The national cosmetics industry, a strategic sector, has seen its performance blossom. As announced by the Ministry of Industry the cosmetics industry grew by 20% in 2018, to a total value of $516.99 million. There are some 760 local cosmetics companies, 95% of which are small and medium enterprises. Meanwhile, the ministry has forecast that in 2019 the sector will expand by 7%. One of the growth factors is the millennial market sector in Indonesia, a demographic that makes up around 34.45% of the country’s population.
“As we see it, local cosmetics have been emerging rapidly. The number of local brands keeps increasing, releasing more innovative products that previously weren’t available from local players,” says Dinar Amanda, cofounder and marketing director of Rollover Reaction.
“And as Indonesia is a huge country, there are still many places that we have yet to tap into, despite the growing interest,” she adds.
Rollover Reaction is one of the earliest local independent cosmetics brands and was launched in 2016 by a group of longtime high-school best friends, Naya Tinanda Nabila, Dinar Amanda, Novianti Haryanto, and Sarah Novia Hartono. The idea of creating Rollover emerged in early 2014. At that time, there were only a handful of local brands, while imports were rare and expensive, severely limiting the choices for regular cosmetics customers.
“After doing some research, we found out that Indonesia, with all its resources, is capable of producing its own cosmetics. So we thought of making our own and worked with manufacturers,” Naya recalls. Like many other players in the industry, Rollover Reaction works with licensed manufacturers in producing cosmetics as joint-partners.
Since the beginning of its business, social media has been an important medium for Rollover Reaction in reaching its target market – millennials ranging in age from 17 to the early 30s. Its official Instagram account for example, is used to acquire customers and then direct them to the Rollover Reaction website – the company’s main channel of distribution.
“There weren’t many indie cosmetics brands that utilized social media back then, but we did tap in there because we saw that our target market used mobile phones a lot.” It has proven effective, Naya says, especially in maintaining two-way interactions with customers through comments or direct messages around the clock.
One year into its online launch, the group began receiving more demand from customers who wanted to experience the product firsthand. Thus they opened a pop-up store at the Plaza Indonesia mall in Jakarta for three months. Upon receiving a good response and wanting to have better engagement with customers, the group soon opened its first store, again in Plaza Indonesia, in April 2018.
However, since then, online remains the main channel of transactions making up 90% of its total sales – collectively from the official website, which it wants to focus on, and in conjunction with other online marketplaces such as Shopee, Sociolla, and Zalora. The rest comes from the offline channel, its flagship store. It has also worked with healthcare and beauty chain store Watsons in stocking a few products, but it has no plans to enter a chain store fully as it doesn’t feel that is the best for the brand.
Although targeting the middle-up market, Rollover Reaction prices its products between Rp 55,000 and Rp 149,000, making them affordable for middle-low market as well.
“We originally planned Rollover Reaction as an alternative, casual brand for our target. Students can buy our products by saving up a little. At the same time, working women or those who prefer high-end brands are still willing to have us as an alternative, local brand – considering our products’ quality and visuals.” After all in the cosmetics industry, they say, price isn’t always the sole determining factor, but it also depends on the quality and added value offered.
Today, Rollover Reaction produces between 5,000 and 10,000 items per month. In Indonesia, a majority of its customers are based in the Greater Jakarta area and within the island of Java. The vast archipelago, even though home to a significant number of consumers, also presents a challenge to the company. Rollover Reaction manages to grab public attention through its attractive social media feeds and reviews, but getting people to actually purchase the products is more difficult. People prefer to try cosmetics beforehand, so this is a problem that the group has tried to resolve. Therefore, this year it plans to approach other cities, for instance by opening pop-up stores in at least four different places – the next being in May in Surabaya, and expansion will depend on how this is received.
Starting from 2016, Rollover Reaction has also been exporting around 500 to 1,000 items to Malaysia and Singapore on pre-order basis through its B2B partner. But this year, it plans to start direct shipping to the neighboring countries, it has had to conduct detailed research to adjust to the respective regulations, particularly on trade.
With the ongoing boom in the national cosmetics industry over the past year, Rollover Reaction says that it has enjoyed double-digit growth. It views the shift in trends as a good sign, especially since it has been on the back of local players, which in the past used to have a strongly negative perception among local customers. Ironically back then people were not aware of the fact that international brands actually had their products manufactured in Indonesia.
“People actually thought that Rollover Reactions was an imported product upon looking at our carefully designed visuals and hearing our foreign name. But after finding out that we’re actually a local player, they have begun to trust us more. This is a matter of pride, that we can help transform the negative sentiment toward local products into local pride, which helps make the market grow,” says Naya.