As I had written about before, Memebox is pivoting in the US and is no longer pursuing an e-commerce strategy. Rather, it seems they are moving towards a content platform strategy and monetizing by using affiliate links.
Coincidentally, Althea, a K-Beauty e-commerce and marketing generation platform has quietly launched in the US last month filling the void that Memebox left in its wake.
What is Althea?
Althea is a Korean startup founded by former Ticket Monster employees in 2015 that has mostly focused its efforts in Southeast Asia until now. They raised $3.5MM last year to fund their global expansion. They built a scalable e-commerce solution that centralizes buying and fulfillment in Korea and then localizes selling and marketing to the countries they serve. They started with Southeast Asia because there was so much pent up demand due to the popularity of Korean pop culture with K-Pop and Korean dramas that was a natural segue way to bring over K-Beauty.
I had an opportunity to chat with Althea CFO Jae Kim about their US launch.
Are you localizing your site or product assortment for the US market?
"Our US site is localized for the US market in everything related to the customer shopping experience, including pricing, payments, shipping, CS, and even returns. We have a local return center in NY and provide an unconditional 30 day return policy.
Since we centralize our warehouse in Korea, the product assortment will largely be identical to those available in other markets. However, the promotions that we run will definitely be localized for the US, and many of the brands that we work with have shown a keen interest in expanding their US presence through us.
We are also quite active on social media, especially our Facebook page, so we actively encourage our customers to check out our page and participate in various contests & events that we run to engage with our fan base."
Are lower prices a consistent part of your strategy or is this promotional for the launch?
"Our 4 main promises to customers are as follows:
1. Free international delivery (on all orders above $50)
2. 100% authenticity guarantee
3. Best price policy
4. 30 day unconditional returns
We only work directly with brand owners or first tier distributors in Korea and then deliver directly to customers, taking out all the middle men and passing those savings on to the end consumer, which is the secret to our low prices. On top of the everyday best price policy, we also run regular promotions for specific brands and products, such as brand launches or category specials."
Are you still fulfilling and shipping out of Korea for all your products in the US as well?
"We ship directly from our warehouse in Korea. Having our expert sourcing team based in Korea allows us to provide our customers with the hottest must-have items that are a lot of times only available in Korea (like limited edition lines). It also ensures that our products are 100% authentic, which is backed by our authenticity guarantee."
Why did you choose the US as your next global market?
"We are a strong believer in K-Beauty in the US market. We believe that customers really appreciate the quality and innovation that represents K-Beauty, which explains the growing interest and popularity. What we've noticed is that only a small subset of Korean brands are currently available in the US, so our goal is to introduce up-and-coming brands from Korea that we feel customers in the US will fall in love with."
Are there any big differences you see in your US customer versus customers in other markets?
"While still early stages, we haven't seen a huge difference in our US customers vs. other markets. However, what we've seen is that many of our early US customers are willing to try products from lesser known brands, which is a very promising sign to us. Again, we are all about introducing the latest and greatest beauty trends out of Korea to the global audience, so this is definitely encouraging for our efforts!"
Given that Memebox was not able to find a profitable e-commerce solution in the US, it'll be interesting to see if Althea can succeed where Memebox failed. Althea's centralized sourcing and fulfillment definitely makes this more scalable and potentially profitable.
Winners and Losers
Winner: US Consumers
Now that US consumers have more access to even more Korean beauty brands at even cheaper prices than other retail outlets, they are definitely the winners here.
It's funny how the timing worked out and stars lined up for Althea in that their biggest competitor, Memebox, has now thrown in the towel in e-commerce. Now Althea can focus on being the biggest online retailer for K-Beauty goods and potentially be profitable doing it.
Loser: Retailers and Indie K-Beauty Startups
I quickly scanned Althea's brand list and pricing and, wow, their pricing is cheaper almost across the board. There is also a decent amount of brand overlap with other major retailers and indie site retailers like Peach & Lily, Soko Glam, and Glow Recipe.
First, for the brands with pre-existing exclusive distributor deals, these distributors (like the three above) will now have to file cease and desist letters and go through the hassle of defending their territory. Second, they will also have to deal with yet another competitor in the space that offers better pricing and larger variety of brands (as if Amazon wasn't bad enough).
The K-Beauty space is always interesting, to say the least. Althea is one to keep your eye on as they focus their marketing efforts in the US.