On December 12, 2017, Monika Zochowska, the chief executive officer of Phenicoptere Ltd. (Phenicopte

On December 12, 2017, Monika Zochowska, the chief executive officer of Phenicoptere Ltd. (Phenicoptere), and Ewa Dudzic, the

Dudzic nearly a year to develop and test their product. They approached manufacturers to produce a microfibre that could be u

GOING GLOBAL From the very beginning, Zochowska and Dudzic had tried to sell their product globally. In early 2014, they intr

of planning, tests, and additional certifications required by the Korean market, GLOV became available on CJmall (owned by CJ

NAVIGATING LOCAL DIFFERENCES Zochowska and Dudzic started to sell GLOV across borders, they discovered that people in As soon

distributors in different markets, asking for their opinions. It turned out that a blond model originally chosen by Zochowska

NOTE ON DISTRIBUTION CHANNELS IN THE BEAUTY AND PERSONAL CARE INDUSTRY In the beauty and personal care industry, store-based

THE CHALLENGE OF E-COMMERCE Ever since they put GLOV on the market, Zochowska and Dudzic had used social media (Facebook Inc

4. How should this firm include e-commerce in internationalization?

On December 12, 2017, Monika Zochowska, the chief executive officer of Phenicoptere Ltd. (Phenicoptere), and Ewa Dudzic, the firm's vice-president minutes' walk from the park-and-palace complex Lazienki Królewskie, Warsaw, Poland. Their firm, founded five years earlier called GLOV. In 2017, Phenicoptere employed 20 people, its annual revenue amounted to PLN 10 million, and its value exceeded PLN 20 million. GLOV was available in 40 countries all over the word. Zochowska and Dudzic were innovation at the Salón Look Madrid awards in 2015, and a Special Citation Award at the 2016 EY (Ernst & Young) Entrepreneur of the Year Awards were sitting in their two-level office, a few one of the central tourist spots in selling an innovative makeup-removing glove was regularly receiving awards for their start-up and its product, including an award for “German? I didn't know you spoke German!” said Zochowska, pointing at the screen of her partner's computer. “I don't. I'm using Google Translate,” laughed Dudzic. “Amazon [Amazon.com Inc.] wants us to respond to every message from a customer within 24 hours. And by the way, don't you think we should start treating e-commerce more seriously?” The partners both knew they had to reconsider their channel strategy; had the time come for Phenicoptere to focus on e-commerce? LOOKING BACK When Zochowska was a recent graduate of the Faculty of Management at the University of Warsaw in 2010, she came up with the idea of creating a makeup-removing product using microfibers while she was at an internship at a plastic surgery clinic in Australia. She soon shared the idea with Dudzic, her best friend from university, who at that time was running a sushi catering firm in Cracow, Poland. Though they knew very little about chemical processes, the women started to explore the technical side of the idea. In 2011 they won a organized by AIP Seed Capital and linked to Academic Business Incubators. In March 2012, Zochowska and Dudzic registered a firm called “Phenicoptere,” meaning “flamingo” in Old French AIP Seed Capital invested PLN 100,000 in exchange for 15 per cent of the firm's capital. Thereafter, it took Zochowska and entrepreneurs at the very early stage of product development competition dedicated to Dudzic nearly a year to develop and test their product. They approached manufacturers to produce a microfibre that could be used in cosmetics. To reduce development costs, they asked a friend from the Department of Chemistry to test the microfibre in a laboratory at the University of Warsaw. Following this, they tested it on their own skin and eventually sent it for final testing at a professional dermatology laboratory, which approved the product as 100 per cent safe, even for allergy-prone skin, and as efficient in removing makeup. In March 2013, Zochowska and Dudzic filed a patent application with the European Patent Office. Makeup removal was a neglected niche in the cosmetics industry. To remove makeup, women had used cotton pads for decades, dipped in makeup-removing gels, lotions, and oils. However, these were often unhealthy for the skin and needed to be further washed off the face, making the whole ritual long, uncomfortable, and perceived as an unpleasant duty. GLOV required no chemical products, just water, and because it was made of microfibres, it “captured” the daily dirt on the skin instead of spreading it over the face. Zochowska and Dudzic often said that GLOV washed chemicals with physics, and they compared their innovation to replacing forks with sticks. The product was manufactured in Poland in an extemal factory on a long-tem contractual basis. The retail price was €103 for the small “On-The-Go” version of GLOV, E15 for the standard version, and €20 for a travel set. It had to be washed after each use with water and soap and replaced every three months GOING GLOBAL From the very beginning, Zochowska and Dudzic had tried to sell their product globally. In early 2014, they introduced GLOV to Sephora stores in Poland. In the same year, they received support from the cosmetics-industry-promotion program sponsored by the Polish Ministry of Economy, which allowed them to participate in trade missions to Hong Kong and Russia and their first trade show in Bologna, Italy. During this trade show, Żochowska and Dudzic met with managers of Monoprix S.A., a large French retail chain, who offered them the distribution of GLOV in its 330 stores in France.3 During another trade show Dubai, they met a Canadian producer of natural cosmetics for children. They sometimes watched over his stand at the show so that he could take a break. He later recommended them to his European agent, who, in 2015, introduced GLOV to the Marionnaud Lafayette SA (Marionnaud) chain of perfumeries in Switzerland. At another cosmetics trade show, Żochowska started to chat with a man working in one of the other stands. By then, Żochowska had already developed a habit of starting every conversation with two questions: “Where are you from?” and “Do you know GLOV?” She established that this man was German and that his parents distributed Italian nail products to beauty salons. He did not know about GLOV, but the idea of using microfibres for makeup removal caught his attention. Soon afterwards, his parents' firm started to distribute GLOV to beauty salons in Germany, and he himself offered to help build GLOV's presence in German retail chains. Thanks to his experience and network in the cosmetics industry, he introduced the product to dm-drogerie markt GmbH, one of the largest retailers in Germany, with 1,800 stores throughout the country. Phenicoptere soon expanded to other European markets, including the Czech Republic; Slovakia and Lithuania; Austria; Italy, where GLOV became available in Perfumery Douglas and other stores; and Spain, where it was distributed mostly by beauty salons and Marionnaud in During one of the trade shows, Zochowska and Dudzic met the managers of one of the largest Polish exporters of cosmetics. In 2014, the Polish cosmetics company recommended GLOV to its South Korean distributor, who was looking in Europe for innovative cosmetics products. In September 2015, after a year of planning, tests, and additional certifications required by the Korean market, GLOV became available on CJmall (owned by CJ Corporation), one of the most important home shopping channels in the country. Television home shopping was much more popular in Korea than it was in Western countries, with Korea being one of the largest home shopping markets in the world. Since 2015, GLOV had been available in the Middle East and China. These markets were served through local distributors, who were responsible for finding the best distribution channels based on their knowledge of the market. For example, in Kuwait, the United Arab Emirates, and the Kingdom of Saudi Arabia, the product was available in international retail chains (e.g, Debenhams Plc; Vavavoom Beauty and Boots run by Boots Company Plc); Kuwait's largest supermarket chain Saveco; and local co-op stores-that is department stores put up by the government-which accounted for 55 per cent of retail trade in the Kuwait Phenicoptere's rapid expansion was facilitated by the fact that GLOV was an accessory and did not require lengthy certification process. Producers of cosmetics typically needed about a year of preparation to introduce their products to China, but GLOV was ready to enter China within a week NAVIGATING LOCAL DIFFERENCES Zochowska and Dudzic started to sell GLOV across borders, they discovered that people in As soon as different countries used their product in different ways, had different expectations of it, purchased it in different places, and had different understandings ofthe meaning ofbeauty. Żochowska and Dudzic needed to reconsider the concept of “global beauty. The beauty industry, which had started with homemade creams and secret recipes sold by local pharmacies had been greatly exposed to the forces of globalization. In 2010, more than half of the industry's sales were generated by the 10 largest firms, with L'Oréal SA and Procter & Gamble Co. alone accounting for more than 20 per cent of the world's sales. Yet, despite the dominance of global brands, the industry had some persistent local characteristics. First, customer propensity to spend money on annual per capita spending amounting to USS343 in Japan, $252 in France, $216 in United States, $191 in Brazil, and $6 in India. Second, the types of beauty products that were purchased varied in different countries. For example, Americans spent proportionally much more on colour cosmetics than the Europeans in different versions, reflecting local tastes for specific scents, colours, and textures. beauty products varied, with Germany, $193 in the Third, beauty products were offered or the Chinese, who spent much more on skin care. Zochowska and Dudzic soon understood that to navigate local differences in the beauty industry, they needed to listen carefully to their local partners and adapt the product concept accordingly. Therefore, while the “content” of GLOV was the same in every market, the product's packaging and communication strategies began to differ (see Exhibits 1 and 2). For example, in Arabic countries, emphasis was put on the product's efficient makeup removal, while in European markets, the emphasis was on natural skin care. In France, where local brands were Asia, GLOV was positioned advertising GLOV internationally, Zochowska and Dudzic sent some sample photos of models to downplayed, while in strongly preferred, the product's Polish origin as a European product, and its origin was was accentuated. To choose a model for distributors in different markets, asking for their opinions. It turned out that a blond model originally chosen by Zochowska and Dudzic was decided to find a more “neutral” beauty type. From their distributors, they learned whether a photo chosen for Arabic markets would be deemed “too relaxed in those markets and whether the skin of the models presented in Asia was perceived as “ultimately Slavic” by their foreign partners, so the women shiny enough to attract customers. Over time, Žochowska and Dudzic had discovered that relying on the local knowledge of distributors could be tricky text to be put on the packaging of GLOV. However, as their Polish graphic designer did not have an Arabic keyboard, she was not able to input the text into her program. Also, the layout was messy, and the text was full of typos. Zochowska and Dudzic decided to post a job advertisement; they had to hire an Arabic- speaking person with Adobe Photoshop skills ributor in the Middle East sent even for a simple language adaptation. Their em translated NOTE ON DISTRIBUTION CHANNELS IN THE BEAUTY AND PERSONAL CARE INDUSTRY In the beauty and personal care industry, store-based retailing accounted for 82 per cent of global sales in 2017. Store-based retailing included grocery retailers (e.g., hypermarkets, supermarkets, discounters, small grocery retailers), beauty specialist retailers (e.g., Marionnaud), chemists/pharmacies (selling prescription medicines as their core activity), and drugstores parapharmacies (offering beauty and personal care consumer health care, home care, and food and drinks). One per cent of global sales were generated by retail sales in hair and beauty salons. non- generated by non-store retailing The remainder of global sales in the beauty and personal care industry which included direct selling (9 per cent of global sales), Internet retailing (7 per cent), home shopping (1 per cent), and vending (less than 0.1 per cent).10 Direct selling (used, for example, by Avon, Amway, and Herbalife) typically took place at homes or in workplaces and occurred on a one-to-one or party-plan basis. Internet retailing involved sales of personal goods online orders for goods promoted in the web medium and paid for them through a web platform. Over the last few years, Internet retailing had been the fastest-growing retail channel, especially for skin care Customers' desire to test products before purchasing had previously been a significant barrier for online retailing in the beauty industry. Recently, however, the industry had developed a number of initiatives aimed at making its products suitable for e-commerce. These included virtual try-on applications, colour matching, and skin analysis with customized product recommendations.1″ The growth of Internet retail had been driven by third party marketplaces-specialized sellers (often small and medium-sized companies) “a shop in their store “Top Internet retailers were Amazon, Alibaba Group Holding Limited (Alībaba), JD.com Inc., eBay Inc. and Rakuten Inc was to the general public via the Internet. Customers placed platforms that offered independent e-commerce Customers' propensity to make purchases online differed according to many factors, including the industry, the customer's country of residence, and the seller's location. In the European Union, 50 per cent of customers made purchases online, and 15 per cent made purchases online across borders. 13 THE CHALLENGE OF E-COMMERCE Ever since they put GLOV on the market, Zochowska and Dudzic had used social media (Facebook Inc LinkedIn Corporation, Instagram) to connect with customers and partners. In 2017, they invited two popular fashion and beauty bloggers to a makeup training event in Dubai, gathering around the globe. During the event, makeup artist Mario Devidanovic used GLOV on Kim Kardashian's face. While Zochowska and Dudzic extensively used the Internet for communication purposes, for sales over 500 influencers from they relied on offline channels. Recently, GLOV had become available in Chinese e-commerce marketplaces (e.g, Taobao, run by Alibaba), with online transactions and customer communication managed by the Chinese distributor. Market growth in Chinese online sales was impressive. Zochowska and Dudzic knew of many beauty businesses that had grown using the potential of e-commerce. In fact, some of these had been born online, selling directly to customers with no and without even introducing their products to offline channels. One of the hottest brands in the beauty industry was Glossier Inc. (Glossier), a US-based direct-to-customer start-up. Glossier was founded in 2014 by Emily Weiss, a former style assistant at October 2017, Glossier began to ship to Canada and set up an office in Montréal, Québec. Ironically, Glossier did not ship to Québec at first, as for that it needed a French website and for all of its marketing to be translated into French. In late 2017, native French speakers recruited by the Montréal subsidiary started to work on the language adaptation of the brand. Zochowska and Dudzic had read Weiss's blog and remembered that she had once declared: “Ever since Day 1, we've dreamt of making Glossier a global beauty movement that celebrates real girls in real life.4 And yet it had taken the company almost four years to start selling abroad-and to only the English-speaking part of Canada, and, a while later, the United Kingdom help from intermediaries Vogue, four years after she started her blog “Into the Gloss.” In Zochowska and Dudzic felt they could no introduced GLOV to Amazon stores in Europe, but they were not entirely commerce channels would take. On the one hand, they knew that the margins in e-commerce were much higher than in their current offline distribution model (see Exhibit 3), in which they had to share their profits with partners and distributors. On the other hand, they knew that focusing challenging. How would they manage logistics with foreign customers? The partners had to think seriously about their e-commerce strategy. longer ignore the potential of e-commerce. In 2017, they sure what further expansion e- on e-commerce would be across borders? How would they handle communication 4. How should this firm include e-commerce in internationalization?

 
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