South Korean startup LYCL enters partnership with Germany’s Beiersdorf via their accelerator program
Under the accelerator program run by German company Beiersdorf in South Korea, LYCL has received a wide range of support in terms of global expansion. As well as having received two rounds of investment from them, LYCL is also building a partnership together with Beiersdorf to handle product development along with other areas.
German global skincare company Beiersdorf runs their accelerator program in South Korea called “NIVEA Accelerator” (or NX) to find and cultivate promising new beauty startups in the country. In June this year, they announced the second batch of NX startups.
For this article, we interviewed with Manhwi Han, Vice President of beauty startup LYCL, one of the companies selected for the first batch of NX, and Jacek Brozda who is the Head of Ventures and New Business at Beiersdorf Korea. We asked them about what the future looks like for LYCL’s business and what plans Beiersdorf has for NX.
LYCL uses the platform UNPA to develop hit products LYCL was founded in 2013 and runs both the information platform UNPA, which offers reviews and other content based on K-beauty items. It also launched its own cosmetics brand “unpa.Cosmetics”.
LYCL’s strength lies in its business model where they analyze and make use of the data collected in UNPA (which has been downloaded over 2 million times) to extract consumer insights. Based on those insights they produce their own products with a high likelihood of becoming popular and rapidly inject them into the market through a cyclic process. Past hits include their lip scrub Bubi Bubi Lip, which was developed through analyzing the data of around a million users, became a million-seller.
In other words, LYCL is a startup with the double strengths of having a platform and its brand. It was due to these strengths that LYCL was selected in the first term of NX and also became the only company to receive funding for two years in a row.
“At LYCL we predict the next trends and demands from the popular keywords that come out of UNPA and surveys taken with users and use this data in developing new products for our brand. So far, along with Bubi Bubi Lip, our Cha Cha Toothpaste has also become a hit.” (Han)
Bubi Bubi Lip was a product that really grasped the opinions and frustrations consumers had about existing products. When keratin accumulates on the lips, lipstick colors lose their vividness. Normally in these situations, people use an exfoliator, although doing so results in a painful prickly sensation. Having recognized this issue through UNPA’s data, LYCL endeavored to make a product that produces a foam that makes keratin soften and become easier to remove, and the result was Bubi Bubi Lip.
Cha Cha Toothpaste, on the other hand, has charcoal powder mixed in, and both the paste and its box are colored black. The idea to develop a product so different from the status quo — that allowed users to brush their teeth with a pitch-black paste — also came from the feedback of UNPA users.
A trend rose in the US and Europe where people use charcoal to brush their teeth, taking advantage of the whitening effect from activated charcoal. This became a hot topic on the platform, prompting LYCL to launch their black toothpaste. The product’s visual impact and the element of surprise caused it to become a huge hit, with 1.51 million units being sold in South Korea alone.
LYCL’s business model of dovetailing the customer-attracting ability and data of their information platform with their ability to develop products in-house is also one of the reasons Beiersdorf holds them in such high esteem. “LYCL is one of our best practices of NX, with two funding rounds from Beiersdorf. The first round of funding was progressed through NX, and the amount of the follow-on investment was 5 million USD in collaboration with Lotte Group”, Brozda shares.
These days the trend is to automate data analysis by using artificial intelligence (AI). In contrast, LYCL is using human judgment to pick out insights that AI can’t find so easily. This isn’t just the data that can be seen from labels such as attributes, they’re also sorting keywords out of comments and digging up potential needs by scanning through user surveys. This ability to thoroughly analyze data is another one of LYCL’s strengths.
Accelerating mutual success for LYCL and NX
Beiersdorf is sparing no effort in supporting LYCL’s growth, and these supporting initiatives can be split into two categories: product development and sales expansion.
LYCL isn’t just on the receiving end of support. On November 18, Beiersdorf launched its new premium face care brand CHAUL in South Korea. It is the first Beiersdorf brand exclusively developed and launched in Asia. For CHAUL, both companies worked closely together across all development stages, including consumer research through the UNPA platform, packaging design, digital marketing and the D2C business model.
“I believe CHAUL is the best practice to demonstrate the win-win partnership between Beiersdorf and our NX startups.” (Brozda)
Due to their experience of operating a consumer platform, LYCL has built up an abundance of knowledge on product launching and digital strategies using D2C channels such as unpa.Cometics’ official site. However, Beiersdorf with their experience in deploying products across an offline distribution network in South Korea and global markets — and which they established with their NIVEA brand — believes they have what it takes to realize the next stage of growth.
Han says that “Brands and companies that excel at digital technologies are able to attain a certain level of success with the D2C model. However, in order to reach sustainable levels of growth, they need to step up further by, for example, building a tight offline sales network. Overseas markets have a particularly high barrier. Up until now in South Korea’s beauty industry, the mainstream approach was to mostly expand into the Chinese market through duty-free stores. However, the pandemic has made that method difficult and we’ve entered a new phase.” This means it’s reassuring to have the support of Beiersdorf, which owns markets around the world.
For LYCL, which plans to actively expand into the global market, their domestic business acts as both a way to develop a new product and to conduct marketing optimization. In South Korea, they can accumulate data, understand demand, and form new trends. Beiersdorf is also planning to fully support LYCL’s global expansion. They will share their business expertise not only with regards to the overall market but also the considerations required for each country and area, R&D, marketing, and sales.
Brozda says, “We plan to use our global resources to not only support LYCL but also support the growth of our NX startups. Our key objective is to build long-term partnerships”. With this, Brozda emphasizes that Beiersdorf views the acceleration program not as a short-term initiative, but as means to build long-term relationships with the NX startups.
NX itself is driven by the vision to become the Number 1 beauty accelerator program in Asia by 2022. The success of LYCL with active support of Beiersdorf, is the ideal way to reach the goals of both companies.
Text: Ching Li Tor
Original text (Japanese): Jonggi HA
