Before evolving into Sephora Online Southeast Asia, Luxola, founded by Ms Alexis Horowitz Burdick in 2011, was an e-commerce platform selling branded cosmetics in Singapore. Growing Luxola from a start-up to a success that would eventually be acquired by Sephora involved multiple business challenges along the way, including the challenge of attracting funding from venture capitalists.

“Even though I don't think of myself as a risk-taker, I do not think you can be averse to risk as an entrepreneur,” said Burdick. “As an entrepreneur, you should be ready to think on your feet and be prepared to be challenged by something new every day.”

In 2011, Burdick had tapped into the burgeoning e-commerce boom, observing how the global trend of online shopping was quickly catching up in Asia. Discovering a growing acceptance and trust of the Internet by consumers, and how the millennial population seemed to be keen on doing transactions over the web, she researched the cosmetics and e-commerce market in Singapore and worldwide.

“We saw how quickly sites like Groupon had proliferated. However, most consumers back then still shopped for clothing and beauty products in retail stores,” Burdick recollected. “However, we knew that this was about to change as consumers had gradually begun to adapt to e-commerce platforms after experiencing the convenience of online shopping. The growing millennial population liked to shop online and enjoyed spending on personal items.”

“In 2011, I had wanted to buy an SK II product from a department store in Singapore, but the answer was a resounding no. Buying these products from overseas was also difficult. There were also these cult brands with natural beauty products that were starting to become popular, which were not available in retail stores either. And there was the beauty-in-a-box concept emerging in the US market. I realised that there could possibly be a sweet spot in the cosmetics and beauty market we could target,” she said.

Burdick formally launched Luxola in October 2011 – the first of its kind in the Asian market – with the objective of making beauty accessible to the ‘regular’ woman. Luxola was set up as a site that would be attractive to its largely female customers. The site had tips on how to use the products, their application, and maintenance. The website’s content strategy focused on educating customers about the brands before purchase. Customer-centricity was a key focus area for Luxola, and the firm continually collected customer feedback through its website, customer reviews, feedback emails, social networks, and even by calling up customers directly after purchase.

By early 2015, Luxola had expanded into eight markets in the Asia-Pacific region, offering a 4,000-strong product range from 250 high-end brands. The repeat customer rate in Luxola’s site was high, with more than 50% of the consumers coming back to buy a second time, and 80% of the second-time buyers buying a third time and 90% of third-time buyers buying a fourth time.

That same year, Sephora snapped up Luxola, through its parent company LVMH. LVMH was a European multinational luxury goods conglomerate headquartered in Paris. Christian Dior, a luxury goods group, was the main holding company of LVMH. Sephora, a French cosmetics store chain founded in 1969, had been acquired by LVMH in 1997.

After the acquisition of Luxola, Burdick and her senior team were retained by Sephora. By effectively ascertaining its target audience and implementing strategic marketing tools with a focus on the overall customer shopping experience, Burdick successfully created a few early wins for Sephora Online in Southeast Asia.

This case, written by Reddi Kotha, Associate Professor of Strategic Management at SMU Lee Kong Chian School of Business and Lipika Bhattacharya from The Centre for Management Practice (CMP) at SMU, analyses the strengths of Luxola and reflects upon some of the challenges faced by entrepreneurs in establishing and growing a venture. The case examines the sources of innovation in entrepreneurship and demonstrates how demographic changes in an existing market can create avenues for new ventures to be successful.

To read the case in full, please visit the CMP website by clicking here.