Memebox launched their new site after announcing their pivot away from e-Commerce and towards being a kind of educational hub for K-Beauty.
I took a look at the new Memebox, which they soft-launched May 1, and here are some thoughts.
New Memebox aka Amazon's Marketing Arm
Let's call a spade a spade. This new Memebox is a marketing arm for Amazon K-Beauty products. I know they like to describe their new business in more fanciful terms - "Tripadvisor for beauty", "...more useful to search a product on Memebox than it is to search on Google.” - but at the end of the day since all their commerce links point to Amazon, it's focusing on product education to only line the already-gilded pockets of Amazon execs.
wait, where's the education piece?
Speaking of product education...where is the K-Beauty education and brand education? Perhaps I was mistaken when I assumed their education and content spin was to bring more awareness to Korean beauty, brands, and products to newbies. Their site seems focused on customers with intent (at the bottom of the purchase funnel) since they put most of their information at the product level. Their current site, albeit in soft-launch form, tucks away context-providing content (i.e., videos) under product specific pages. So how does the customer know what the brand April Skin is? How do they know what a cleansing balm or essence is? I guess the New Memebox is relying on others to do this education or perhaps this is education that is forthcoming? I personally think a big part of the K-Beauty problem is the top-of-the-funnel awareness and education that's needed, which I thought New Memebox would address but isn't.
They want to "own the information layer" according to CEO Dino Ha but their current site offers information that you can find elsewhere. Why go to Memebox when I can go to Google to find the same thing and more?
probably not a profitable business model here either
Before the pivot, Memebox was spending a lot of money on acquisition and fulfillment. Facebook ads, Google Ads, re-targeted ads, etc., were everywhere. In this original scenario, the math didn't work out: Sales of Goods minus Cost to Acquire minus Cost of Goods minus Cost of Fulfillment = Negative Profit.
With the New Memebox, I am pretty sure they will have to go back to paying to acquire customers given their stated 10MM customer target for 2017. They do have a decent built-in audience from their e-Commerce days at 1.5MM customers. But how many of these customers will add extra clicks to their K-Beauty shopping journey because that's what Memebox is asking them to do when linking out to Amazon. Why not just go straight to Amazon to pick up their desired products and bypass Memebox all together? Any informed buyer with intent will not stop by Memebox en route to purchase.
To get to their stated goal of 10MM customers by 2017, that's a lot of acquiring they need to do. I don't know what kind of deal they have with Amazon but if they don't manage their CPAs (Cost Per Acquisition) well, I can see how they may find themselves in a similar and uncomfortable situation of unprofitability. A 5-10% affiliate cut of sales is not much unless they are doing massive volume. A model like Tripadvisor works because in selling travel, the average transaction value is much higher (therefore Tripadvisor gets a bigger cut) than with beauty where the average purchase may be around $75, depending on your free shipping threshold.
How Can new Memebox Make it Work?
I don't think the New Memebox will work if they continue to focus at the bottom of the purchase funnel. American consumers need more education on Korean beauty - they need context and awareness and stories otherwise they won't know to go to New Memebox. They will need to add this in and commit to being a destination for everything K-Beauty from awareness to purchase. Also, I think they will need to add the commerce part back to their business to make this work and, you know what? I bet they will. Unfortunately, by then, it may be too late because this will be their fourth pivot in their short history and they may have lost most of their goodwill with customers trying to figure out what they are.