Memebox Founder and CEO Dino Ha announced to their customers on March 7, 2017 that they are essentially getting out of e-commerce and turning into some kind of content and discovery platform. Said another way, they are pivoting "bigly".
Raising the white flag in e-commerce
This is essentially an admission that e-commerce in an Amazon domination age is not working. When you're a heavily VC-backed company with a $160MM war chest of funding you have to grow big and fast (and maybe profitably) so I'm sure the pressures to make it work in the US were high.
My read on this situation is that they are losing sales to Amazon where consumers can find it faster and cheaper. Memebox is probably having trouble finding a profitable e-commerce solution for their US business given their history of killing things that cost money like international shipping and loyalty programs. Instead, they are turning to an alternative content/affiliate program focus.
what's their growth potential now?
Surely, a content/affiliate program business model will require less capital and is more likely to be profitable, but I am not sure they can reach a large amount of revenue. Given that affiliate programs pay out about 3% - 10% and given that the size of K-Beauty sales in the US are still small (I think around $250MM?) expect their top line numbers in the US to decrease significantly unless they found other ways to monetize.
Their original business thesis may still stand - datamining their customers' site patterns, preferences, and purchases and turning those into private label beauty products quickly, à la fast beauty. Even with a content/affiliate site they could still get enough data about what customers want and use that information to innovate. If they can get the right distribution, the private label brand play may have the biggest potential.
what does this mean for other k-beauty sites?
The question now is given that the best funded K-Beauty related startup has essentially admitted that their e-commerce business cannot find profitable success in the US, what is the implication for other indie or niche K-Beauty sites like Soko Glam, Glow Recipe, and Peach & Lily?
I would say, stay small and profitable.
I've seen a flurry of e-tailer entrants into this space since the barriers to entry are so low and a few small players that left the game like Via Seoul (now defunct). Now, the biggest elephant has left the room.
I imagine we'll see some lift in sales to the niche, indie players given that there is some brand overlap. In the long run, bet on Amazon to be the biggest beneficiary. As these niche, indie players do the education and provide content, it may only benefit Amazon in the end.