Entrepreneurs Navigate Taiwan’s Vast Retail Space

A new cohort of young business owners is exploring how to create, import, and sell products that are attractive to Taiwan’s discerning consumers, using a variety of online and offline sales channels and strategies.

For a small, independently owned business, making a name for oneself in the retail sector of any major economy is difficult. In Taiwan, where consumerism is almost a religion and where the retail market has been growing at an annual rate of 10-12% in recent years thanks to a handful of popular e-commerce platforms, standing out as a new, unfamiliar brand is even more challenging. Yet more and more energetic young entrepreneurs are finding unique ways to break into this saturated market, introducing niche products or a twist on existing, popular goods.

For husband and wife Joshua Roberts and Mandy Wu, co-founders of local skincare startup gabi+skin, the idea to start a retail cosmetics business was purely accidental. Wu had been searching for products that were better suited for sensitive skin. After reading about all-natural coffee-based skincare online, she began searching Taipei’s drugstores and e-commerce platforms, only to realize that such products were virtually unavailable in Taiwan. She decided to turn this deficiency into a do-it-yourself project, using the kitchen in their apartment to make a simple exfoliating coffee scrub from easy-to-find ingredients.

“I remember the first time Mandy made it at home and was trying it out in the shower,” says Roberts. “I heard her yelling, so I asked what was wrong. She said ‘Nothing’s wrong! The scrub is awesome!’”

The two began making more of their homemade concoction, giving extra bottles away to friends. The feedback they got was overwhelmingly positive, and it gave them the idea to start selling the scrub as a packaged product in Taiwan.

A bit of trial and error was involved in getting the company off the ground. While both Roberts and Wu were well versed in branding given their respective backgrounds in design marketing and advertising, they didn’t have much in the way of formal retail experience. When they first began selling their coffee scrub at an outdoor market in Tianmu, they realized that one of the key ingredients, coconut oil, solidifies in colder weather, rendering the product difficult to use. They were forced back to the drawing board, tinkering with the formula to improve consistency.

Husband-and-wife team Joshua Roberts and Mandy Wu founded coffee-based skincare startup gabi+skin after Wu discovered that such products were difficult to find in Taiwan. Photo: gabi+skin

In other ways, though, gabi+skin faced a relatively low barrier to entry. Certain aspects of Taiwan’s retail ecosystem make it easier for new brands to develop a following. In particular, several well-known e-commerce websites, such as local platforms PChome and Momo, as well as regional players like Singapore’s Shopee and Hong Kong’s Pinkoi, provide a convenient space for individuals and companies to hawk their wares. Like Amazon Marketplace in the U.S., these websites allow third-party sellers to create their own individual stores and provide pay-on-delivery and convenience store shipping options that are popular with local consumers.

Roberts and Wu chose Pinkoi, which has a focus on original design products, as the primary third-party sales channel for gabi+skin. So did Jane Chen and Alex Denner, founders of artisanal condiments startup Empress Hot Sauce.

Empress Hot Sauce is the brainchild of married business partners Alex Denner and Jane Chen, who launched the company last year. Photo: Empress Hot Sauce

“In Taiwan, being on these e-commerce websites is incredibly important because they lend a trust factor to your product, and Pinkoi is a trusted community where they curate products to make sure they fit their quality and standards,” says Chen. “We were lucky to be able to join.”

Jane Chen offers an Empress taste test to a customer. Photo: Empress Hot Sauce

While online sales are a major component of the business for gabi+skin and Empress Hot Sauce, both still note the challenges involved. One major hurdle is the hesitancy among many Taiwanese consumers to make purchases online, especially from brands or sellers they’re not already familiar with.

Chen and Denner sell their hot sauce at an open air market. Photo: Empress Hot Sauce

“Taiwanese people have to see things in real life before buying them,” says Wen Tu, co-founder of Rioni Group, an advisory firm for foreign businesses looking to enter the Taiwan market. “It’s almost unheard of for them to buy something online without having first seen it in person.”

Tu also co-owns and operates a separate e-commerce business with her Austrian business partner, Stefan Pellech, selling pre-owned luxury watches from Switzerland. She says that given the more conservative approach to buying online in Taiwan, her company’s model would be almost impossible without the help of established players in the timepiece industry.

“We collaborate with local retailers, asking them if we can work with their watch expert, who can help our clients by offering certain services,” Tu says. By making those connections, she says, she and Pellech are able to create a higher level of trust in their brand and the products they are offering.

Another important part of the marketing strategy, Tu says, is crafting an interesting, compelling story for your brand. That not only builds consumer trust, but also increases word-of-mouth referrals, which are extremely important for small businesses to grow in the Taiwan market. For their watch business, Tu and Pellech have interviewed both watchmakers and collectors, who related their experiences in the industry and imparted valuable knowledge. They then synthesized the information they had collected into an attractive narrative for the company.

“It’s a win-win situation,” Tu says. “It’s not one-sided, like I’m just telling you a bunch of information. You’re also learning and connecting to the community through these stories.”

Denner and Chen of Empress Hot Sauce agree with that approach. “Storytelling is such a key piece of brand marketing, even in the States,” Chen says. “I’ve realized that one of our benefits is we’re really honest in how we tell our story. I think everyone understands that we’re just two people trying to make really good sauce and have fun while we’re doing it.”

The couple had also benefited from their modest experience in the food and beverage sector before starting Empress. After moving to Taipei in 2019 from New York, where Denner had been working as an accountant and Chen as a product manager, they began making chia seed pudding, which they then delivered to different offices around the city. The venture was relatively successful, but Chen noticed that their refrigerator at home was becoming filled with an increasing number of hot sauce bottles.

“Every time I go back to the States,” Denner explains, “I always bring back a ton of hot sauce because the craft hot sauce industry in the U.S. is so much more robust than it is here. There’s really only one flavor of hot sauce here and I’m used to a little bit more variety.”

He says that his eureka moment came when he was walking through a local market one day and spotted mangos and chilies sitting next to one another at a stand. “It immediately made me think of the mango habanero sauce that I had at home and was trying to conserve,” he says. “And basically, while I was recipe testing for the chia seed pudding, I decided to give hot sauce a shot as well.”

The new experiment seemed like a nice way for Denner to make sure he had several homemade varieties of his favorite condiment on hand. Yet it didn’t strike him and Chen as being a potential business idea until a couple of years ago, when the couple started receiving positive feedback from friends and family members who had received bottles of the hot sauce from them as gifts during the holidays. Some even asked for more. After taking another half-year to fine-tune the recipe for each sauce, the two decided to incorporate, officially launching their business in July 2020.

In addition to Empress’ brisk online business, Denner and Chen also travel in person to various markets around the island. They found that the tactics used to pull in potential customers offline were much different from those used in e-commerce. At a recent event held by local business networking organization All Hands Taiwan, Denner noted that he and Chen had started out just waiting behind their stand for customers to approach. When that did not prove very successful, he moved to the front of the display and began calling out and offering samples to passersby, which worked a bit better.

Roberts and Wu of gabi+skin also ventured into offline sales with a pop-up shop at the Eslite Xinyi Store from December 2020 until February this year. Like Denner and Chen, they took a more passive approach to sales at first, but noticed that the staff at other booths were proactively approaching customers to reel them in. While they didn’t feel comfortable with such an aggressive approach, they knew they needed to do something different.

“While doing some research online, we found some weird psychological tactics, like ignoring customers and pretending that you’re busy” with other people, Roberts says. “Nothing attracts a crowd like a crowd.” They also rearranged their display to make it appear that certain items were being sold out and also arranged for the sales staff at a neighboring shop to provide coupons for their customers to get a free gabi+skin sample upon completion of a sale.

Although sales at the pop-up shop began waning at the end of gabi+skin’s run in Eslite due to the cluster outbreak of COVID-19 cases in Taoyuan earlier this year, the various tactics they tried during their time there netted overall positive results, Roberts says.

Going it alone

While maintaining both online and offline sales channels is possible with small businesses that have sufficient capital and human resources, it’s much more difficult to tackle for those operating as individuals. Such was the dilemma faced by Irene Sun, Taiwanese-American founder and branch manager of iSkin Global, which imports and distributes specialty skincare products from a manufacturer in the U.S.

Irene Sun, founder and branch manager of iSkin Global, decided to launch
and develop her small business entirely on her own, focusing solely on in-person
sales at her brick-and-mortar store in Taipei. Photo: Irene Sun

“I started out with both e-commerce and through my brick-and-mortar store, and I was losing a lot of money,” Sun says. “So I took down my e-commerce platform and solely focused on in-person sales, and just designed my entire business and marketing plan around that.”

Rather than opt for temporary sales channels like those used by gabi+skin and Empress Hot Sauce, Sun decided to rent a storefront in Taipei’s Da’an District. The shop was located in a small alley, away from all of the bustling foot traffic of the nearby shopping area, but she says this location lent it an air of security and exclusivity.

“The first thing I did was set up a salon bed, and I provided my clients with a five-star free facial that’s actually a US$450 value,” Sun says. “Then I would, throughout the process, teach them why my product is different and how they could improve their skincare routine so that the products are more effective.”

She says that by using this approach, as well as by chartering a new, English-language chapter of the Rotary Club and joining other business networking organizations, she was able to rack up an impressive number of sales. In line with the observation by Tu of Rioni Group about Taiwanese consumers’ online spending habits, Sun says that a purely e-commerce approach may not have been as effective, especially since the price point of the products she was selling was quite high.

“With e-commerce, I could only post videos and because my products are so expensive, the customer would have to pick and choose one or two products,” she says. “But in person, they’re getting the full experience, so they’ll be compelled to buy more.”

Though Sun eventually exited the company she founded and returned to the U.S. last year, licensing her exclusive right to sell iSkin’s products in the Taiwan market, she offers encouragement to those who want to become retail entrepreneurs in Taiwan.

“Don’t give up and don’t get intimidated,” she says. “There are a lot of very local – usually very male – business owners who will try to talk down to you – and people can be very discouraging, but don’t worry. The market is very saturated, but if you keep trying and give yourself time, you’ll be fine.”

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