Synergy with Nationwide Stores and Combined 'Omnichannel' Instant Delivery Service
Summer Online Sales Share Surpasses 30%
[Asia Economy Reporter Jo In-kyung] CJ Olive Young, the number one player in the domestic health and beauty (H&B) market, continues its solo growth and is standing out in the e-commerce market beyond its existing offline platform. As the distribution industry is being reorganized around comprehensive malls such as Naver and Coupang, the synergy-enhanced ‘omnichannel’ strategy?combining Olive Young stores in major commercial districts nationwide with fast delivery services?has captivated consumers.
Online Mall Grows at an Annual Average Rate of 60%
According to Olive Young on the 20th, the online mall, which was first launched in April 2017, surpassed a cumulative transaction amount of 1 trillion KRW by mid-this month, just 4 years and 4 months later. As non-face-to-face transactions became active due to the prolonged COVID-19 pandemic, Olive Young’s online sales ratio, which was 10.6% in 2019, rapidly expanded to 17.9% in 2020 and 23.4% in the first quarter of this year. During the second quarter summer sale (June 3?9), which achieved the highest-ever regular sale performance of 107.2 billion KRW, the online ratio exceeded 30% for the first time.
Powered by this, Olive Young’s share in the domestic H&B market, estimated at about 2.3 trillion KRW last year, approached 90%. A company official said, "Since its launch, the online mall’s transaction amount has been increasing sharply by about 60% annually," adding, "We aim to achieve 500 billion KRW in online mall transactions this year."
The number of accumulated cosmetic reviews on the online mall is about 10 million, and the cumulative downloads of the mobile app have reached 8.34 million. This means that 6 out of 10 MZ generation (Millennials + Generation Z) in their 20s and 30s have downloaded the Olive Young app.
From Same-Day Delivery to Immediate Delivery
Olive Young’s growth is analyzed to have been driven by proactively building an independent O2O (Online to Offline) platform that maximizes synergy between online and offline channels. Customers can experience products anywhere nearby and purchase and receive them conveniently at their preferred time and place.
The number of Olive Young’s offline stores has steadily increased from 1,198 in 2018 to 1,246 in 2019 and 1,259 in 2020. This contrasts with GS Retail’s Lalavla and Lotte Shopping’s LOBs, which are struggling to improve profitability by reducing stores. Olive Young introduced the ‘Oneul Dream’ (Today’s Dream) service, which uses stores located in major commercial districts nationwide to pack and deliver products ordered online or via the mobile app from nearby stores. For the ‘Fast Delivery’ option, which delivers within 3 hours if ordered by 8 p.m., the average delivery time was shortened to 45 minutes in the first half of this year.
Strengthening Omnichannel Across Online and Offline
This month, Olive Young launched a branding campaign with the slogan “Go to Olive Young (store), or turn on Olive Young (mobile app),” solidifying its so-called omnichannel position that combines online and offline. The strategy is to secure unrivaled curation competitiveness and a solid customer base in the cosmetics and health categories, which e-commerce giants find difficult to challenge.
Last month, Olive Young also conducted the largest IT talent open recruitment since its founding. Demonstrating its commitment to discovering talented individuals with excellent development capabilities and potential, it attracted attention in the distribution industry by unusually selecting candidates for the first round solely through a ‘coding test challenge’ without a document screening process.
An Olive Young official emphasized, "We will maximize synergy between online and offline to achieve a definite paradigm shift as an omnichannel by the end of the year," adding, "We will go beyond commerce that sells products to also serve as a cosmetics information platform."
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