Welcome to the fourth session of our series: 'BRICK by BRICK: Building Insurgent Brands' with Dione Song, CEO Love, Bonito.
At DSG Consumer Partners, we have always been channel agnostic and invest in both online-first and offline-first brands. Love, Bonito one of the largest womenswear brands in Asia, is a great case study of an online-first brand that has grown across physical stores in Asia-Pacific while remaining sharply focused on its target consumers.
In this episode we cover:
- The elements of a world-class omnichannel consumer experience in women’s apparel
- Fundamental KPIs for Love Bonito
- Maintaining consumer love while going global
Welcome everyone to episode four of the brick by brick series by DSG Consumer Partners where we talk with some of the brightest minds about building insurgent brands. For those of you who don't know DSG Consumer Partners, we're an early stage consumer only venture capital fund investing across India and Southeast Asia. We manage more than $275 million on behalf of our LPs and we have invested in 73 insurgent brands across India, Southeast Asia, in consumer products and services since 2012. I will be your host today. My name is Sameer Mehta and I run DSG Southeast Asia's efforts and I'm delighted to welcome Dione Song, who is the CEO of Love Bonito. We will talk about going international and maintaining consumer love today. I'm sure we'll talk about other things as well. But that's the main theme. By way of introduction, although I don't think there needs any introduction. She has been at Love Bonito for more than five years, serving first as Chief Commercial Officer, then Chief Operating Officer and then assuming the mantle as CEO in early 2021. Prior to her time at Love Bonito, she spent many years at Sephora Asia as well as Zalora in various senior management, digital marketing and E commerce related roles. So she is really what I would call a very experienced person in the space and what is a new category new space in the new region. She studied at NYU Stern and an undergrad, she sits on multiple boards. And in full disclosure, she is a board member at one of our portfolio companies, namely Ramblin Brands, which is which makes Smile Makers one of the world's leading female sexual wellness products that's available everywhere you can find it. That may also be why she agreed to do this, we'll find out that she's never going to talk to me again. We have a great audience today of more than 50 people signed up spanning early stage consumer focused founders from India and Southeast Asia, early stage investors, brand marketers amongst others. Throughout the session if you have any questions, please use the Q&A tab and ask your questions. I will do my best to try and fold those questions in during the session or leave some time at the back end to do that. Alright, enough about me and the session. Let's move to Dione. Can you tell us a little bit about your journey to Love Bonito, what led you to go there? Right and what has inspired you to stay on? I mean, five years is a long time in this day and age to be in one company. To give us some sense of background I think that'll help frame our the rest of our dialogue.
Yeah, thanks so much Sameer, and nice to meet everyone. Oh, gosh, I just got a ping from Deepak. He was like please smile more. Sorry, everyone, I have a naturally more RBF so I'll try to very friendly so please ask questions along the way. Right. Very open to any questions. We can have a more open dialogue this evening. So yeah, I think for for my journey and how I landed here, I would say quite randomly actually, first started my career in banking and in finance, you know, I think typical route I guess when you're going to and undergrad business school like Stern, where everyone's either becoming a banker or becoming a consultant and management consultant, but it's really one of two routes, right, so I did that, but realised that hey I think I really wasn't enjoying it. Right? There was no spark, there was no passion for the role. And I really just wanted to also make a bigger impact right to my day to day and not just be you know, tweaking some lines in a in a model, right, which is usually what you do as a first year investment banker. So yeah, so that was when I met up with an old friend right from university, who just left his role at McKinsey to join Rocket, and I found out, oh, my God, what is this glorious place? Right? This is in 20. This was early on, right 2010 2011. So what is this holy land of like, wow, we're, they hire young people to take on and make big decisions and who have the ownership and autonomy right in their day to day. So I met with the Rocket team then was offered a was asked to join as a fourth member in their payment Fintech startup. So it's called Pay 11. It's a sort of copy of Square, right? So payments are like bodegas and so on. You're probably wondering, what is Pay 11? Well, it never launched, right. So a couple of days before my role, they told me Hey, I think there is an issue of their prototype. It's actually not It's not passing regulations with MAS in Singapore. And hence, it's not happening, right? It's too expensive to redo the entire prototype. So then they asked me, Hey, would you want to join sort of Zalora or Food Panda, which is all in the same office, right back in the days in 2011. So that was how I started my career. So totally random. I said Zalora right. So here I am started in the function of content analytics, right? I just took the first role that they gave me, but I think they thought it was a good fit. And then just just worked my way through, right, did that for a couple of years, stepped into a marketing role for Singapore, and then soon after a more senior role also for the region right across Singapore, Hong Kong and Taiwan. So I would say I think very fortunate, I think it was entirely random, very not planned. But out of that experience, what was really very beneficial and helpful right now in hindsight as well was that Rocket was so early on in the startup when ecommerce team in Southeast Asia which meant that if you really want to understand our E commerce be really good at sort of analytics, right on site analytics, product management, right technology and all of that. It's really the place to be to learn It's a wonderful school for learning all of that, and digital marketing as well. Right. And back then I guess a lot of the marketeers in Southeast Asia was still doing more traditional right brand marketing. And we became the experts at really digital marketing. Yeah, and then move to Sephora. Because after doing that, for a while, I was wondering, Hey, I think you're sort of in cowboy land, right? learning as you go, when I was running other companies where I can also learn from maybe people a lot more experienced than me, right, who have seen so many more years, right in a certain industry and just learn some best practices. So that was really why I moved to Sephora. I think what was interesting was, I was also very fortunate to see the company post m&a, because back back then they just acquired Luxola, and sort of seeing two companies come together. But you know, I think it's a once in a lifetime, or maybe a couple times you experience all these things yourself, right? Yeah. So those are the two and then finally met Rachel at a women's networking event, and then join LB right, which a key difference for me was really going from E commerce, which is still retailer, Sephora, which is also still retailer and a multi brand retailer to now being in a brand where it's very different, right? It's a lot more on the whole branding, identity, strategy. You know how you think about your channels as well, versus a retailer or E commerce marketplace?
Speaker 1 06:12
Excellent. That's great. Again, congratulations on very fast progression and taking opportunities to learn. I think that's the lesson for many other young people right is sometimes just self aware, you will learn the most and then interesting opportunities will manifest it's hard to plan it. In hindsight, it might make sense. But you won't have the foresight to know where you will go right. Talk me back to a little bit when you joined Love Bonito, what did the company look like? Give me some sense. You don't have to give me numbers if you don't, if you can't, but some sense of revenue, target markets was it only a digital business at that point in time, just so that I think our audience can understand as we talk about the transition from what it used to be to where it is now and what is to come. I think it'll help people reframe more about where Love Bonito was.
Yeah. Okay. Sure. I can't share revenues, right. But in terms of footprint, it was mainly in Singapore, then also in terms of Singapore in terms of size of operations, mainly online, we hadn't yet opened our first store in Singapore and team size, we were just below 50, in terms of total team size. Yeah. So that was sort of internally right. From a fundraising landscape perspective. We just closed our Series A.
Got it. A very different business than where we are today. Right. Yeah. So you know, on that subject, right under your watch, obviously, there has been a huge amount of change, I would say from what I can see outside in about Love Bonito. So walk me through, you know, we talked about this international idea, we talked about omni idea, walk me through what led to the internationalisation pipe, right, like we get a lot of founders come and ask us, hey, when should internationalise? I want to go regional, I want to go global, I get a lot of that as an investor. And then I have to sort of calm them down. Lightly I hope, right? It's first dominate your home market be number one and number two, in your category in your home market, explore offline and online fully before you go further afield. How did Love Bonito think about its internationalisation playbook, which markets? Why, in what sequence? And for what reason? I think they'll help a lot of other people who are exploring those possibilities.
Understand, oh, so different, I guess when I first joined already, LB, I think we the pressure from investors of like, hey, go international. Right. And that was really that first key priority. But of course, maybe we were already slightly more mature. And yeah, slightly more mature in our markets. I would say I think first of all being headquartered and starting operations first in Singapore. I mean, there is a limit, right to how much we can grow. But of course, then we already existed for five years right as LB. So it's a very, very different scene. So back then, from an online perspective, we were definitely the leading local player already in the market. And we were only just starting offline. But the landscape I think, then was also very different. Right? Meaning that in general, I think the industry and investors were also not that comfortable going offline, right? I think offline was still sort of a dirty word, right? Oh, my God, why do you go offline? Right? So high capex? Right? There's so much risk, why would you sign like three year leases? Right? I think so everyone is really very apprehensive about investing in the offline expansion. Right. Hence, can we started looking also actually then into other markets? Right, and then already started Malaysia, Malaysia, Indonesia, we had just started already when I joined. Yeah, so I would say I think looking back, though, I think you asked looking at how do we think about internationalisation? Probably quite a different lens. Right. I think if we were to look back, and sort of maybe refine also how we think about expansion, right? Firstly, I guess I think being based in Singapore, for sure. I think you don't have the luxury of being based in a big market, right like India, US or UK right and so on, where hey I think you have a good definitely five year runway to grow, grow, grow, be a leader in the market be also interesting, attractive and sexy enough right to the street to investors before sort of hitting a limit, right. I think that you're at a saturation point where you're hitting sort of a limit also with TAM, but in Singapore, I think the year where you have to go overseas comes a lot earlier, because the markets are so much smaller, but I think the missed I guess a lot of companies perhaps in Singapore make a step you start thinking about, okay, which are my neighbouring close by markets to expand into. But but the truth of the matter is Singapore is so different from Malaysia, from Indonesia, or Thailand, Vietnam. And if you're a consumer brand, you know, in a certain sort of like middle price point it's very different because income GDP levels are totally worlds apart. So it's I think the first mistake is not looking at just your neighbouring markets Southeast Asia first, but really think about okay, right, who's the customer? I'm trying to reach out to? Where's my assortment positioning? Right? And what problem am I trying to solve? Are there markets as well, at a global level? That really makes sense, right, for a product like this? Right. So I think that that's really sort of the second bit and for us, this includes countries like Hong Kong, right, for example, and includes countries like the US, for example, where the problem that we're trying to solve for would be can we really cater to the Asian female, right? And really produce women's wear fashion and beyond when a very Asian female centric way, right that today, they are not really getting served by incumbent players, international players, right, hence, our pie and oyster (market size) is actually far wider than Southeast Asia. And for us today, then Hong Kong markets like Hong Kong and the US are actually one of our larger markets.
That's I think is very interesting. And I would say also a little bit counterintuitive, because you're right, the traditional playbook for internationalisation is I hit up against a cap, I have to go find a big market, I can explain why the you know, flag posting around my neighbourhood makes sense. It's not as alien as going halfway across the world. Actually, what you're saying is the lens should be who is your target audience? Who is the consumer who loves you? What do you know about them? And then focus on that, right. And of course, I assume that the early days, it was all digital expansion, it was not physical store expansion and non Singapore countries. Is that a fair statement?
Yes, yeah. So in terms of how we expand, but I think having sort of the online platform today, and it's so simple, I think it's very easy to have your own Shopify and so on, we tried to cast a wide net, right, meaning we have a dot com that serves like more markets, right? Start doing more light touch awareness, meaning products, get more marketing, social media, right? And so on seeding, and then we start seeing hey, I think, where do we get more natural organic traction, where we already start seeing a good product market fit, right, and then we dial up, we dial up meaning that we might invest now, in a little bit more local marketing, resourcing, we might have a person on ground as well, right? That you can easily do a remote structure and team example we do the Philippines, right, we have one two people in the market, right? Really seeding and growing the market and the market grows, while you don't have to have a full fledged team, and then only if the market makes sense for an omni channel expansion. Right? Meaning stores, then we do it right. And by that we look at other metrics we look at, I think how malls are doing right in the market right now, how it sort of offline retail, as well as it growing right year on year. And usually I think those things check out right for most of the markets that we're in, and then we dive further. And we do that first with a pop up store, right? Try to understand the customer better also work on other operational foundations, right, like understanding sort of the market better these terms and so on. And then only after, do we invest in a in a more permanent store builder.
That's, that's really interesting. So again, what I heard was seeding, experimenting with limited capital controlled explosions. I like calling it right. So you know, you don't blow up the house if it goes awry. And as you start getting more proof points, again, in a light touch way expand, right. So let's talk a little bit about where we are now, I think, you know, you talked a little bit about in hindsight, looking back and looking wrapping. And it was always an interesting way of putting narratives around what's happened, right? You didn't always have could always explain it that way. At inception, the answer is almost never right. But in hindsight, you can see how the pieces unfolded. You're now if I understand in seven countries, physically, I know you were in Japan last week opening some stores, that looked like fun. So give us a sense how many countries? Okay, give us a sense how many countries or cities? That's how you think about it? How many stores and what potentially is happening in the future? In so much as you can?
Yeah, sure. Understand. So we're we like to see ourselves in three key regions, right. So Southeast Asia, and then north Asia, and then the Asian diaspora market. So in Southeast Asia we are It depends how you define what countries we're in, right? I think online, we have quite a lot of countries. So I'm not going to talk too much so much about that. But omni channel, we're in Singapore, Malaysia, Indonesia, we have a retail franchise in Cambodia. And then Philippines would be another interesting market for us because it's growing exponentially, right? Just and it's only ecommerce. And apart from that in North Asia, mainly Hong Kong, where omni channel we just opened our first flagship also why I'm in Hong Kong right now. And then Taiwan sort of a growing but e commerce only market for the moment. And then Japan right where we are starting pop up stores at the moment. And then lastly, we have the Asian diaspora market. Right So Australia and the US, and US would be our big bet market of focus. So right now, yeah. 10 key markets globally, four omni channel markets and then 19 stores across the region.
Got it. Excellent, excellent. I think just the way you laid some of that out also tells people a little bit about how you think right, seeding, pop up, experimenting digital-only first, decide what the inflection points would be to put physical infrastructure in place because again, with apparel fits, you know, some physical experience is still really, really important, right? I mean, we know from the work that we do in apparel, and we've made a couple of investments recently in the space that returns is a big, big problem online, right? And that really gets ameliorated if you have a physical store presence, right. And there's a nice interesting way to close the loop. And the really great retailers have increasingly seamless Omni experiences. So on that subject of Omni, if I can get you to switch focus a little bit, how do you think about building that perfect store experience, irrespective of the perfect store being physical or online? Because the young consumer thinks of them quite interchangeably? Right? I expect, I'm not that young. But even I expect to have a perfect experience, whether I buy online or offline, right? So help me understand how you think about it. What are some of the key metrics that you guys might track? And what are some of the things that have worked or not work? In the lessons that you've learned over the years?
Yeah, a lot of people asked us always, like, how do we create that whole experience? I would say, actually, it just boils down to having this, the team really thinking from a very customer centric and thoughtful perspective, but always putting the customer at the centre of everything, right, and not really rolling things out, you know, rolling features out, you know, rolling, let's say, cool technology, for the sake of tech. Right. And I think a lot of times, I think a lot of retailers are companies end up sort of falling in that cycle, right of doing something tech for tech sake, real logic, because it's cool, right? But when you ask them, hey, what's the use case? Or am I solving a problem? Typically, I guess, you know, they have trouble answering that. I'll give specific examples. Right. So when it comes to offline experience, when we first started doing stores, right, we were really clear, hey, we don't want to do a typical store, right? We want to ensure that we're rolling out a store that's solving a lot of pain points, and we're gonna be introducing features, whether it's technology or non technological features, we will roll them up right to improve the overall customer experience. So if you look at our stores today, share a couple of key things like one for example, because we have one One example was we started quite a while back, we noticed a hey, I think a lot of our customers coming to our pop up stores just because of the brand that we are right. We're quite girly, feminine, right? I'm quite cross generational. So people like to come in shop Love Bonito, always with their friends, right? They're coming with a girlfriend, they're coming sometimes with their moms? Or because we have categories like bridesmaids, literally coming in with a group of five women. So we were like, Hey, why should we have a typical fitting room experience, right, we want to ensure that we allow for communal changing, because women are literally buying together. And because a lot of times they are shopping together what they want to do. And what we want to do, right is to also give each other feedback, right? You also want to get your friends input, how does it look? Right? Does it look great, and so on. So we started rolling up modular communal fitting rooms, and a lot of our stores and bigger format stores, right to really aid the overall customer journey. But again, it's very, I wouldn't even advise other brands to do it. It's very specific to who we are and our DNA and core but another example was a couple of years after we had a couple more stores, we realised Okay, getting a lot of actually a lot of traffic right to our stores. And our queues at the fitting room was usually quite long, it's a bit longer also, because our product is a little bit more intricate, right? It's a lot more work where it's a lot more occasion where maybe it takes a little bit longer to sort of wear in right to the product, not so basic. And then maybe you take time, right? Also contemplate so instead of sort of having a typical fitting room cue, right, which you always see in a lot of stores, we were like, Hey, how can we also enhance the customer experience. So we ended up rolling out fitting room queue system, and we took this it was a leaf out of Korean barbecue restaurants, right? It's crowded outside, you leave your number you leave, right and like Singapore Tanjong Pagar, all of that same thing, someone can come in, they leave their number, they take a, they take a number, it can be physical, or they can send it to their phone. And then we beep them when the when the room is ready. So what can they do, they can do two things. Number one, they can either spend more time browsing on the floor, which for us is great, it increases our AOV, AOQs, or because Singapore and a lot of the malls and southeast stores in Southeast Asia always in a mall versus like the US where it's a lot of street stores. Right? So instead of that they could go out to the mall, get a cup of coffee or tea, and then we beep them when the room is ready, what does that do? Right? That also enhances the overall shopping experience because they're not wasting time. Right? Did you get less heavy as well. So that was number two, right? Again, it's not very, I wouldn't say it's even high tech. Right? It's just very basic. And we took it out of the soup, you know, F&B theme. So So that's just an example. Yeah.
That's amazing. I can't tell you the number of times I've left the store after seeing the queue for the fitting room. It's just pointless. I'm not going to waste half an hour waiting. And then you've lost me as a customer. Right? So that's super, super insightful. Talk me through a little bit. You talk a little bit about physical store experience and give us two very tangible examples of what you've done that actually frankly I've never seen before. So that's super interesting on improving the customer experience putting the customer at the centre of it. Talk me through the digital experience, right? I order stuff online, whether it's clothing apparel, and I have stopped quite frankly over the years because of fit problems. And I don't want to deal with the returns and it's just you know, too messy, quite frankly, right. What are so that's one problem that I know exist and there's how does it fit on me how how would it look? Walk me through how you think about the online side of the equation, because in apparel, and as investors, we have historically been very wary of apparel for this reason, right. But we are gaining some courage and doing somethings now, I would love to hear how you think about the online space for women's apparel, given your target audience and given the spread that you have globally?
Yeah, I think maybe first on the issue that you raised around sizing, okay, if anyone has a very good sizing AI to recommend, please recommend me
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I think at least from testing so far, all the different tools, we found that actually nothing beats that traditional mode of trying, which is where the entire omni channel experience comes in. Right. And where also stores play a certain part in terms of sizing, in terms of trying in terms of recommendation. So that's where we really think about the whole omni channel experience. But I think beyond that, when it comes to our entire e commerce, again, it's back to that whole customer centricity, right, I think first up was also around, let's say, discovering, or browsing, where again, we go back to our customer, right, and how she's shopping, and how she's also making different decisions, right? So for example, in our categories and our filter, we have also very fun attributes, right? That makes sense to our customer, right? Example. You know, I think dresses that sort of take you from night to day, right? I think we have things like Hey, I think for women also, we have things like hey, buffet friendly pants, right pants that really hug you right, they have your tush, but hey, after that it's so comfortable, you can go through a heavy meal, right? So stuff like that, we ensure that the entire filtering experience is actually fun it's very specific. But again, I think it's not going to work for another brand, right? Because there's a very, very different experience, then apart from that, just ensuring that from an omni channel point of view, all the different features are there, right. So a lot of times also customers sort of look online, because they treat online almost the catalogue, right? But then I want to go into the store to try and make the final purchase. So we ensure we have things like store availability on site, right? So customers that you know, right? Is this available in our Orchard store, right or in our Malaysia store, for example, before actually heading down. So we have features like that. On the flip side. Also, we have omni channel features in store, right? So for example, the amount of assortment you hold in any store is never going to be 100% of the ecommerce assortment right of your entire warehouse. And that will be fact, that is just truth. But we try to ensure that customers, we can also upsell, let's say colours that are not shown on the floor items that are not shown on the floor and then style, right. So meaning the customer can get recommendations from our retail ambassadors in store and the point of sale at the cashier, they can make a purchase a very seamless one purchase and buy both the physical item and then the online item. And we'll ship that item right to their homes.
Oh, wow. So that's one experience.
One purchase for two types of items from two very different fulfilment centres. Right. So that's another way that we try to do it.
Yeah I think what you're alluding to is listen, you have the attention of your customer for limited periods of time, right now, you can try and extend the attention that they give you. But from what we see, with e Commerce Data, the amount of time people spend on sites is increasingly thinner and thinner and thinner, unless they really, really love what you're doing. Right. And I know, of course, Love Bonito has one of the best cohorts in the apparel industry, from what I can tell. So I know you don't have that problem, but a lot of other people do. So when you have their attention, how can you convert them? How can you delight them? And in order to earn that trust? And and ultimately the gold standard is to get them to repeat often. And with increasing basket size? Understood, understood. You've addressed many, many interesting points. One thing I wanted that we haven't yet talked about, if I can draw your attention to is we've talked about ideas, systems inventory, you know, as you are being the CEO of a large, complicated company that's growing fast that's expanding internationally has to think about Omni, if you could give us a bird's eye view into the top 3, 5, 7 metrics on your mental dashboard for the company, right? What do they include? They need not be on the sales stuff, right. But like I want founders to get a sense of how a CEO of a much later stage company operates and how they think about stuff. Can you give us a bird's eye view what that looks like? I'm sorry I'm going off script now Dione.
Beyond sales, I actually like to look at all of the underlying operational levers, right. And drivers very importantly, so for us, it's understanding also, what are the I think to understand what is your Northstar metric, right? So one example for us would be a second order, right, that we know that typically, as you said, I think our cohorts are generally quite healthy. We know that the moment you get a customer past that second order, they will typically then come back right quite frequently, meaning they shop three to four times a year, but we need to get them past the second order. So that's one metric, right? So to get there, we even Of course, we look at the CAQ, we look at first order, right? And then we look at second order, and we hope for them for that to increase, then of course we look at other more underlying operational metrics right would be NPS.
How often do you measure NPS Dione?
We do it monthly? Yeah, we do it monthly as internal where we don't use an external third party.
And you use both in store feedback from consumers as well as online feedback, post order, or even abandoned orders, I guess, you might ask for feedback. Okay.
Yeah, we we do that. Yeah. And then conversion rate would be another metric that's really important, very helpful, right conversion rate both for your online channels for your offline channels. And of course, you can dissect it in many ways, right? For online, it's really thinking about the overall funnel, because this gives you a good sense of what's happening in your business, right? If the upper funnel conversion is sort of weak, you know that something there example? It's maybe how you're showcasing the assortment, right, that you know, and they're not coming through the door, right. And there's something that's not prohibiting the customer from clicking through. If it's deeper through the funnel than, you know, right, maybe fine it's a more technical issue where there was a payment issue and so on. So I tried to look at that, right. So conversion rate, then also for stores, very telling, because it tells you very clearly our service level sort of up to par as well, right? Or are we staffing the store enough? And these are two very operational and very, I would say, I think I like them, because they're very actionable, right? You know that you can do something and you would see an impact immediately. Right, be it the next day or the week after?
So I think on the online front people, I think will have intuition for this. But what I sense that you're saying is, Sameer, I care about web sessions or app sessions, I care about whether they've lingered, right? Whether they've added to cart, whether they've abandoned the cart, and then whether finally, they've transacted right that I think there's some variation of that. But I think we can all agree that's intuitive. Offline bit, talk to us a little bit about how you track conversion, right? Because there's no link necessarily other than Big Brother style video camera type surveillance, which don't admit if you doing. Don't admit if you're doing it, but how do you track conversion online? Right? Is it your sales staff, eyeballing stuff, and saying, oh, people went into the trial room with 10 articles? And then they abandoned all of them? Like, how do you get intuition for it? Or do you have directly have hard data for it?
Yeah, I mean, for CR, we don't have the overall funnel, the full funnel, right for offline, and but we have the CR, that one is just through more basic traffic, traffic cameras, this moment in time, and then you can at least see maybe the slight dwelling or if they walk through, right, the stores that we have actually visibility today. So that gives us a concrete sense, the other part then then comparing that conversion, also to your manpower ratio, right it will be the other? Because that gives you a good sense also of hey, I think, do you have enough people right on the floor to be also driving up the conversion? And then beyond that, as well, of course, I think a lot of is also feedback to ensure this is circular, there's a full loop right from stores. And I will say I think this is the beauty also of Omni, right? I think a lot of times online, the data tells you here I think what is going wrong or right. But through the store teams, especially of getting feedback from the fitting room, you get the why, right. So I know that, hey, certain products are not moving, because a customer might actually say, hey, this strap is actually quite scratchy. But I would never get that feedback from an online purchase. Right. But I think that's the feedback that you get in a more timely manner. And then you can improve for either the assortment or improve something around the visual merchandising and so on.
So talk me through the feedback loop, how fast because I like what you said that you want things that can be actioned on, so we can do something about it, rather than just having lots of data for the sake of it. So how fast when you notice something like just to work on your example of a scratchy strap that a sales associate noticed, because lots of ladies returned it, how fast then can you get that back into your supply to say, hey, we made a mistake here, we need to do something about this.
Yeah, I mean, we we do our typical performance meetings on a weekly basis. Right. So I think the moment we get that if we know that it's a much bigger problem to solve, right, then immediately we can escalate right to 12 supply chain. But I guess at that point in time, yeah, it's not around maybe improving a lot of the product right immediately for the next launch. But at least we know also, if we need to pull back, right, maybe defects or reduce exposure on certain products immediately, to not move into customer experience that I think we can do. ASAP.
Got it? Got it? No, that's very, very interesting. I wanted to talk to you specifically about inventory, because that's what gives us sleepless nights as investors in apparel, right? How do you think about layering on inventory in physical stores? And I know, you know, of course, there's the Shein model, which many people will be familiar with, which has truncated the time from factory to consumer, for lack of a better word. That's, I'm not familiar with how you exactly source. But how do you think about that timeline, right? And what do you do to manage that timeline so that you don't have the kiss of death, which is out of stock in the physical retail environment, the online retail environment, but also the other side of the problem, which is far too much stock of something that's slow moving, and then you have to potentially discount it, consign it, liquidate it, who knows what else, right. So how do you manage what I feel is a very delicate balance that is even more profound in women's apparel relative to men's apparel? I would say,
Yeah, I think it really first starts with the entire range strategy, right to be really clear around what is your evergreen core product offering versus what's seasonal, because it's quite different, right? For evergreen core, to be very honest, it's not so much about it's not too big on the entire speed of supply chain, because it's sort of an always on category that's always there. Right what you want to do is to ensure they have enough inventory levels, that your product lifecycle is sort of healthy enough, and then what you spend time doing it's really around more product innovation and iteration. So to make that example, that hero pair of pants, the best pants possible, right? We're going to be improving let's say the seams the tailoring, right quarter on quarter, you know, year on year. Um, so that's something that we do, right. So for the entire seasonal Core Collection, actually, today, it contributes to around, we change our model quite a bit, I think people think we have a lot of different new launches, but that actually contributes to around 30 to 40% of our business. So it's very core, it's very evergreen, but you see new things, right? Because the new things are actually new colorways right. So for example, started two colours today, there are 15 different colours. So then we introduce new colorways reintroduce them, we may change up the fabric swatches right, so we change up the materials slightly example there could be more spring summer version, right for our markets, like Hong Kong, the US, then it makes sense to introduce a more Fall Winter version, but the entire silhouette is exactly the same. So that's sort of four part is quite different.
That's interesting. You're teaching me a lot here, which is, there's a lot more nuance to this than perhaps I am applying my mind towards. And so that's that's, that's interesting. We talked about. So just going back to the bird's eye view of the key key metrics that you track, right, we talked about sales, and we talked about a couple of underlying levers under sales, we talked about NPS, we talk a little bit about inventory, at least I talk a little bit about inventory. What about the human side of the equation, right? This is a delight the consumer business, right, which has sales associates as real human beings who can touch and feel and have good days and bad days and and don't get along and occasionally do get along. How do you think about that side of the equation? Right? And What measures do you have in place to get early warning signals? Are people getting burned out? Are we having too much attrition in specific stores give us a sense of what that is. Because again, a lot of the founders who are on this call don't have a massive amount of experience in the offline space where you have to deal with real human beings, right? So give us a sense of that.
Human beings in general, right? I think companies are all running, it's made out of people, right end of the day, I think your strategies and everything, they're just numbers in a model, right? I think you need your people to ensure that you are able to actually implement the strategies really well, actually, for our employees side of things we look at, we also look at ENPS. Very similarly actually and that gives us a good pulse. Right? And it's one simple question of, Hey, would you recommend Love Bonito, right to have yes or no? So very, very similar. And for our teams, I guess it really starts first with onboarding. But I think a lot of times we look at other numbers like attrition, all of that. But to be honest, the signals would have came up way early on. Right? So we really focus also when the moment we bring in someone we track very tightly the first 30, 60, 90 days, right? Where they are pulse check ins already to understand how this person is performing, or if they're happy. If they're not, is there a misalignment? Also, when it comes to scope, right? Are we also very clear when they will be give areas of feedback, right? What they can do better what they're good at. Because that's also your time period, right? Before you also get the employee to the stage of confirmation. So we're actually we actually keep a very, very tight lid on the first 30, 60, 90 days. Yeah.
Got it, that's very, very interesting. I've seen that in very large companies. I must be honest, I haven't seen that in too many smaller companies. Because again, there's so many moving parts. But yeah, makes a lot of sense, right? The cost of losing great people or not noticing that some people are struggling is even more pronounced than a small company. Yeah. And actually, you almost have to invert it and really focus in on it. And what you're telling us a little bit is that you have to drive the agenda there a little bit, of course, you have help doing it. But you need to have a pulse on that problem yourself.
Yeah. So much more actually, to add on that. And note because I think typically, I noticed too, I think the moment someone has an awesome, like onboarding experience at the first three months, to be honest, they are really set up for success, right and the moment someone comes in, and they have a really terrible onboarding experience. It's like, first impressions are on a date, it just goes wrong. And it's very hard to salvage and come back from the situation. But if you take a few steps back then that is where we spend time, also really taking time to do our recruitment process. And I understand I think we're all small, like growing companies, and maybe don't have the time and bandwidth, right. But I would urge everyone to spend a lot of time on recruiting. So we spend, we have typically four to six rounds for every hire. Only recently, I've stopped in the past, I used to actually be myself involved the final round of every single interview until we hit until start of year until the end of last year.
How big was the company in terms of employees end of last year?
I mean, through that process? 100 plus 200.
So all 200 people have individually met with you people who started after you have met with you.
Yeah, in the past, in the past until yeah mid of last year. Sorry. Mid of last year, at least for corporate roles? Yes.
Wow. Amazing. Amazing. I wonder how many founders put in the effort and the time to do that. But I think you're giving us an example of where it's crucial, right? It's the company building. And actually, it's very interesting when you talk and hear people who've built very, very large companies talking to 1000s of people, now, many people will tell you the first several 100 hires they are keenly involved, because that's what they believe sets the culture and tone not for perpetuity. Nothing is perpetual. But certainly if you said up the right way, the odds of success increase manifold. And I would say, just reflecting on what you said, you know, one of the key things we see from early stage founders and we try and test as best as we can, is, do they have the ability to attract, retain, train people who are better than them? Because if they can, and they can do it sustainably, the compounding effect is phenomenal over a three or five year time period. Right. So we really try and advise as best as we can, of course, some founders get there some founders don't some founders, you know, sort of muddle along, but very interesting. Give me a sense of non negotiables when it comes to hiring since you've been involved in so much I know, I didn't plan on talking about this, but it's our podcast, we get to do what we want, what are the non negotiables? Right? What are red strikes for you in this environment? Right? Where if you feel like this, sorry, I'm not the right place for you. We're not the right place for you. Are there key non negotiables that Love Bonito operates by saying if you if you are like this, I'm sorry, this is not the right place for you.
I mean, it boils down to that culture fit right in alignment of values. I don't know now it sounds maybe very, maybe it's very standard or cookie cutter answer. But I mean, we're very clear. We just don't hire, we don't hire people who are divas or who have that attitude, who are douchebags, who are just not nice people. And of course, for the environment that we are, if someone comes in maybe makes a more chauvinistic comment, no right red flag, that's a no no, for sure. Right. Because we're a women. female centric, right, female first brand and organisation. So that's very clear. Right? Yeah. Yeah.
Beyond that, so we know chauvinist pigs, that seems to make sense, there are chauvinist pigs anywhere. But beyond that, what else are you looking for? I get the fit part, but are there others soft skills, technical skills, just things that you seek out irrespective of functional I get functional, expertise. This is beyond functional expertise.
Understand, okay, usually always try to suss out motivation. I think that's very important, because that's the guiding purpose to that person's behaviour. Right? I think to just understand, I'm not looking for a specific right answer, I'm really trying to understand what is their true motivation for joining the role? And typically what I try to ask would be hey, walk me through, why did you leave and join all of your past organisations? Because I really want to understand what makes them tick. Right? And can we then as an organisation really serve and make them happy and aligned with their motivations? Right, and typically, here also, it's fine. I think we're getting answers around hey, I think it was very disgruntled at the workplace where I think I couldn't really make decisions, then. I think that's someone that we would love, right? Because we want someone to be able to challenge right, the status quo. We want someone who actually wants to make an impact. So motivations, I think it's one thing that I feel it's quite important. Yeah.
Makes complete sense. I just wanted to remind the audience we have sort of last 15 minutes coming up. I don't think there are any questions here that maybe we bored you, I hope not. But if you do have some questions, that would be the right time to start asking them so we can filter in as we as we start wrapping up, give me a sense of what you're most excited about for the next two or three years, you know, you've been at this for five years in a high pressure environment, grow fast, going international deliver an omni experience that's world class, raise money a bunch of times through good times and bad times. What's now exciting for the next two or three years as you're appropriately resourced, you have a larger team, you know, people have settled in, if you will, what's exciting?
I think the global expansion, still exciting, right? Really focusing and doubling down now on the bigger bet market. Because honestly, I think we have a footprint, but we're not deeply entrenched, right, in a lot of these markets. And that is actually that difficult part. Right. And it's really not that easy to do. So it's I think that's a very new, exciting challenge to be doing, and doing more of the omni channel bit, right, too, as well then extending also our categories and offering. And when we think about category expansion, it's either through building doing it ourselves, or potentially be buying as well, right, and aligning ourselves with, you know, strong sister brands, maybe in categories that are complementary to us, or in perhaps where we are weaker in. I would say I think that's very exciting, because we've never done something like that.
No, that's, that sounds super exciting. And for some of the founders, who're working in spaces where the target audiences, Asian women across the world, that should be very, very interesting for them. Okay. Excellent. I had sort of one last question before we wrap up, and we can get people back some time today. Right? If I were to talk to you again in five years, and we maybe we will, right? And then I asked you, where's Love Bonito now, five years from now? What does it look like five years from now? I want to tie to cycles, five years a good amount of time to get something done or not get something done.
That's true, you mentioned that. Hopefully, we really become the leading brand, right, the go to destination for Asian women globally. And the top of mind when they think about hey, I think where can be really come to when it comes to women's wear or even beyond, we're really the first brand that comes to mind.
And the way you would so that's of course brand recall and what have you. And the only way to get there is of course maintaining consumer love and being razor razor focused on that that NPS right. I mean, that's the Northstar metric. You know, funnily enough, you talked about that. We get our founders to do NPS on us right. Those are our main consumers. Who are our main consumers? Our LPs right who trust us with money, to deploy sensibly, hopefully. And our founders who we work with reasonably often, right, and in some cases we work with day in, day out. So they are our main customers. And we did an employee NPS. And we were very lucky and fortunate to get an amazing score. Let's see how long that lasts. But you know, we so we do practice what we preach, right, which is NPS is something we expect all founders to track carefully, and really think long and hard about why it moves up or down, right. For those of you who don't know what NPS is, please look it up. It's really the gold standard way of measuring customer love, whoever your customer is. And I think it's really important that all founders get very familiar with it. I get very sick and tired of seeing NPS, where people say, I have a Google rating of 4.8. That's my NPS. No, that's not your NPS, go learn about it. Okay, we have some questions, my threats have led to some results. Okay, I like this on the subject of NPS, right. How do you deal with when you have unhappy customers, you know, we all have unhappy customers, we have founders who potentially don't love us. And you know, occasionally they'll give you feedback. Sometimes the feedback is constructive, actionable, sometimes it's not. Right. So how do you process that? And you're in a physical sales environment? So I'm sure you have some level of this? How do you process it?
Yeah, that's a great question. I guess in a nutshell, you have your your recourse, right, and armour or various actions and templates? I mean, first of all, because we always acknowledge we try to understand the issue, we acknowledge, right, what is the issue as well, we apologise, but I think upfront, I think consumers just in general, also, usually typically value today, the authenticity and transparency, right? So I think be upfront about it, and then see if this sort of complaint or feedback should also warn a certain action, meaning, I guess, you know, be it a certain credit, coupon and so on, to also appease the customer. But I think maybe to give you a very tangible example, especially when it comes to offline retail, or working with your customer experience agents, I think most importantly, customers want a response in a very timely manner. So what we do and we ensure that is very clear about teams is that we give them very clear thresholds of authorization, meaning if something goes wrong, they don't have to go up right to their manager to get approvals for additional budgets to appease the customer. We don't do that, right. We tell them, hey, baseline, appease the customer, right, always you have full authority to do that. So that the moment only happens, they can just reply, because especially with an offline store, to be honest, the pressure's there, Someone's waiting for you at the counter, you can't be like, Oh, let me speak to my manager, and then come back, that person is going to be super pissed. So I think the trick is to ensure that they're very clear thresholds for authorization and then empower your teams.
That I think is is really interesting, important. And of course, depending on the thresholds, difficult to figure out the right balance, right? Because you don't want to give people carte blanche. But the flip side is you want you know, how do you get them to take some risk as well and own that customer recovery? If you want to call it that. Interesting. Interesting. I have a question from one of my other founders, Andrew from Saturdays Thank you, Andrew, who talks about, you know, how do you think about discounting? This is hot on Andrews vine, Andrews has gone from three to 26 stores in Indonesia, I'll link you up with him when you're there next. Right? So how do you think about you know, discounting generally, right, whether it's on the core range, whether it's seasonal, whether it's event driven, or you know, 11.11 driven and such like things? Is there a framework, you think about discounting, or you test and learn as you go along?
I know today, there's 11.11. And then there's 10.10 9.9, 8.8, it never ends, I think it really depends on who your brand is, right? To be very honest, and the type of image that you want to create. So for us, you know, I think that image is actually quite important. And we want to ensure that we have quality cohorts of customers. So we know from my analysis at INSEAD, a lot of the customers we acquired through a lot of big tactical moments like 11.11, to be honest, the cohorts are not that healthy, right? Because they're typically only coming right? They're what we call shots, right? They come in maybe once or twice a year, whether it's don't come back again. Right. So I think it's very different. I think you're clear that hey I think these are more inferior cohorts, then you want to balance it out. So for us it's very clear that we do typically two big major tacticals a year, your 11.11 right and whatnot mid year sale. Apart from that we try to run promotions maybe on a more segmented basis. So we fuel that through our LV community plus which is a loyalty program. Right and it gets it's that it's through a CRM strategy is very targeted, very specific, right maybe hey, someone is close to churning you sort of try to get them back right and you try to reward.
Or they haven't come back to you in 6 months, hey give us another shot. Okay
Yeah. And I think maybe just to flip your question over on its head as well. I think to try to answer why customers sort of come to you I think for us we know that we're already quite well priced to be very honest. When we try to brand it such as very clear to a customer Hey, by the way, you're already getting a very good decent price off the bat full price black price, right and for us as well. We try to always run on a hype model such that our customers are quite trained and they know that hey, I think they're not getting something the moment it launches and it's a very hot product, it's gonna run out of stock right so either you get it full price, you get it today, if not actually if you wait 15 days or something, it's actually not gonna be available. Yeah, and only if it's slower selling then fine, right, maybe overtime that it's on a markdown. So it's very clear right, in terms of decision making. I get it now. Right. And I really get the trendiest hottest item.
Interesting. Interesting. Thanks that's very useful. There are a couple of questions that are clumped together, which which are around, you know, being a brand owner from Singapore, right. So Love Bonito is identifiably Singaporean, I would say, at least today, you know, one question is around, is that a advantage in your mind, from a consumer business point of view? Do you, do you use that in any way, shape, or form? And of course, we're very familiar with this with many of our other businesses, some that don't talk about it, and some that talk about it all the time, and then everything in between? So talk to us a little bit about that about being a Singaporean consumer brand. At least people within Singapore will consider you that, how do you play it up or not play it up in other markets? I've stumped you finally?
Oh no we talked openly around our history. I guess it depends. I think consumers in certain markets do think about Singapore brands as being also more maybe I guess, as quality or this trust. Right. So I think that part, there are some benefits. But typically, I guess, for the most part, consumers overseas don't really associate Singapore with, you know, fashionable or trendy. So I think to your question, do we play it up so much? Not not so much very specifically like that. Right. But I think what we play out would be we talk about Asian heritage, right? There we're proudly also from Asia, a brand also made for Asian women, by Asian women. That's the part we play up. Yeah. I was gonna say I think on the benefits, sorry just a very quick. One of the benefits I guess of being based out of Singapore, I think from a omni channel perspective, all of the actually, I think if your founders are in Singapore, I would really think about the whole omni expansion. Right? I think it's to me, I think it's a lot easier doing things in Singapore, because I think, honestly, I think the government and malls are also quite supportive. Right? So leverage that and dig deep into that. Like they're really quite supportive. Yeah.
So I think you're talking about explore your full potential in Singapore, before you go further afield. Right. And I think linked to that, comment is, you know, this question around hey, you are into your specific example, you're not in an unknown category. Women's apparel is a rich, deep category with lots of competitors. I couldn't even name all of them, I suspect, how do you then as you're going to region to region or city to city, how do you position LB, when launching in a new market? Like do you care about the competitive intensity at all? Or is it because it is such a large, highly fragmented market that you don't worry about competitive intensity the same way against specific competitors, it would be interested to hear your thoughts about that, because I think it really plays into internationalisation, and how you think about that for other types of brands and stories.
Understand. I mean, we first think about global positioning, right, then actually, we do extend it to each key market that we're in. So we have a positioning map very clearly. Example for the US, Hong Kong, where we peg ourselves, for example, versus key international players in market and then key regional players or local players, and that will change from market to market. But at least our fashion, what we see based on where we are hitting the international players are pretty much the same, right? It's the likes of Zara, to be honest, we were competing with Zara, Uniqlo, Mango, and so on of H&M and so on. So it's really sort of the same group, what will be different between each market then would be pricing, because pricing is always relative to where everyone's pricing in market. So we actually do price quite differently actually, between markets because the definition of affordability is also different, right between Singapore, let's say versus Australia versus the US. So I think if you're doing an omni channel brand, or you're having a global fulfilment, I think that's where it gets interesting because you can sort of even out your margins or arbitrage between markets, right. So in Southeast Asia, maybe we price lower because the markets also more affordable, but you can really price at a maybe a 20 or 30% premium in developed markets, actually. And we that we do that right now. Yeah. And we're still considered affordable, right?
Do you worry about competition coming to you at all right, like so you talked about your competitive competitor set and it's mostly the international large apparel houses, I would call them. Brands that all of us know and have grown up with. There are now some, I don't want to call them copycats that would be uncharitable. But folks who are inspired by Love Bonito's success, let's use that word. Do you worry about that at all? Or do you worry about the likes of Shein? Very fast fashion, churning stuff out really, really fast? Dare I say, almost too cheap to be true. And does that keep you up at night?
Yeah, okay. I think when it comes to copycats, to be honest, it shows us that that we're doing something right, right. I think if we stopped seeing people trying to copy something. I think that then it's quite worrying. Actually, on the flip side, do we worry so much about that? No, I think because end of the day, we're very good about positioning. Right I can't remember, it was this huge beauty brand, sorry I just forgot which brand now but the founder said something really important, right? That she doesn't really care too much about what's happening outside but really looking inward at customer customer feedback, right and really improving and iterating. Do we care so much about Shein, not so much because it's a very different positioning and ball game, right? They're really going around lower quality items a lot more affordable, right? It's for a slightly less discerning customer. And the occasion and category mix is actually quite different. Right, I think we're quite clear around who we are when we know the customer that we're trying to target. Right. I think the only sort of way that we could sabotage ourselves would be if we didn't listen right to our customers' feedback, and we're not improving our game.
I like that. I mean, another way of describing that is we're not trying to be all things to all people return to be the right thing for our people know who your tribe is, and focus on your tribe. Right? I like that a lot. Okay, I'll give you one last one. And then I will let you go for dinner since we're now getting up to 730. Here in Singapore. Yes, I wanted to, you know, we've talked tangentially today about the backend, right tech warehouse operations, omni, seamless technology, you said something fascinating that, you know, if I find a dress that my wife would like you can tell me whether it's available on the Orchard store or on the ION store. That's super cool. I wish more apparel makers could do that. How much of that is, you know, build and integrate? How much of that is off the shelf? How much is that is completely proprietary. Can you give us the secret sauce here?
I would say I think in a nutshell, ecommerce and retail, it's not so, it's not so much rocket science. Right. So I think there are a lot of at least in the back end, there are a lot of different tools and platforms that can do what we need to do, then it's about integrating all of the right platforms together. Yeah.
Well Dione, this has been my great pleasure to have you on this episode. Thanks a lot for making the time. I individually, I'm very excited to continue to observe how Love Bonito does. I know you and I will be talking separately about various different things over the coming years. But again, thanks a lot. Thanks, everyone who gave us one hour of your time. Hopefully this was useful for those of us who would like to reach out to DSG you know where to find us. LinkedIn, Twitter, all that jazz. Thanks a lot. Good night.
Awesome. Thank you, everyone.
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