If vanity had a home, it may well be the nation of South Korea. According to The New Yorker, the nation has the highest rate of cosmetic surgery in the world. But more importantly for the beauty market, South Korea is home to a booming industry that has continued to spread its influence in both product and digitally-savvy marketing approach.
The “Korean Wave”, otherwise known as Hallyu, has taken over popular culture in a multitude of different fields – the latest being beauty. Explaining an influx in exports, the Korea Customs Service comments: "Korean-made cosmetics appeal to overseas consumers on the back of the rising popularity of South Korean movies, pop and TV series.” But for beauty, it’s not just innovative ingredients that are edging out Korea’s European competitors.
K-zone: The facts
At last look, The Korea Herald reported South Korea’s net cosmetics production was worth $US9.3 billion. An increase in export from growing outside interest in Korean cosmetics and skincare has surged the industry forward. Cosmetics production in the country rose 19.64 per cent in 2015, with exports rising 43.76 per cent to $US2.5 billion. According to Yonhap news, South Korea-made cosmetics have more than tripled over the past five years. On the flip side, the interest in outside cosmetics has not been returned - with imports rising only 3.83 per cent to $US1.87 billion.
China was responsible for highest export volume, followed by Hong Kong, the US and Japan. According to Government trade figures, in Australia: “Korean cosmetic imports almost doubled from 2014 to 2015, reaching almost $18 million Australian dollars.” This was spearheaded by booming interest in innovative cosmetic creations such as compact cushions, BB and CC creams.
Digital IQ
Where Korea really thrives when it comes to beauty is its understanding of retail and its high digital IQ - the nation has been found to be one of the most digitally savvy. More than 80 per cent of the population is online, according to L2 Daily. The country has as its disposal some of the fastest access to internet.
“Strong digital engagement [is essential for brand growth],” reports Euromonitor – a notion that business in Korea is aware of, with local beauty brands adept at engaging online with consumers. Rated the most digitally-savvy brand is Etude House. The brand not only offers mobile purchase, but is active on the top five global and social platforms. Among these it has booming social media engagement including 23 million views on YouTube, near 200,000 subscribers, and more than 920,000 fans on Facebook.
But digital engagement isn’t just reserved for social media in Korea, with brand websites offering hubs of information incorporating e-commerce, SEO and social media awareness. Luxury Daily says: “Beyond innovative products, South Korean beauty brands are also excelling online...incorporating functionality and content that drives loyalty, trial and e-commerce.”
Virtual stores are also starting to take flight in the country, becoming a benchmark for retail innovation that integrates digital strategy. Says Business Korea: “The [virtual store] is indicative of how South Korean retailers continue to redefine the shopping experience, and the idea has since been borrowed by businesses across the globe.”
M-commerce
Korea has long recognised how integral e-commerce is for success, with only 18 per cent of local brands currently not offering a link through to an e-tailer or direct brand site. According to Cosmetics Design, e-commerce’s latest development mobile retailing is now the fastest-growing retail sector globally. The arena - whereby consumers purchase through smartphones, tablets or similar mobile devices, is forecast to hit 30.1 per cent of all online shopping sales in Europe, and 36.5 per cent in the US.
With two-thirds of the population owning a smartphone – the highest penetration in the world – Korean beauty has utilised its nation’s addiction to the device. Sales of goods purchased on mobile devices jumped four times in popularity since 2012. Management consulting firm McKinsey & Company says: “The majority of South Korea’s consumers already have experience with m-commerce, and on-the-go shoppers spend about as much on each mobile transaction as they do in stores. In addition, consumers who turn primarily to their phones to shop - ’mobile first’ consumers - tend to spend more than shoppers in other channels.”
As Business Korea explains: “Korean retailers are starting to deliver for a customer who sees the smartphone as the primary tool for shopping, and therefore now expects retail to be three things: everywhere, instant, and personal.” It’s an arena that Koreans excel at - the nation’s m-retail markets has doubled in value every year since 2010. McKinsey continues that the adoption of a mobile-retail attitude has made a notable difference in the Korean beauty market, with the nation’s brands making plenty of room for m-commerce offerings that compliment bricks and mortar stores. “This enthusiastic adoption has put the country at the vanguard of so-called omnichannel commerce, where physical stores and online shopping are complemented by mobile (m-commerce).”
Analysts believe it is Korea’s adoption of m-commerce in particular that is fuelling the country’s booming beauty industry. They suggest that, for success, foreign brands follow in the steps of local digital decisions. Summarises McKinley: “The country’s experience holds lessons for players around the world.”
