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Market development & Distribution

The rapid growth of the Asian beauty industry over the last few years has caught everyone’s

attention. Global manufacturers of beauty brands have been applauded for their efforts to

understand the needs of the Asian consumer in-depth and for the use and application of exotic

ingredients and rituals to redefine the product experience.

The availability of online beauty platforms has significantly altered the way Asian consumers buy

beauty products. There is a wide selection of local retailers selling a global assortment of products

and the availability of online retailers at the touch of a smartphone button, the brand purchase

funnel has seen a significant change. The average Asian beauty consumer is now aspiring to buy

foreign beauty products and increasingly from global shopping destinations.

About DNO Group

DNO Group has been established with the purpose of assisting brands in achieving effective business

results through systematic application of business and market knowledge. Our group distributes

over 50 different brands, from Europe, USA, South Korea and Israel, throughout the Asian region.

We understand Asia, its strengths and its challenges. In the last 15 years, the principles of DNO

Group have been heavily involved in conducting business in APAC. By virtue of our experience, we

provide deep practical insights which enables successful business. Our distribution activity include

market research, preparation of business plans, finding the right sales channels in the designated

country.

We are sensitive to both Asian and western cultures. We are committed to increasing pan Asian

business using our most precious asset which are our team partners across Asia. Our partners who

are based across the APAC countries bring in working knowledge of industry which is a significant

factor in ensuring successful cross-border ventures.

We are committed to partners we work with. Our association with companies in the West and Asia

has resulted in extremely successful ventures. We are backed by a resource team of highly

motivated individuals who are experts in their respective domains right from business consulting,

local regulations and all the required services which are vital to the success of our partners.

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DNO-Group structure

DNO-Group have local in country offices across Asia Pacific with local teams that provides the

following:

- Market analysis of the potential of each brand that we take.

- Network with the prospect customers in Retail, Online and Professional.

- Promotion and brand awareness activity

- Technical and logistic support when it comes to distribution

- Regulatory support for local certification in each country

- Local ongoing support with the customers

Our goal is to create a long-lasting relationship in order to make sure that the brand is well accepted

and there are ongoing sales.

DNO Presence

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Our methodology

STAGE 1 Choosing the countries

At this stage we evaluate the different countries in Asia and decide in which countries it is best to start. We share the samples and marketing materials of your brand with our local teams in three of our main offices. In each country our local teams make initial presentation to the prospect customers. Following the initial feedback from each country, we decide where to start based on the following parameters:

1. Prospect’s feedback 2. Market size and potential of sales. 3. Sale cycle which is dependent on local certification, tax and regulation.

STAGE 2 Meeting with the prospect customers In Asia Pacific it is important to have a face to face meeting with the customers. Unlike in Europe or USA where a lot of business can be done online, in Asian culture we must meet in the beginning and present the products face to face in order to build trust in the brand. Part of our go to market plan is to conduct such meetings in the countries selected to make sure that we kick off. After initial meetings our local teams makes sure that we are securing the initial order and move forward for repeating orders.

STAGE 3 Local certification Once we initiate the business, we assist with the local certification and guide you with the required documents that needs to be submitted.

STAGE 4 Follow on support This is the most critical issue in Asia. The target is not to get the first order, but, to make sure that we establish ongoing orders and that the customers are happy with the products. Our local teams visit the customers on a regular basis and provide the support when necessary. We coordinate with you the promotion activities (mainly during festivals season) and make sure we maximize sales. We also build the price structure specifically for each country taking into consideration the local prices and taxes.

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Some of our sales channels:

Some of our customers:

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How COVID 19 affected our activities

The New Normal

DIY beauty trend gaining prominence as at-home wellness gains traction The COVID-19 and subsequent social distancing measures have challenged the consumers to revaluate priorities where the pursuit of health has never been more important and dynamic than it is now. As a result of the COVID-19 implications, we are seeing mindfulness and the conscious movement becoming important. The notion of holistic wellbeing is gaining momentum as consumers are embracing various route to wellness. The holistic approach has become a key motivator of consumer behaviour unpinning by the needs of convenience, transparency and value.

• Raveena Tandon, Bollywood Star, shares DIY tips for work-from-home eyes Times of India, July 2020

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Filling time Before the pandemic hit, consumer’s product choices were shaped by their on-the-go and busy lifestyles. However, now that people are confined to their homes with more time to themselves, DIY products are becoming a more attractive choice during self-isolation. DIY is gaining prominence in this new world as people have increased time. With more time on hand, consumers are looking to creating things from scratch on their own. Consumers are looking for trust and authenticity, comfort and wellbeing, as well as customisation and experiences. The consumers now have more time to evaluate brands and ask which are able to connect and create a unique experience and leave a long-lasting impression on them With a DIY project, consumers can help consumers to create and learn new skills to create a sense of wellbeing. At-home solutions offer consumers the benefit of convenience. For instance, with hair and beauty salons shutter, consumers are looking to home-based solutions for their grooming needs.

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HONG KONG the ideal trial market for ASIA

Hong Kong is a bifurcated market in that it serves both the local population of 7.2 million, as well

as serving as an import hub for China and catering to a large number of tourists and business

travellers.

In average, Hong Kong host 60 million tourists, of which an estimated 47 million come from China.

As products can be imported duty free from Hong Kong into China, a significant portion of

products imported into Hong Kong are repackaged and processed for the Chinese mainland

market, with an estimated 55% of Hong Kong’s total imports then re-exported to China ($3.65

billion USD in 2018).

Hong Kong is an important launch pad for marketing cosmetics and skincare products into the

mainland Chinese market; it acts as a showcase for the Chinese tourists that annually visit Hong

Kong, often with shopping for personal, family or even re-sale use as a primary travel objective.

There are tremendous opportunities for foreign suppliers to export to Hong Kong, as local retailers

and distributors are eager to increase the variety of products that they can offer to the mainland

Chinese tourists, and also eager to cater to the needs of the local population, which is increasingly

looking for skincare with the latest anti-aging and skin “whitening” technology.

There are no import duties on cosmetics, toiletry and skincare products in Hong Kong and

registration is not required for cosmetic products.

Skincare products generate the lion’s share of Hong Kong beauty business, followed by make-up

and nail products, then perfumes and fragrances. To remain competitive in the local market, it is

important to work closely with a Hong Kong distributor to promote the brand, and adapt the

products and packaging to suit local tastes. European cosmetic and toiletry products are well

received in Hong Kong and enjoy a reputation of high quality, high product safety and hygiene

standards, and competitive prices.

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Market Size

In 2018, the size of the personal care & cosmetic products imported for direct sale in Hong Kong

was estimated at US$2.7 billion. The total value of products imported for direct sale in Hong Kong

is project to grow at about 2 to 3 percent in 2019 and 2020.

Hong Kong’s total imports, including re-imports to China, were valued at $6.35 billion in 2018.

These sales are expected to remain the same or increase in 2019, based on the latest

consumption data from mainland China.

DNO sales channels

Our sales channels include:

- Retail chains (such as SASA, Bonjour, Colourmix) and online sale channels such as Zalora,

JD.COM, Strawberry and HKTV.

- Large beauty salon chains (such as Goldbeauty)

Another important factor in choosing this market is the fact that many times people from

Mainland China are purchasing goods (known for being genuine) in HK and a “cross border”

trade is possible without the hassle of the Chinese FDA which is very difficult to achieve and

requires animal testing.

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The Professional Beauty Market

There is a large number of Beauty Salons in HK that offer professional care treatments in high international standards. A lot of these chains also act as source of information for many professional chains coming from Mainland China.

These Salon chains have good connections, serving as useful links for selling professional product lines to beauty salons on the mainland.

Both HK men and women regularly visit the Salons for grooming, as well as receiving more holistic advise. In many of the Salon chains in HK you would find a Chinese Doctor that offer complementary treatments to the Salon customers. This intimate connection between the Salon and it’s customers, created a flourishing industry which is very protective when it comes to competing with the online players.

Selling to any salon chain in Hong Kong means that the brand would have to avoide any parallel trading with the local retail and online channels. The salon owners would not tolerate this. In fact, it is expected that the brand would actively assist in any case of unauthorized seller.

This approach gives the salon owners the motivation to further grow their business with the brand, both for the HK market as well as Mainland China.

When it comes to skin issues, the main three categories that attract the most attention are:

- Anti Aging - Acne - Anti-pigmentation, or, brightening.

The warm weather all year round with the high pollution, brought both men and women to take better care of their skin. Offering effective products and treatments in any of the above subjects would mean good business.

It is important to address all types of skins as Hong Kong is a home to both locals and many other expats who live there.

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WHAT’S HOT IN HONG KONG?

• Korean beauty trends

• Natural and organic products for baby skincare and oral expected to grow

• International brands dominate beauty and personal care

• Men’s grooming and functional hair care products on the rise

• Increasing demand for functional skincare products & cosmetics

• anti-ageing, skin whitening and sun protection products

• natural colour cosmetics and mineral make up

• cosmeceutical products with efficacy & technology

E-Commerce is growing Online-to-Offline (O2O) commerce continue to grow rapidly and Hong Kong as a base to access

China through Cross Border E Commerce. Social media becomes a key marketing tool. Free flow of

information with no access restriction to social media channels. Hong Kong’s most popular social

media platforms:

• Facebook

• Google

• Youtube

• Instagram

• WeChat (in China)

• Use of online bloggers / KOLs is popular

f the distribution channels, the market is segmented into Hypermarkets/supermarkets, Specialty

Stores, Pharmacy and Drug Stores, Online Retail Stores and Other Distribution Channels.

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Sales and Marketing Strategy

DNO-Group allocates resources that vary according to the sales channel that we target.

As an ongoing activity of our business, we are using both online and offline channels for

creating brand awareness to expand sales in the market.

Offline – To enter the large chains that we target, including Mannings, Watsons, SASA,

Bonjour, and others, we showcase the brand and invest our resources in making

promotional events.

Initially, we would target the large pharmacy and beauty retail chains, including SASA,

Bonjour, Manning’s, and Watsons. Each one on its own can contribute a lot to the brand’s

awareness and business growth. In parallel, we would expand to specialty boutique stores

that would add awareness to the brand.

The next step would be to enter the online platforms designated for Mainland China. These

platforms such as JD.COM, VIP.COM, Zalora, Lazada, would not only open the market for

Mainland China but would also allow pan Asian sales, managed from Hong Kong.

Our team would be constantly working on building brand awareness in the different online

channels such as social media Instagram, Facebook, Influencers.

See below details about the sales channels mentioned above

Company Website Type

Mannings https://www.mannings.com.hk/ Online+Offline

Watsons http://www.watsonsworld.com/ Online+Offline

SASA https://hongkong.sasa.com/SasaWeb/eng/sasa/home

.jsp

Offline

Bonjour https://www.bonjourhk.com/en Offline

Colourmix http://www.colourmix-cosmetics.com/ Offline

On top of the above, we target boutique vegan wellness stores (both online and offline) that

are located in strategic locations around Hong Kong.

Some of these stores are listed below:

BEYORG

BEAUTY

https://www.beyorgbeauty.com/ Online

Dr

Koala

https://www.drkoalahk.com/?fbclid=IwAR35x7HyzxMz

HSnBbm2ZQxUx9PZscZ6LpQlakrvtNoPdVvOoFETV9E3

LtZg

online

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First Stage - B2B Online shop

At first, we create Kusum an online B2B shop in Hong Kong, to get maximum exposure to

hundreds of local retailers, both in Hong Kong and mainland China. We translate the content

to Chinese and start a B2B campaign.

For example please have a look at the KUIDA Skincare store here

Second Stage

Once we have the first retailer on board, we start a heavy online B2C campaign, as well as

off line PR activities.

For example, see the marketing assets that we used for our KUIDA campaign on IG below

with the retailer The Green Rice.

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Our Business Model

Our business model is based on the following:

1. Mark-up fees on a normal distribution model. 2. One-time setup cost which is per country and involves the efforts done by our local teams

when opening the market - $12,000 Euro. DNO invests in omni-channel structure for marketing and PR in each country in order to cover all channels possible. Our sales teams are constantly monitoring the market in order to expand the customer base and make sure that we keep an open channel with prospects and customers on a personal level. The above costs include the following:

Digital Marketing

Digital Marketing is the need of an hour for every brand that can sell online. To build authenticity,

credibility, appear different from competitors, engaging & quality marketing strategies are very

important. Our team has brand strategists, graphic designers, experienced digital marketers and

content writers who know how to build a brand in country level ecosystem.

Regulatory Compliance

Offering the titanium standard in cosmetic regulatory services for the Beauty Industry guiding you

with the required steps needed for successful registration.

Marketplace Listing

It’s a requires a lot of checks and documentary evidence to prove that you are and will be a seller

selling & shipping genuine product online. We have dedicated account managers assigned for the

brands we sell. In a nutshell, great account health on all e-commerce platforms which lists and sells

regulated items in minutes.

Logistics & Customer Care

Sales are incomplete without efficient Logistics & customer support. In a review based digital

marketplace ecosystem, it is critically important to have an efficient logistic team and an engaging

customer support team to ensure that brands have a connection with customers.

Data Analytics

Days of Trial and Error are passe. Data is Powerful. Analysis of Data and contextualizing its

geographical relevance in order to understand consumer behaviour, forecast future actions is logical.

Digital Team makes sure that decisions are made basis Data Analysis so that every penny of the

market budget is utilized logically and efficiently.

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Localization of Marketing Materials

Offering localization of the brand’s marketing material so that it appeals to the local audience and

consuming culture. Emphasizing the right messages, choosing the appropriate imaging, using local

language and more.

Inhouse Development

DNO has in house digital capabilities and has successfully created e-commerce websites through its

own team. Recovering cart abandonment, retargeting shop visitors, AI based chatbot integration,

API based shipment tracking, CRM integration for email and SMS marketing, upselling, cross-selling -

our e-commerce solutions focus on customer acquisition and is integrated with tools to maximize

conversion rates with the seamless shopping experience.

ROI

Once the certification, usually one customer (whether it’s a retail chain or online) would start with a

1-3 pallets pilot order in order to test the market. Once we have the anchor of several large

customers, we can expect the same quantity periodically.

It is important not to rush into getting the first order in place, but rather making sure that the sales

channels picked are the ones who would serve the Brand’s DNA and would create the impact to

expand.

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DNO Marketing and Sales activities

Japanese brand we distribute in India called 'Super

Million Hair'. We had a very large booth, and this was

a huge success.

Online promotion via our own e-commerce website in India The Beauty Council

March 2019 taking part at a local exhibition in India

Marketing activity in Hong Kong

As part of the activity for GIGI Laboratories

which we distribute, we organized a training

event in a 5-star hotel in Hong Kong for the

multiple customers from the region .

September 2019

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CALLYS SWITZERLAND – ISRAEL Launch

October 2020 - CALLYS from Switzerland was launched in Israel’s BE

chain, one of the leading big box retailers in Israel.

Before the launch

At the launch

Celebrity influencer Video

Local Tik Tok link

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OH GLOW marketing activities JUNE 2021

#CHICCHIQ #DAILY CONCEPTS #OHGLOW ISRAEL

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DNO in the News

Yahoo Finance covered our activity in India and Hong Kong for the prestigious company Moana Skincare from New Zealand. You can have a look at the full press release in the following link Yahoo

Finance

LOOKING FORWARD TO HEARING

FROM YOU