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Case Study

 

Memebox Loves Its Makeover

Beauty Products Start-Up Takes Off with SAP S/4HANA

by Ken Murphy, Senior Features Editor | insiderPROFILES, Volume 7, Issue 3

August 11, 2016

A make-up store

Korean start-up Memebox started simply but soon began growing at an exponential rate —  establishing unique product lines, e-commerce platforms, and retail stores. It didn’t take long for Memebox to realize that if it wanted to keep up with customer demand, it needed new technology capabilities. But as a small, fast-growing start-up, the company needed an out-of-the box solution that could grow with it. Discover how Memebox allowed for growth while improving its inventory accuracy and increasing its revenue with SAP S/4HANA Finance on an SAP HANA Enterprise Cloud deployment.

Memebox, a beauty care start-up founded in Korea in 2012, very quickly became one of the top e-commerce beauty care suppliers in the country by packaging and delivering some of the most popular brands on the market. Devoted customers hungry for the latest must-have lipsticks, eyeliners, and other cosmetics led to rapid growth for the company.

Like many start-ups, scaling in accordance with a rapidly growing customer base quickly became a challenge for Memebox, and the fledgling company realized that it would need a technology partner to support its accelerated growth timeline. Because it was reinventing its business model on the fly — adding an e-commerce platform, launching its own product lines, and opening retail outlets — on-demand provisioning with a cloud infrastructure made the most sense. With just 150 employees and limited IT business infrastructure, the business couldn’t justify the capital expense of owning and operating its own data structure and large-scale on-premise landscape. Moving to the cloud was the ideal solution for the organization — made even more ideal when the new e-commerce platform, which served as the impetus for creating its own private brands, turned Memebox into a data-driven organization.

 “The web and mobile platforms have been a big success and are among the biggest beauty platforms in Korea,” says Jason Kim, Global Finance Director at Memebox. “From those platforms, we were collecting all kinds of valuable data about cosmetic preferences and how people make their purchasing decisions. For example, we knew if there was a demand for a certain color lip gloss that wasn’t on the market — and then we could create it and go to market faster than our competitors.”

Memebox

Headquarters: San Francisco, California (US); Seoul, South Korea (APAC)

Industry: Consumer-packaged goods

Employees: 400+

Company details:

  • Founded in Seoul, South Korea, in 2012
  • Pronounced “Mi-Mi-Box”
  • Accepted into the Y Combinator start-up program in December, 2013 (Funding start-ups since 2005, Y Combinator graduates include Dropbox, Wepay, Checkr, Docker, and Airbnb)
  • Private brands are Pony Effect, Bonvivant, Nooni, and I’M Meme

SAP solutions:

  • SAP S/4HANA Finance
  • SAP HANA Enterprise Cloud
Starting with a Base Layer

Becoming a product manufacturer within two years of the business launch drove home the need for an infrastructure to improve inventory accuracy, increase insight into logistics, and establish a foundation for global expansion. At the time of its inception, Memebox pulled customer data and ran accounting software through a localized database and used standalone spreadsheets for reporting. “We didn’t have a specific business solution other than a simple accounting program,” says Kim. “We just extracted basic, raw data from our server and manually created reports that were used as the basis for our decisions.”

To support the growing enterprise, Memebox turned to SAP S/4HANA Finance, going live in five months with the “best model company” approach on SAP HANA Enterprise Cloud. “We needed a solid business structure to support our daily operations, and we chose SAP, in part, because of its reputation for providing the foundation for a growing business,” says Kim. “Deploying the best model company approach with SAP HANA Enterprise Cloud also meant we could use pre-built processes, rather than starting from scratch, and we could implement it in a condensed timeline.”

Out-of-the-Box Business Infrastructure

SAP provides Application Management Services (AMS) for the pre-built processes in the best model company deployment. With AMS, Memebox did not have to designate resources to support the application at go-live, and it could leave day-to-day operational support to the AMS team for both functional and technical aspects.

This meant Memebox could focus on growing the business. Since going live on SAP S/4HANA Finance in January 2016, Memebox has continued to expand to the US and China (US operations are based in San Francisco), has most recently begun expanding into Hong Kong, Singapore, and Taiwan, and has opened its first retail outlet (in Korea).

Pre-built processes on SAP HANA Enterprise Cloud include financial planning and analysis, accounting and financial close, treasury and financial risk management, and enterprise risk and compliance management. Memebox used this out-of-the-box functionality to drive immediate improvement for validating third-party vendor settlements, which had previously been difficult to track.

 “Inventory accuracy has increased significantly, and that has been one of the bigger points of success,” says Kim. “By tracking our inventory more accurately, we can better forecast delivery. Analyzing inventory became very important with the growth of our e-commerce platform, and we couldn’t do this effectively with the previous system we had.”

Adding Some Accents

Memebox’s situation was somewhat unique in that, at the time of go-live, the company was still rather small and knew that it would need to grow into both its cloud infrastructure as well as the application itself. “Our expectation is to have in the vicinity of 500 employees by next year, but we had less of a specific understanding for how we would grow into business processes,” Kim says. “We knew we needed a flexible tool that would offer support across multiple sales channels, but at the same time, the SAP implementation came with a lot of functionality that we didn’t need.”

Using pre-built services in SAP S/4HANA Finance did not mean, however, that Memebox was restricted to modeling its business processes to the pre-built model. According to Kim, this freedom did create some complications during the five-month implementation. “The SAP team would make an analysis, we would align our current process accordingly, and then they would start the design based on what we told them,” explains Kim. “But before it would be complete, the business process had evolved and made operational changes — for example, implementing a policy change to accept returns from all vendors. But the SAP team was very flexible, working closely with us to make the necessary adjustments.”

A Finished Look

In six months since going live on SAP S/4HANA Finance in SAP HANA Enterprise Cloud, Memebox has experienced a dramatic increase in sales productivity and a much shorter delivery lead time. Much of these gains in efficiency, according to Kim, can be attributed to the improved inventory accuracy made possible with the in-memory SAP HANA platform. “With real-time tracking, we know — in real time — how many products we have,” he says. “Before, we were selling products that might not have been readily available to send.”

Memebox opened its first flagship standalone store in one of the trendiest areas in Korea in June 2016. Expansion plans include launching 15 stores by the end of the year, including in Taiwan and Hong Kong, and developing a greater presence in the US and Chinese markets. There are tentative plans to implement a franchising model, which could yield roughly 100 stores globally by 2017.

 “Nothing has been confirmed, but we will use SAP software to help us grow globally, including solutions for retail,” says Kim. “When we first considered the need for a business infrastructure, our original impression was that the SAP implementation would take a year or more. But the success that we’ve had in the cloud helps to prove that SAP software can be a very good bid for start-ups like us.”

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