How Korean skincare brand COSRX has harnessed out the East Asian market
Founded in 2013, the South Korean skincare brand COSRX now boasts a high degree of recognition in Southeast Asia. Having recently come off the back of achieving fame in the US, in the space of just two years they’ve gone on to see success in several countries within the region.
High acclaim in the US through multiple awards
In the Teen Vogue Acne Awards 2019, held in June this year by the US edition of Teen Vogue, one South Korean skincare brand clinched three awards — COSRX.
Their three products that won the awards were Triple C Lightning Liquid (under $30 category), Acne Pimple Master Patch (under $10 category) and BHA Blackhead Power Liquid (Blackhead category). In fact, COSRX has been winning awards in this competition for three years straight since 2017 (with five products in total).
In 2018, COSRX was also selected by Amazon in the US as a Global Brand Success Story, and currently, within the US, they’re selling their wares through both online and offline stores, including Urban Outfitters and Riley Rose and all stores of Ulta Beauty. In May this year, they also arranged to have their products sold in all Forever 21 stores. COSRX is becoming a shining example of a South Korean skincare brand that has successfully expanded to the US.
Watsons — the entry point to popularity in Southeast Asia
In recent years, COSRX has been expanding its market share within Southeast Asia as well. In February this year, they completed the expansion of their distribution network that spans all stores of major drugstore chain Watsons within the Philippines, Indonesia, and Singapore.
According to comments made by a COSRX representative in South Korea’s Kukmin Ilbo newspaper, “As a result of meeting the needs of customers in Southeast Asian countries, of whom many deal with skin issues relating to the high-temperature and humidity the region is known for, we were able to achieve a surprising level of growth within two years of expanding to the region.” They also mentioned that from here on the plan to further increase the sales they’ve achieved so far in four chief countries of the region and grow to become a brand beloved by all of Asia, and eventually by the whole world.
The secret to COSRX’s growth
The company was established in December 2013 and is owned by Sanghoon Jeon. It has a sales volume stands of around 36.5 billion won (approx.US$33.2 million). Apart from this, not much information is publicly disclosed about the company, much less its history. However, in South Korea, COSRX has a high reputation as a pioneer for being a small-to-medium-sized company that has cultivated distribution networks in overseas markets. Their success in doing so can be largely put down to three reasons.
First is the change in consumer buying behavior. Traditionally, the normal path to expand into overseas markets has involved first setting up in local department stores. However, COSRX has been able to largely surpass the boundaries to entry by instead focusing on revitalizing the local H&B (Health and Beauty) stores and beauty boutiques. In addition to this, word-of-mouth and evaluation from consumers themselves via social media has come to have a large effect on the market, and this has brought about increased opportunities for small-to-medium-sized brands with good products to be adopted within local distribution networks.
The second reason is COSRX’s method of product development. The company focuses largely on customer satisfaction. Owner Jeon has said in interviews with South Korean cosmetics media that, “Rather than focusing on marketing materials, we plan to sell products that give consumers a high level of satisfaction, including in terms of price”.
Amazon’s acclaim of COSRX is largely based on their active communication with consumers. They also make use of Amazon’s Early Reviewer Program when releasing new products, which involves gathering reviews from consumers at an early stage, analyzing them and updating products according to the user needs that are discovered.
The last reason is tits digital strategy. For instance, when they expanded into North America, COSRX made full use of the Amazon platform not just as an online store but as a form of media that is influential on a global scale. They designed their Amazon sales page as if it were their own official site — posting detailed explanations on products and information including ingredients, methods-of-use, prices and excerpts from reviews — turning the site into proper reading material. As well as this, they also made use of social media, video content and influencer marketing to continually communicate with consumers, which helped to increase COSRX’s recognition enormously.
Being a small-to-medium-sized company and having popularity over the internet has proved to be an advantage in getting a foothold into Southeast Asia. One case, in particular, is COSRX’s entry into the Philippines. There, Watsons currently holds the largest market share of H&B stores in the country, and COSRX remains the only South Korean brand in those stores that have been able to secure in-store shelf space and increase their sales successfully.
The major H&B stores in the Philippines — Watsons included — tend to demand exclusive sales rights. A company such as COSRX, with nowhere near the amount of funding as bigger companies, hasn’t been able to establish its stores in the Philippines yet, however they have grown a huge following over the internet. This was what originally caught the eye of Watsons, who approached them and allowed expanding into the country. Since then, their popularity in the Philippines has grown even more and their products have come to be sold in all Watsons stores.
Recently, there’s been a growing trend of small-to-medium-sized South Korean skincare brands entering the Southeast Asia market. According to Euromonitor, the size of the cosmetics market of the six chief countries within Southeast Asia combined is US$19.1 billion (as of 2017), or 4.2% of the global market. They also predict that by 2022, this Southeast Asia market will see an average annual growth rate of 8.8%.
Text: Ching Li Tor
Original text (Japanese): Jonggi HA
