Case study Romoni

Romoni: The new household name for beauty services /

Romoni is one of the successful enterprises to avail support from the B-Briddhi programme’s Impact Ready Matching Fund (IRMF) scheme. This is an innovative approach to trigger investments into early-stage enterprises while incentivizing the entrepreneurs like Romoni to stay true to their social mission. How is Romoni becoming the full-stack platform for enabling women-led micro-enterprises in the beauty and lifestyle industries?

Picture: Romoni website


Inception of Romoni

Armin Zaman Khan, the Co-founder and CEO of Romoni, started her journey with a simple motivation fueled by the problem of inaccessibility to credible beauty advisors or experts who could provide decent services at home and save time. With a vision of becoming a one-stop platform for female professionals and micro-entrepreneurs, Armin pivoted Romoni’s business model towards catering to an underserved market, and in due time, grew to become a household name among Bangladeshi women.

With social distancing and movement restrictions becoming a part of everyday life, Romoni continues proving to be instrumental for women in catering to their regular beauty service needs. In the process of working as a complete customer focused service marketplace, Romoni has laid an impact on creating employment opportunities for women in the beauty industry of Bangladesh. The beauty sector of Bangladesh strives on the labour of skilled but unduly underpaid and unprivileged women, who are, oftentimes, disproportionately exploited by the system, simply because the industry lacks structure in terms of regulation and applied labour law.

Romoni’s mission is to create a solid platform which can enable these skilled women to turn into micro entrepreneurs and, hence earn what they deserve.

Romoni’s Traction and Transition

Founded in the year 2016 as a Facebook Page, Romoni is now a support system for women micro entrepreneurs in the beauty industry. Initially, each business had its own profile with a service list and booking option, where customers could book appointments directly from Romoni’s site. After a few months, that model of operation had transitioned to a more personalized form where beauty professionals provided services to customers at their homes at reasonable rates. 

Currently, Romoni acts in two ways: connecting customers with verified providers of beauty services, and helping those providers improve their standards and access funds from financial institutions  for supplies and growth. At the heart of the business’ priorities are customer service and safety of the beauty service providers. Team Romoni ensures full authenticity of clients by calling and verifying their identity before sending beauty service providers over to their house. In case of emergency, the service provider has the option to communicate directly with the team through the Romoni app. Romoni also works towards ensuring a comfortable discourse of beauty related problems and solutions. The front line of customer service representatives receive hands-on training from renowned skincare and makeup professionals so they can become expert beauty advisors. With a customer retention rate of 75% and a consistent MoM growth rate of 20%, Romoni’s business model displays stellar traction as it continues to cater to customer convenience even through the COVID-19 pandemic. 

Romoni’s revenue model runs on commission from B2C home beauty services and B2B beauty product sales. Any beautician can start a business using the “Romoni Partner” app, which lets them create an online profile, keep track of orders, assign work, build a digital financial footprint and enhance their credit worthiness in the long run. They can either enroll themselves as freelance service providers or opt to be an in-house beauty service provider; in both cases receiving hands-on monthly training to improve their service quality,  build capacity and expand their business.

Currently, Romoni is working with over 300+ active female beauty service providers, of which 40% belong to the indigenous ethnic minority group. 

Apart from receiving hands-on training from beauty experts, service providers get access to proper customer relationship management techniques and advice for best practices which eventually increases customer satisfaction and quality measured by 80% of customer’s net promoter score of 9. Additionally, they also get provisions for small working capital loans which help them scale slowly. This is important as only 7.2% of MSMEs are owned by women and the beauty industry of Bangladesh represents disproportionate employment of extremely poor and marginalized women who are in desperate need of empowerment.

The Market Opportunity

Bangladesh is the 6th largest beauty products consumer market in Muslim countries, with a beauty service industry estimated to be at US$ 3.2 Bn by 2023

The labor force of this industry is primarily women, deprived of opportunities such as: a platform to connect service providers with clients, easy access to finance, a solid place to receive training from, and many more.  Having a unique ability to lay an impact on the scaling capacity of a number of, mostly women led, MSMEs gives Romoni the power to address a few very important social problems. Problems entailing a lack of capital and raw materials, exclusion of women from the entrepreneurial ecosystem, continued exploitation of disadvantaged ethnic groups, and a lack of proper business registration and credibility ensuring quality of service provided. With Romoni’s business scope, there is potential to turn these problems into opportunities, such as promoting women’s entrepreneurship through the platform, creating a quality standard for MSMEs in the beauty industry, and even boosting GDP through female participation in the labour force. 

Romoni partners with financial institutions to bring these micro entrepreneurs under the umbrella of financial inclusion. Through Romoni’s fintech platform, micro entrepreneurs can begin to maintain a structured process of bookkeeping, and reach out to financial institutions for help, such as opt for loans. The platform works as a credit facilitator by providing the financial institutions the data they require in order to embark on the evaluation process before handing out funds, and also, by banking and unbanked segment of the population.

Picture: Romoni signing the IRMF investment agreement with Biniyog Briddhi in March 2021

Opportunities and Challenges

Among Romoni’s prime strengths is the trusted and reliable brand loyalty of its consumers. As Romoni puts customer service as its top priority, customers revert back by showing loyalty and appreciation towards the brand. In addition, Romoni’s team of specialized and experienced beauty experts work efficiently to ensure proper service quality control. They also manufacture salon products with customized in-house formulas, under ‘Romoni Salon Naturals’ giving customers assurance in regards to the quality of the products being used to provide beauty service. There was a demand for at-home beauty services before the pandemic, and with its persistence towards an unforeseeable future, there is potential for greater demand, leaving Romoni with a scope to generate higher revenue given customers develop a habit and comfort with at-home beauty services. 

However, the competitive landscape of Romoni stands a major challenge. Beauty salon stores, global beauty products selling platforms, and micro finance lenders stand as direct competitors of Romoni. There are also new startups operating in the same field, such as Shebaxyz, Shopup, Shajgoj. There is also a lack of recognition of internal brands as compared to large brands. 

Investments

Keeping the business scope and opportunities as a stronghold, Romoni has been able to raise investments of almost US$ 250,000 to date in order to expand and collaborate with new brands and improve service quality. 

Other than US$ 80,000 angel investments, the enterprise has also raised US$ 75,000 from Accelerating Asia, an early-stage venture capital fund headquartered in Singapore and US$ 45,000 as grant from UNCDF, United Nations Capital Development Fund that is dedicated to improve the least developed countries and markets.

Through B-Briddhi programme’s Impact Ready Matching Fund scheme, the enterprise has an opportunity to raise upto US$ 100,000 as non-repayable investment. Currently, they are raising US$ 300,000 to build a proper infrastructure and venture into new industries.

B-Briddhi’s Catalytic Funding Support

Romoni’s far reaching scope of business, has the ability to positively affect the lives of many underprivileged women, who struggle everyday to earn their bread and butter, and eventually lay a greater impact in terms of improvement of livelihoods. Biniyog Briddhi’s catalytic funding program aims to help Romoni transition into a properly groomed impact oriented organization, with the ability to accurately measure impact metrics- primarily, gauging the growth in the number of women being impacted by the platform, measuring the percentage change in the income levels of the micro entrepreneurs, and improvement in the skill level of the service providers on the basis of customer ratings.

B-Briddhi’s support has helped Romoni in determining the accurate measurement criterion for these metrics and, ultimately measuring the  impact left on humanitarian and development segments through data, partnerships, technological upgrade, and new ventures. In addition, B-Briddhi will also award Romoni upto US$ 100,000 to improve its impact metrics and create an impact in society.

Way Forward

Romoni’s growth so far has left a powerful impact on the case of women in the entrepreneurship ecosystem. Given the amount of data they are collecting through operation, there is scope to utilize that data to make better informed business decisions and  impactful product and service improvements. The goal for now is to become the second largest beauty service brand and e-commerce platform by 2021. Scale up Romoni Salon Naturals and pilot Romoni branded standardised salons by 2022, and become the largest beauty and salon naturals reseller brand by 2024. The underlying and primary goal remains to be a reliable platform for all things relevant to beauty, lifestyle and more for the urban and semi-urban women, while being a solid platform for the micro entrepreneurs to rely on in regards to all things necessary to run a business in the beauty industry of Bangladesh. Being a one stop platform for the micro entrepreneurs will make them stick to Romoni and only then will Romoni be able to create a much greater impact.

The Bangladesh ecosystem

The Bangladesh entrepreneurship ecosystem: the next step /

What are the biggest problems that Startups and SME are facing in Bangladesh right now? And how can they be overcome – especially in times of COVID-19? Our programme partners Bijon Islam and Mehad ul Haque from LightCastle Partners share their insights into the entrepreneurship scene and illustrate how collaborative efforts such as B-Briddhi can support a thriving ecosystem for impact and growth.


Bangladesh has had a remarkable growth over the last decade. The country nestled geo-strategically between India on one side, and China on the other, has performed with a GDP delta of +VE: 5 to 8%. A lot of the growth can be attributed to our twin engines – RMG/Textile growth (which explains 80%+ of our export mostly to Europe and US) and remittances (from our human capital mainly positioned in the Middle East). Coupled with them, is the boom in ICT export (locally developed software and ITES export to more than 50 countries), a growing local consumer market (growing technology adaptable middle-income population) and large infrastructure projects (mostly in power, roads, bridges and mass transits, both public and private).

However, as we move into the next decade – Bangladesh also needs to focus on Startups and emerging companies, especially SMEs. A cursory glance at the advanced economies (like the US) or Bangladesh’s two powerful neighbors (India and China) confirms the hypothesis. Bangalore alone has lubricated India’s move to become an IT outsourcing giant (companies like TCS, Infosys, Wipro have gone global big time) and China (no need to elaborate) have only recently come down from its double-digit GDP growth. Alibaba, a pioneer in leading the technology revolution in China, has become the world’s most valuable B2B e-commerce company and has diversified their portfolios from retail, entertainment, cloud, and internet services to FinTech.

So, what’s holding Bangladesh back? There is an acute problem with Startups and SMEs (arguably the most potent engine for growth) on three levels.

Problem 1: The faltering infrastructure and investment initiatives for Startups/SMEs

The first problem identified is the faltering infrastructure and investment initiatives for Startups/SMEs. Almost all of the accelerators, incubation, and mentorship programs are located in the capital – leaving no support for startups from other cities. Adding on it, the dearth of access to finance (60+ banks and 34 NBFIs – mostly debt-based financial instruments with high-interest rates against collaterals) is a no-winner for the entrepreneurs.

For tackling these challenges, initiatives need to be taken to circumvent Startups/emerging companies’ capital needs via Angel Investment Networks, Venture Capitals, and Private Equity Hedge Funds. The establishment of a vibrant equity capital market will attract the fund providers for profitable exits.

The good news is that a growing number of local and global entities have shown interest in the Bangladesh ecosystem lately. These ranges from international investment companies/global companies like, Gojek, an Indonesian decacorn, who invested in the local ride-sharing company, Pathao; Ant Financials, a fintech affiliate of Alibaba Group, who invested in bKash or IFC who invested in Chaldal; and local players – both alternative investment companies under B-SEC guidelines like, BD Venture and corporates like, Epilliyon and Urmi.

Angel syndicates like the Bangladesh Angels and the angel network have 50+ angel members. These types of networks are new, growing, and need to be more inclusive and be present throughout the entire country. In 2018, Bangladesh based Startups raised U$ 27 Mn compared to U$ 4.2 Bn in India. Even considering the difference in economies (India’s GDP is ten times as of Bangladesh’s), the disproportionate gap of 155X in investment raises questions. Given the amount of risk capital the country needs to take the sector forward, the startups and SMEs also need to grow significantly to garner early investor’s interest. 

Problem 2: The business environment is far from being competitive with comparable economies

Secondly, the business environment is far from being competitive with comparable economies. The inefficiencies in the market are at a monumental amount. “Speed money” is required everywhere, and the existing players create entry barriers by virtue of “lobbying” and “muscle power”. Moreover, payment terms are equally bad, and often growing businesses already burdened by high financial costs die down because of the cash flow crunch. According to the World Bank’s Ease of Doing Business Index – Bangladesh ranks at 168 out of 190 countries with a score of just 45 out of 100. The country is reported uncompetitive on all vital components, such as Starting a Business (ranked 131), Getting Credit (ranked 119), Taxes (ranked 151), International Trade (ranked 176), Enforcing contracts (ranked 189).

For the country to progress in the next decade, business processes, policies, and regulations have to be more streamlined and more comfortable to start and operate startups/SMEs. One way forward could be to use technology and fintech platforms to register and collect taxes from companies to make it more transparent and secure.

Problem 3: Lack of access to quality talent in the local market

Third and finally, access to quality talent in the local market is a massive challenge for the business ecosystem as a whole, especially more so for the Startups and SMEs. While there are many (53) public, (90) private, and (2) international registered universities in the country, the industry-academia disconnect means there is an absence of the right kind of resources for the market. Moreover, fundamentally universities in Bangladesh do not yet focus on developing entrepreneurial talent – nor do they have the right sort of incubation programs, access to funding, or R&D labs to facilitate Startup/SME growth.

Without the right kind of talent – Startups and SMEs will always be a small segment and won’t be able to scale into large enterprises. Countries like South Korea have grown into major technology hubs with government incentives that tackled brain-drain and also brought back their intellectuals from innovation economies like the US – most of whom formed companies in the country or joined universities like KAIST (Korean Advanced Institute of Science and Technology). Even India receives huge knowledge remittances from NRIs (Non-resident Indians).

For Bangladesh to move forward, industry-academia is mandatory to set up the right kind of infrastructure to nurture innovation and talents at school/university level as well as leverage knowledge remittances from all over the world through incentivized initiatives. 

What does the Startup ecosystem say for itself?

Recently, an internal survey on 100+ Startup company founders was carried out to understand what are the severe bottlenecks they are facing in operating a business in Bangladesh. The findings show the top three problems for the startup founders were related to either finding the right talent (co-founder and team- top 2 challenge each with a score of 4/5) and access to funding (3.6/5)  followed by cash flow management (3.6/5), government support (3.3/5), and legal/regulatory affairs (3.2/5):

Source: LightCastle Primary Survey November 2019 (n=104)

Global recession – the wrath of the COVID 19 pandemic

Since the end of 2019, the world is experiencing a “Black Swan” event – the COVID 19 pandemic. As an export-driven country, this will create a lasting impact on the country’s export sectors, especially- RMG sector, which is facing U$ 1.7 Bn worth of canceled orders amid backward linkage disruption resulting in a million job loss; and foreign earning remittance, as other countries are shutting down, our human capital of half a million people has come back into the country from Middle-East and Europe where they were employed mostly in semi-skilled/unskilled category. Domestic demand not only in tourism but also for both services and products have scaled-down, leading to shutting down businesses creating unemployment, especially in the informal sectors.

Given this scenario, the businesses need to become increasingly inclusive and start creating social and environmental returns on top of positive economics, and the role of Startups/SMEs would become even more critical for equitable growth. A quick survey of founders during this testing time also shows that there has been a significant fall in their business activities – 29% reported a decline in business activities by more than half while another 29% reported a complete business closure. ADB estimates Bangladesh may lose up to U$ 3 Bn – 1% of its GDP for the Fiscal Year 2020-21, that may result in a job loss for 9 million people due to this pandemic.

 
Source: Bangladesh Startups Survival Guide for Coronavirus, March 2020 (n=42)

Most of the countries have come up with economic stimulus packages, and the Government of Bangladesh has declared the same. However, Bangladesh’s package covers only the export-oriented industries such as ICT/RMG/Textile sector (mandated that the 2019 export portfolio has to be more than 80%) in the form of refinancing from the Central Bank (to the amount of ~U$ 600 Mn) to pay wages and salaries. However, the SMEs/Startups have not been included in the stimulus package, and it is imperative to include and support this sector that contributes 20% of the country’s GDP and employs 35% of the total employment in Bangladesh. 

Way forward

As we move forward, we need to support the Startup/SME and impact enterprise engine by a collective ecosystem play.  Startups need the right drive, motivation, mentorship, business environment, and access to funding networks.

The sector can reach optimum growth by building an ecosystem via cross-collaboration with the government, angel investment networks, institutional investors, ecosystem builders, development partners, trade chambers, and of course, the budding Startups, whether traditional or impact-focused, is of utmost priority.