Pomelo Fashion CEO David Jou on managing a reverse supply chain and logistics in Southeast Asia
CEO David Jou has hailed Pomelo Fashion as a new type of fashion brand promising to “make fashion fun again” and the start-up is set to shake up the Asian market by offering an omnichannel experience with investment from big names like JD.com.
“We’re a vertically-integrated, digital fast fashion brand: we do everything from design, material sourcing and trend research all the way to providing the delivery service for our customers.”
Indeed, Pomelo recently had the largest-ever series B funding round for a Thai start-up, raising $19mn.
Jou was previously Managing Director of Lazada Thailand, which was set up as to take advantage of digital adoption rates in emerging markets which lacked capital, technology and human resource investment. Why did he choose Thailand, and remain there to set up Pomelo?
“I always thought Bangkok was a very international city, while simultaneously small and charming. It’s a central location, which is great for ecommerce. From Bangkok to Singapore, Hong Kong, Ho Chi Minh… it’s all within a three-hour flight. In addition, the population and GDP per capita were at a level that can really support an online business – especially with accelerating trends in internet adoption rates.
Another option was the Philippines, which Jou says would have been more challenging logistically due to its many islands, and Malaysia where the population is small and fragmented both ethnically and culturally. “A customer-facing brand serving such a hugely diverse population would have proved difficult,” says Jou, adding: “When I looked at Indonesia [four years ago] I thought maybe it was a bit early in terms of its technology development – but I was completely wrong; Indonesia has really leapfrogged other markets in terms of how quickly it was able to develop.”
Thailand, in conclusion, was “a really great place to set up: 70mn people, 30-40% internet penetration, and social media adoption was greater than 100%, meaning there are more Facebook accounts than people”.
The reverse supply chain
For Pomelo, managing an efficient reverse supply chain is paramount to giving users what they require. “I think it’s really at the heart of the ecommerce problem fashion has. When people purchase fashion products like apparel and shoes fit and sizing are such important factor. We have a ton of customers and a huge online following, but when we look at the segment of people who have yet to make a purchase, they say the #1 roadblock isn’t brand or style, it’s always fit and not wanting to deal with returns. That’s 95% of it.”
“That’s why in 2016 we recognised we’re not an online brand, we’re a digital brand. Online or offline, you can make it better through the use of technology. We do have an offline presence we’re rolling out very quickly. it’s an omnichannel experience; we don’t think about it as ecommerce versus instore retail, we think of it as offline and online both being ways to reach and interact with our customer.”
Omnichannel to disrupt fashion
Jou feels that an Asia-based fashion company is set to disrupt the fashion industry as the continent consumes 70% of fashion and produces the vast majority of clothing. In the Asian market, it’s important to look at what you are replacing with ecommerce, according to Jou: “It comes down to accessibility: they want trends localised to the climate and lifestyle people in these countries lead. In the US or Australia, every major town has multiple retail outlets selling all the high street brands, but here if you’re not in one of the major cities you don’t get that assortment. It’s key that we’re able to provide that assortment of trendy fashion at a price point that works regardless of whether you’re in Bangkok, Chiang Mai or Phuket.”
In the future, the brand hopes to expand its channels to reach a wider consumer base. “We’re mostly online with a small offline footprint, but as we’ve recently realised the biggest barrier to purchase is fit, sizing and hassle of returns. This can be easily addressed by combining technology with the offline footprint that makes sense for the markets we operate in.”
Next, Pomelo will expand geographically. “I like to call it multi-vector growth: all big companies have multiple vectors along which they are growing at any given time, simultaneously. Currently we are in Thailand, Indonesia, Singapore and are setting up our cross-border trade warehouse in Hong Kong which will allow us to reach customers across the world cost-effectively, efficiently and quickly. We will then be able to serve customers in India, Nigeria, the Middle East, Japan, Vancouver… all from the same warehouse. That will be possible due to recent innovations in the logistics space. That’s going to be really exciting.”
You can read more about Jou’s experience and future plans for Pomelo on Business Chief. http://asia.businesschief.com/technology/891/Feature:-Pomelo-making-fashion-fun-again
EU and US agree end to Airbus-Boeing supply chain tariffs
The EU and US have agreed to resolve a 17-year dispute over aircraft subsidies, suspending tariffs on billions of dollars' worth of goods that have plagued procurement leaders on both sides of the Atlantic.
Under an agreement reached by European Commission Executive Vice-President Valdis Dombrovskis and US Trade Representative Katherine Tai on Tuesday, the tariffs will be halted for a period of at least five years.
It will bring an end to punitive and disruptive levies on supply chains that have little to do with the argument, which became embroiled in the trade battle. Businesses on both sides of the dispute have been hit with more than $3.3bn in duties since they were first imposed by the US in October 2019, according the EC.
The US imposed charges on goods upto $7.5bn in response to a World Trade Organisation ruling that judged the EU’s support of Airbus, its biggest aircraft manufacturer, unlawful. A year later in November 2020, the EU hit back. The WTO found the US had violated trade rules in its favourable treatment of Boeing, and was hit with EU duties worth $4bn.
In all the tariffs affected $11.5bn worth of goods, including French cheese, Scotch whisky, aircraft and machinery in Europe, and sugarcane products, handbags and tobacco in America. Procurement leaders on both sides of the fence were forced to wrestle with tariffs of 15% on aircraft and components, and 25% on non-aircraft related products.
Boeing-Airbus dispute by the numbers
- The dispute began in 2004
- Tariffs suspended for 5 years
- $11.5bn worth of goods affected by tariffs
- $3.3bn in duties paid by businesses to date
- 15% levy on aircraft and 25% on non-aircraft goods suspended
Both sides welcome end to tariffs
European Commission President Ursula von der Leyen branded the truce a “major step” in ending what is the longest running dispute in WTO history. It began in 2004.
“I am happy to see that after intensive work between the European Commission and the US administration, our transatlantic partnership is on its way to reaching cruising speed. This shows the new spirit of cooperation between the EU and the US and that we can solve the other issues to our mutual benefit,” she added.
Both aircraft manufacturers have welcomed the news. Airbus said in a statement that it will hopefully bring to an end the “lose-lose tariffs” that are affecting industries already facing “many challenges”. Boeing added that it will “fully support the U.S. Government’s efforts to ensure that the principles in this understanding are respected”.
The US aerospace firm added: "The understanding reached today commits the EU to addressing launch aid, and leaves in place the necessary rules to ensure that the EU and United States live up to that commitment, without requiring further WTO action."
This week’s decision expands upon a short-term tariff truce announced in March this year. The EC says it will work closely with the US to try and further resolve the dispute, establishing a Working Group on Large Civil Aircraft led by each side’s trade minister.
Airbus last month signalled to suppliers that post-pandemic recovery was on the horizon, telling them to scale up to meet a return to pre-COVID manufacturing levels. “The aviation sector is beginning to recover from the COVID-19 crisis,” said Airbus chief executive Guillaume Faury, adding that suppliers should prepare for a period of intensive production “when market conditions call for it.”