'e-Beauty' Thrives... Double-Digit Growth Rate in Online Sales

August Sales Up 14.1% Year-on-Year
Higher Unit Prices and Shorter Product Replacement Cycles
Major E-Commerce Companies Compete 'Online'

The ‘e-beauty’ market, which has gained momentum since the COVID-19 pandemic, is showing significant growth, maintaining a double-digit growth rate. Major e-commerce companies are leveraging this growth to launch beauty-specialized brands or expand other beauty-related businesses, targeting the online beauty market, which is considered a relatively ‘blue ocean.’

Citizens visiting the Coupang Mega Beauty Show Virtual Store are experiencing various beauty activities.
[Photo by Yonhap News]

According to the ‘August Major Retailers Sales Trends’ announced by the Ministry of Trade, Industry and Energy on the 26th, online cosmetics sales last month increased by 14.1% compared to the same month last year, recording the highest growth rate among all product categories. Online cosmetics sales have maintained a double-digit growth rate for a year straight, following a 23.1% increase in August last year compared to the same month the previous year. This was followed by service & others (13.3%), food (13.0%), and living & furniture (8.7%). The sales share by product category also increased by 5.0% compared to the same month last year.

The reasons major e-commerce companies are continuously entering the online beauty market include relatively low penetration rates, high average transaction values, and short replacement cycles. According to Statistics Korea, the online penetration rate of cosmetics last year was 29.4%, significantly lower than books (54.8%) or home appliances (58.1%). Therefore, the industry still sees great growth potential in the e-beauty market. High average transaction values and short replacement cycles are also considered advantages. For companies aiming to improve performance, the cosmetics market is highly attractive.

Accordingly, major e-commerce companies are competing to secure the beauty market by launching dedicated sections and expanding product categories. For example, Market Kurly, which was primarily focused on food, changed its service name to ‘Kurly’ last November and launched the beauty-specialized platform ‘Beauty Kurly.’ After onboarding premium beauty brands such as La Mer and Sisley last year, it expanded its lineup this year by adding Lanc?me, Kiehl’s, and others.

Lotte ON also launched the beauty specialty section ‘On & The Beauty’ in April last year, showcasing about 3,000 popular brands on social media, including luxury brands. It operates a dedicated section exclusively for luxury brands such as Yves Saint Laurent and Jo Malone to meet premium demand.

Coupang expanded its cosmetics business scale by launching the luxury beauty section ‘Rocket Luxury’ in July this year. It offers a total of 16 domestic and international luxury brands, directly purchasing through the Korean subsidiaries of brands like Est?e Lauder and MAC.

Fashion platforms such as Zigzag and Ably are also expanding their presence into the online cosmetics market.

An industry insider said, "The K-beauty market continues to grow every year, so there is ample growth potential. However, while offline channels were previously recognized as the core distribution channel, since COVID-19, there has been a clear preference for online channels among younger consumers, leading many companies to focus on expanding their online market presence."