It has been anecdotally well documented that there are over 8,000 beauty brands in Korea. When I attended the Soko Glam talk at The Korea Society Soko Glam co-founder Dave Cho mentioned he thinks that number is now closer to 10,000 as new brands enter the market daily to ride the wave.
The problem from a supply chain and manufacturing point of view is that I have been hearing that Korean beauty manufacturers are now operating at near full capacity. Keep in mind that these Korean beauty manufacturers also manufacture products for some of the leading non-Korean beauty brands such as Chanel, Estee Lauder, L'Oreal, etc.
Demand for K-Beauty products has grown to a fever pitch which means that as these OEMs and ODMs are at full capacity their lead times grow longer and longer. No longer can they turn products around in 3 months. Those 3 months now turn into 5 months.
The issue is that since Korean beauty has really been known for speed of innovation with their supply chains constrained their key competitive advantage may be compromised.
I have heard insiders on the manufacturing side describe the situation as a kind of "crisis". We are at a precarious moment where demand outstrips supply and as the supply chain side gets stressed, could the K-Beauty phenomenon come crashing down?
It's a strong possibility.