distribution via conventional channels that has been disrupted by online channels. Services related to health and beauty are something that we are interested in and it might take some thinking to figure out what will be suitable for our company.
TET: How has the COVID-19 pandemic impacted the organization and what are the measures coping with it?
We need to look at the COVID-19 impact from 2 perspectives. The first one is that Snail White brand has adapted to the situation by launching products that cater to health concerns such as alcohol gel under the brand SOS and NAMU Life Anti-Pollution cream, a skin care product that helps guard against different types of pollution.
The other perspective is the impact on equipment products because 70% of the sales revenue comes from department stores. When they were forced to close down, we need to rely on online distribution channels, which was doing rather well because we have proactively laid foundation for online sales for some time.
Not only that, we have set up a dedicated team to accommodate end-user customers from online channels to approach customers more effectively. In the meantime, we invested in the system to specifically support the online channel, which has been very well received, boosting online sales to almost double during the COVID-19 pandemic.
TET: What are your views on the growth of skin care business?
We believe that the beauty business is still a growing industry, depending on which aspect. Previously, we used to see a double digit growth, but with more competitors in the market, it is less likely to happen again today due to a lower growth rate. We can say that there is still growth momentum because consumer behaviors still suggest continuous consumption, meaning that even they are still using our products, chances are they might change or try out new things.
Therefore, it is not rational to stick with only one brand and expect that people will only buy this one brand. Likewise, it is very hard to expect 1 or 2 billion Baht sales because it is a low loyalty market and it will keep getting lower. If consumers discover something worth trying out, they will do so.
Moreover, consumers have started to buy products in smaller portions that can be carried everywhere. And if they do not like to product, they can change right away. We also find that products that come in packets are also valuable purchases.
TET: With more competitors and players in the market, what are the Company's differentiation strategies?
With a lot of new brands being introduced into the market, I think that consumers' key concern is credibility. We are fortunate in a way that we have been in the market for 8-9 years, which have earned us customers' trust. Another factor for customers' advocacy is the excitement. If the brand is not different from other existing brands, it is most likely going to be swallowed up by the market. Therefore, our priority is to create a sense of freshness at all times. Previously, a product life cycle might be 1-3 years, but now it is going to be shorter, and we need to renew them regularly.
TET: How is the nature of the competition? What are the new factors that will change the course of competition?
Certainly there are more competitors, and brand owners will be more attentive to consumers, with the main aim of satisfying their needs, instead of intermediaries' needs. Furthermore, one thing that is going to change for certain is to overcome the influence of intermediaries to increase profit margins, allowing for more utilization and customization of the products, which will satisfy both the consumers and brand owners.
TET: How does the Company place emphasis on the environmental policy?
The tangible example is the development of the sunscreen product under the brand Oxe'Cure, which does not contain any chemicals that can harm the skin and the environment, to ensure consumers that the products are chemicals-free and the environment remains intact. However, this is quite challenging because we need to develop the formula that does not make the skin look too white and can absorb into the skin more effectively.
TET: What are the challenges facing business operations?
One of the most significant challenges facing the business is that we need to adapt ourselves to the rapidly changing consumers' behaviors because consumers nowadays can access the online media much more easily, leading to abrupt emergence of several trends, while at the same time more prone to sensitive issues. So, we need to adapt fast and be careful not to upset people.
Especially now that there are a number of social issues, we have the lessons learned from other brands regarding the use of media and wordings. If we take side with any party, there might be negative feedback, which is greatly challenging because things get dispersed very fast. Moreover, with the availability of media platform, people have become more courageous to express opinions. So we see this as a matter that needs caution.
We also believe that consumer data is highly critical, meaning that we need to understand the data of the true users of our products; whether they are men or women. Previously, we were of the view that our customers are mostly women, but it was just a hypothesis. Hence, consumer data is something that requires much more attention, and it is a challenge not just for us but for every company to determine how well you understand your customers.
The Customer Relationship Management: CRM is another key focus area, given that we did not have any touchpoints with end-users previously, so we need to develop one to have customers register with our system, not with the distributors. With customers' data, we can offer and sell more products as well.
We might begin from launching a Line Official Account, to serve as a channel for customers to buy products or view product offerings. When the database is created, the next step is to develop products that truly satisfy customers' needs.
Besides, being able to know who our genuine customers are also enables us to choose the right kind of media to use. For instance, if the major customer base is 18 years of age, then we should choose media platforms used by teenagers such as Twitter or TikTok. Or if it turns out that 80% of the customers live in provincial areas, then there is no need to put up advertising signs in Bangkok.
Even though the development of a big data is not easy, but if we can get started it can help a lot. Meanwhile, when we can get hold of the data, we need to process and analyze it. It might seem a little overwhelming, but it is a necessary course of action.
About The Executive Q&A Series
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