The instruments used to collect the data were an observation and online research from websites, electronic documents, journals, articles, etc. The observation of interview in other website was utilized to seek the Supply Chain Management (SCM) activities in an organization. An interview question from http://www.ecinsider.my are as follows:
1. How and when did you start Hermo?
2. How many co-founding partners you have at Hermo?
3. Since both of you are guys, why did you start a beauty business?
4. In return, what do you expect from the investors besides the fund?
5. How do you utilize the investment, and why?
6. What is the percentage of Stock Keeping Unit (SKU) you have ready stock?
7. How do you keep track of the stock level?
8. What are the demographics of your customers?
9. How did you convince your suppliers to go online with Hermo?
10. How is the growth rate of Hermo, is it profitable now?
The questions is fully answered, because we used the observation of the other website for their company information. Therefore, we decided to continue our research within the related scopes of the study that has been discussed in Chapter 1, as well as related information based on the observation on the other website. As a result, all of the findings based on the observation and the other online research will be answered in Chapter 4.
List of Resources Needed
This section outline the list of resources needed that throughout this research. The resources that we need in order to finish the overall research until the documentation of this report are as follows:
Stationery is used during our research to jot down all the notes that can be used to our research. All information during the research is written on the notebook.
Obviously, we used a laptop to gather information from the interview, as well as searching for more information, and produce a report.
Budget and Costing
This budget outlines the cost of resources that needed that throughout this research. Based on the table above, there are no cost that involved, because we used in this research is only an observation and online material research.
INTRODUCTION OF THE COMPANY
Hermo Creative(M) Sdn Bhd or commonly written as Hermo MY is a click-mortar or an online beauty shop – a beauty collection, – whose mission to bring gorgeousness straight to offering the favorite beauty products from across Asia. Hermo is Made in Malaysia and it is founded in February 2012, with just an open-source shopping cart system, they renting a RM400 flat unit that time and gather positive responses during the 3 months trial period, and officially relaunched it in June 2012. There are 2 founders, Ian Chua and Chong, whos was the classmate of Ian Chua during the secondary school. They are selling shoes via Lowyat forum before Hermo was started. Chief executive officer Ian Chua say he and his co-founders, chief operating officer Ian Mok, and vice president of merchandise P.S. Chong, wanted to start an online retail business in Southest Asia because they believe “that the future of retail in the region will be driven by e-commerce.”
Hermo are certified partners and distributors of the brands that only get 100% authentic products delivered to customers. As they are online beauty store with no physical shops and overheads. The site, which also operates in Singapore and Indonesia. There are thousands of people who choose to buy their skincare and beauty products online. The aim of Hermo is to make the shopping experience simple and affordable, with the best range of brands available.
They did more market research, they also discovered that beauty products enjoy strong margins that remain consistent even during market fluctuations and enjoy higher levels of customer loyalty than other types of products. Hermo’s business model combines flash sales with regular inventory and it specializes in premium brands. The startup maintains direct relationships with its suppliers, which means it can offer lower prices, more products, and avoid counterfeits, a problem on some marketplaces.
In June 2013, after they have bootstrapped for a year, Tan Swee Yeong came in as an investor followed by investment from Crystal Horse. Hermo more prefer to invest on customer service over marketing. They have invested the big chunk of their resources on stock holding as this is the only way to provide good and prompt service to their customers. They have seen many online business invest heavily on advertising but face issues on fulfillment. For example, to provide a better sevice on their refund policy, their customer service officers are authorized to decide by themselves whether to refund immediately (in terms of cash or cash balance) to the customers, without the need of approval from their manager.
They don’t have any real supplier relationship when they started. In the early days, they even buy over the counter to make up the variety, and resell without any profits. Most brands at that early business, don’t trust e-commerce at all. They are comfortable with their traditional distribution channels, it was really not easy to gain their trust. Now, Hermo competes with Luxola, which acquired by cosmetics retail giant Sephora and ships to nine countries, including Singapore, Malaysia, Hong Kong, and the Philippines. Luxola focuses on western brands, while Hermo’s specialty is Asian beauty companies. It has a supplier relationship with French brand L’Oreal, but Hermo’s bestsellers come from South Korea.
CK Wong, Adrian Oh (2014 December 11), Interview with Ian Chua-co-founder of Hermo, from http://www.ecinsider.my/2014/12/interview-hermo-co-founder-ian-chua.html.
Kevin McSpadden (2015 October 2015), Gobi Partners Invests Us$2M in Malaysian cosmetics e-commerce company Hermo, from https://e27.co/gobi-partners-invests-us2m-in-malaysian-cosmetics-e-commerce-company-hermo-20151014/.
Philosophy of Hermo
They are dedicated to provide a unique, value added shopping experience through their large selection of high-quality and affordable beauty products procured from Korea, Taiwan, Japan, Europe, USA and other diverse international renowned beauty brands. Their tagline “Turnin’ Beauty In a Click” allows users to shop anywhere and anytime conveniently from any device to shop from over 300 brands and more than 6000 products available on its user-friendly website. Hermo carves an exciting beauty journey for its users with more than 10,000 beauty reviews, where user can discover high-quality beauty products at great prices from skincare, cosmetics, fragrances, bath & body, haircare and a whole lot more, while also offering current and trendy beauty insights and tips.
The aim of Hermo is to make the shopping experience simple and affordable, with the best range of brands available. The international recognition not only in Southeast Asian that Hermo strives to achieve is not one which can be measured merely in quantifiable terms of size, growth and profitability. Moreover, Hermo hoped to be competitive at the global level in intangible aspects, such as customer satisfaction and corporate citizenship.
The importance of SCM to the company
Every organization need to implement the supply chain management. The value of cost savings and better coordination of resources are the reason why the organisation need to employ the supply chain management. Moreover, any organisation need to reduce the bullwhip effect. Bullwhip effect can be defined as the tendency of consumers of a material or product in short supply to buy more than they need in the immediate future. For example, the magnified reduction of safety stock costs based on coordinated planning and sharing of information. Besides that, the most important thing of the supply chain is collaborative planning, forecasting and replenishment activities reduce bullwhip effect and lead to better customer service, lower inventory cost, improved quality, reduced cycle time, better production method and another benefit.