"Working with a well-known YouTuber to get into Olive Young can cost up to 80 million won. For a brand that has just started out, it isn't easy to even try."
That is how an official at an indie beauty brand described the barriers to entry, after the label recently secured space at Musinsa Beauty's first flagship store in Seoul's Hongdae district. It was the brand's first offline sales channel. The official said a dream had come true, welcoming the emergence of an alternative in an offline beauty retail market long dominated by Olive Young.
Olive Young has been the central stage for the growth of K-beauty. Backed by a nationwide store network and demand from foreign tourists, it raised brand awareness and helped smaller labels expand overseas and open new sales channels.
But as Olive Young's influence has grown, so has the threshold for getting in, small and mid-sized brands complain. To be stocked at Olive Young, they say, a brand must go through a vendor that acts as an intermediary distributor, and the costs of marketing, promotional items and collaboration products are substantial. Some also complain that Olive Young's market power is so great that it inevitably holds the upper hand.
Against that backdrop, newer beauty retail channels that have set a lower bar for indie brands are drawing attention as an alternative. At the Musinsa Beauty Hongdae store, which opened last month, indie labels account for 70% of roughly 600 beauty brands carried. Positioning itself with a pharmacy tie-up and a blend of fashion and beauty, the store topped 250 million won in cumulative sales within three days of opening. Daiso, leaning on uniform-price items of 5,000 won or less, expanded its cosmetics lineup to about 2,200 products in August from roughly 1,420 at the end of last year. Off Beauty, which keeps prices low by buying up inventory outright, is on track to surpass 50 stores nationwide this year.
The arrival of new retail channels that discover and nurture more indie brands also matters because it widens the base for growth in the K-beauty industry. Of the record 11.4 billion dollars in cosmetics exports last year, small and mid-sized companies accounted for 8.3 billion dollars, or about 73% of the total. Overseas consumers are also seeking out newer labels. After eBay Japan launched Mega Debut, which introduces four new brands each week, cumulative sales reached 6.4 billion yen, with weekly sales 17 times higher than in the early stage of the program.
Even a strong product cannot prove its competitiveness without a chance to reach consumers. That is especially true for indie brands short on capital and name recognition, which badly need a platform to gauge consumer response and build a track record. With new K-beauty brands emerging almost daily, widening the distribution networks where they can meet consumers is an essential task not just for individual companies but for the sustained growth of the entire K-beauty ecosystem.