Over the past two years, online women’s fashion business Pomelo has expanded rapidly offline, building up a network of 20 stores across Southeast Asia. Most are in its home market of Thailand, but the retailer recently opened its first store in Indonesia and its second store in Singapore. And this year, it will enter a new market – Malaysia – and double its overall store count in the region. “The beauty of our business is we can really utilise online data to see where [the business] ha
e business] has traction. We bet on certain markets for expansion, but we have a lot of proof points,” Anders Heikenfeldt, Pomelo’s chief omnichannel retail officer, told Inside Retail.
Pomelo’s offline expansion comes after it raised US$52 million in a Series C round in September 2019, which saw some of Thailand’s biggest retail and property companies invest in the business, which is backed by Chinese e-commerce giant JD.com.
Pomelo is based in Bangkok, but has a growing presence in Southeast Asia. Image: Supplied
Tap, try, buy
Started in 2013 by Lazada co-founder David Jou and Casey Liang, Pomelo was initially conceived as a local Southeast Asian rival to the global fast fashion giants, such as H&M and Zara. But as omnichannel became a more dominant business model in retail around the world, the founders saw an opportunity to use bricks-and-mortar stores to solve two of online fashion’s biggest problems: fit and returns.
Today, Pomelo is best known for its unique ‘tap, try, buy’ concept, which allows customers to order unlimited items online and ship them to their nearest store to try on for free. They only pay for what they decide to keep. The business refers to this as ‘true’ omnichannel as opposed to click-and-collect or ship-from-store, which Heikenfeldt claims don’t really solve customer problems.
“The only benefit of click-and-collect is that you have a wider assortment online than would be available to you in-store. But then you have to ship it to your home. What we do with ‘tap, try, buy’ is really beyond [that]. You can order 50 items and pay zero. You can go to a physical location and try on 50 different things. That’s really a benefit of a customer-centric approach,” he said.
To make it work financially, Pomelo has invested heavily in building up its internal capabilities in digital and data and strongly encourages customers to use its mobile shopping app. This way, it can track what customers order and what they send back, so that, over time, it can learn to present products they’re more likely to keep. While most retailers see returns as a cost, Pomelo actually encourages its customers to try on more items.
“The more data we can get, the better we can personalise the experience, and the more likely the hit rate of your order will increase,” Heikenfeldt said.
Customers can even use ‘tap, try, buy’ to order items from Levi’s, Converse and L’Occitane and dozens of other brands on Pomelo’s website, after the retailer transitioned to a platform model about six months ago.
“It’s only available in Thailand at this point, but we’re hiring up aggressively to start rolling out the platform experience across Southeast Asia over the coming year,” Heikenfeldt said.
The retailer believes its ‘tap, try, buy’ offer represents true omnichannel. Image: Supplied
Startup mentality
The success of the ‘tap, try, buy’ concept has given Pomelo a strong incentive to continue expanding its offline presence. Last year, the retailer started partnering with other businesses to allow customers to use ‘tap, try, buy’ without having to visit a Pomelo store.
“We work with yoga studios, gyms, cafes and other retailers, where we simply tap into their fitting rooms for customers to try on Pomelo products,” Heikenfeldt explained.
Currently only available in Bangkok, customers can choose from a list of around 100 third-party locations at checkout to send their order. They can try on and buy any items they want to keep using a payment app that Pomelo provides its partners with.
“Our goal is to get closer and closer to our user base,” Heikenfeldt said.
It’s hard to imagine the likes of H&M partnering with yoga studios and cafes to fulfil online orders, but that is the benefit of being a startup, according to Heikenfeldt.
“We’re not so-risk averse,” he said. “We have more to win than they have to lose.”
