Korean Beauty Trends & Industry News: 23-08-24

South Korean Cosmetic Industry Favors Big Players Post-Pandemic; Too Many Companies in the Market

According to a recent report, the South Korean cosmetic industry has been tilting in favor of major companies since the COVID-19 pandemic. An analysis of data from the Ministry of Food and Drug Safety by the Skin-Based Technology Development Division revealed an expanding market centered around large corporations.

As of 2022, there were 28,015 authorized cosmetic resellers and 4,548 manufacturers, showing a 7.2-fold and 3.0-fold increase respectively since 2013. Despite this growth, only 36.1% of these resellers actually reported production figures, and a mere 7.2% are actually producing products.

Smaller manufacturers are increasingly being pushed out. Companies with production exceeding roughly $84 million account for only 0.1% of all manufacturers but hold 67.9% of total production. In contrast, companies with less than about $8.4 million in production make up 92.8% of all companies but contribute only 4.0% to production.

Industry experts are concerned that this imbalance is hampering the healthy growth of the cosmetic sector in Korea, highlighting the urgent need to support and sustain small and medium-sized enterprises (SMEs). Products aimed at hair loss have increased by 3.1 times over the last six years, and functional cosmetics have also risen by 10.2%. However, the overall market for functional cosmetics has been shrinking since 2019.

Last year's total production stood at roughly $11.3 billion, a decline of 18.4% compared to the previous year due to reduced exports to China. Basic cosmetics account for 55.4% of total production, while personal cleaning products increased by 5.8%.

The Skin-Based Technology Development Division emphasized the need for policies that support SMEs and reduce the excessive number of companies in the sector.

Coupang Accelerates Beauty Market Strategy with New Experience Store in Seoul

E-commerce giant Coupang has opened a 'Beauty Virtual Store' in the Seongsu-dong neighborhood of Seoul, marking the company's first offline cosmetic experience event. The event is part of Coupang's beauty promotion campaign called 'Mega Beauty Show.' Fifteen cosmetic brand booths were set up, offering various interactive events.

Customers who made purchases worth around $17 received a beauty box worth about $110 on a first-come, first-served basis. The opening day was fully booked with long waiting lines, highlighting the high level of interest. Coupang recorded approximately 10,000 visitors in just three days and also offered consulting services to smaller beauty companies.

Since 2021, Coupang has been aggressively entering the beauty market, registering an 18% year-over-year growth in online cosmetic sales. Last month, it launched a luxury beauty product section called 'Rocket Luxury' to further strengthen its competitive position in the cosmetic market.

This move clearly shows Coupang’s ambition to capture a bigger slice of the cosmetic market, relying on credibility and a diverse product range. Industry insiders are closely watching how Coupang will differentiate itself in a market where other e-commerce platforms are also looking at cosmetics as a growth engine.

Shopee Leading in Southeast Asian E-commerce Market; Strengthening Support for Korean SMEs

Shopee is a global open-market e-commerce platform focusing mainly on Southeast Asia. The company sees platforms like TikTok as competitors, emphasizing entertainment elements to claim the top spot in the region. Kwon Yoon-ah, the head of Shopee Korea, stated that TikTok’s focus on entertainment and ease of transition to commerce make it a formidable competitor.

In Korea, Shopee is assisting local sellers, especially K-Beauty brands, to sell their products in Southeast Asian and Central and South American markets. Local storage and delivery are managed by Shopee’s local staff. Recently, there has been a surge in orders for Korean products from Mexico, Brazil, and Thailand, largely attributed to the popularity of Korean culture and K-Pop.

Shopee has also enhanced its new service, 'SLS Plus+', offering increased compensation for issues like returns, refunds, and lost items. For any problems that arise during international sales, Shopee plans to automatically compensate sellers up to $200.

The Seoul Regional Small and Medium Business Administration is planning to hold an online marketing seminar on utilizing Shopee for the Southeast Asian market. This educational initiative aims to help Korean SMEs to digitally expand their exports.

Shopee is rapidly growing not only in Southeast Asia but also globally, providing Korean SMEs an easier route to break into international markets.