To be honest, it's been a slow news cycle in the K-Beauty world. Perhaps it's because it's summer but there hasn't been much new news these days. So, I thought I would write a kind of state of the union in K-Beauty as I see it in the US.
B2C is about the 3 Horseman
The past few years have been witness to a deluge of new direct-to-consumer e-Commerce sites offering Korean beauty products but it's really all about the 3 Horseman.
Soko Glam, Peach & Lily, and Glow Recipe are really the three to watch and the ones that have made the most meaningful inroads in the US market.
Many of the smaller players like Via Seoul, Skin Milk Bar, Petaluma & Co (examples only), are starting to realize that can't make it work. Many of these players that came later in the game are now closing shop because they can't get scale, can't make money, and can't compete with the 3 Horseman for customers at this point.
Memebox - Are They Still K-Beauty Players?
Have you visited Memebox recently? Have you noticed that they added a slew of Western brands to their site? In the recent weeks they added brands like Glossier, Anastasia Beverly Hills, Marc Jacobs Beauty, Neutrogena, Bare Minerals and more.
I'd say the majority of their brands are still Korean (maybe a 70/30 split or 60/40 split) but they've quietly added the brands mentioned above and then some. They still link out to Amazon and Ulta. They've added Sephora and Walmart and sometimes link to the brand's site (like Glossier). No change to their affiliate commission business model and it looks like they're well on their way to trying to create that data layer and be like a Google or Tripadvisor of beauty.
Jury's still out on whether they can monetize this into something successful. They may be focused on building out their private label brands as the main revenue driver. Now that they are not bleeding cash each month from operating an e-Commerce business, they have some time to build out this new data platform concept.
However, perhaps we should stop talking about them in the same breath as K-Beauty or Korean anything. Judging by the direction of their site, they are clearly trying to build a beauty platform and are quickly expanding beyond just K-Beauty.
W2Beauty - Maybe They Should Merge with Memebox
Racked had an article profiling W2Beauty a bit more in depth. As an e-commerce + editorial + community site, they're slightly different from others because of their global customer base and community focus. However, with all their e-Commerce products shipping from Korea, I'm not sure they can be successful against local retailers and Amazon unless they offer really unique products or cheap prices that customers in the US are willing to wait for.
Rather, they may be better off selling ads on their site once their community gets to a meaningful number. And, maybe they should merge with Memebox since they seem to have some complementary capabilities. Memebox may need/want a community focus to make their platform stronger. They may also want to get back into e-Commerce once they figure out that affiliate commission will not add to much. But, perhaps Memebox will want to build those capabilities themselves, which they certainly could.
US Retailers & Non Korean Brands Are Still K-Beauty Hungry
Yes, retailers are still on the K-Beauty bandwagon. And so are non-Korean brands that want to be classified as K-Beauty even if they're not. For example, I heard that Shiseido doubled their sales of certain skus once these items were categorized as K-Beauty even though Shiseido is a JAPANESE brand. As long as their sales increase and awareness of their brand grows, it seems that these non-Korean brands don't mind being classified as K-Beauty. Money talks.
China is Still An Issue and I Don't See it Improving the Situation in the US
I had written before that the geopolitical situation between the US, China and South Korea was tense and led to China economically punishing Korea by banning tourism to Korea amongst other tactics. Due to the reduction in tourism and a lingering anti-Korea sentiment in China K-Beauty sales to Chinese customers fell off a cliff and still have not yet recovered.
One theory was that this would force Korean brands to invest more in the US to help diversify their business but...I just don't see this happening right now. Brands are still scrambling to fill the sales gap that China is causing and they are too stressed and busy to focus on the US.
When Will the Bubble Burst?
I've said before that this bubble will deflate. Again, it may not be because of lack of demand but, rather, due to structural issues given the fact that many of these brands lack the proper resources and infrastructure to do anything meaningful in the US.
Things to watch for this fall
Innisfree launch in the US - will they succeed? I get this question a lot.
Althea & B2Link expansion in the US - will this happen and can they be successful?
Chinese sales of K-Beauty goods - will we see recovery and therefore some stabilization in the market?
If you have any ideas for topics, write a comment below and I'll try to address it or investigate it.