South Korea’s Olive Young set on the overseas market with their online stores
Olive Young is by far the most popular store in South Korea for buying cosmetics, but since 2018, the franchise has been refraining from opening new stores both domestically and overseas, instead of concentrating on strengthening their online presence.
Olive Young can be considered similar to the drug stores we have in Japan. However, as per South Korea’s Pharmaceutical Affairs Law which only permits licensed pharmacies to handle medicines, Olive Young falls instead into the “Health & Beauty (H&B) store” category. H&B stores generally deal in cosmetics, health foods and a variety of foods and drinks. With this range of products, Olive Young stores play an everyday role in the lives of South Koreans as places they can casually drop in to pick up a few items.
Since their first store opened in Seoul in 1999, they’ve expanded to 1,203 stores, the most of any H&B franchise in South Korea. Rivals Lalavla (previously Watsons) and Lohb’s only have 168 and 125 stores respectively (as of January 1, 2019), making Olive Young the unrivaled industry heavyweight, representing over half of all H&B stores in the country.
One reason for Olive Young’s growth has been their relentless opening of more and more stores, backed by the financial might of CJ Corporation. Another reason is how they design their stores to suit the location. For instance, in their Myeongdong store, which regularly sees great numbers of foreign tourists, the first floor has been made to focus on basic skincare products that are popular with tourists as souvenirs, such as facial sheet masks, and this setup has led to a 22% increase in sales.
A third reason is how they’ve fostered new brands to help bring originality to Olive Young’s inventory. They’ve actively searched for and fostered emerging brands by utilizing their strong marketing capabilities, and have developed PB (private brands) such as Wakemake. For up-and-coming brands in South Korea, it is becoming a standard journey to first try selling by themselves online, then, once they get a certain amount of response, begin selling with Olive Young, from which point their reputation sees a sudden boost.
Lilybyred, famous for their lip tints, have employed male models in their advertisements, despite being a makeup brand, and since releasing their goods at Olive Young have become increasingly popular. South Korean media reports that Lilybyred’s sales recently saw a 30% increase from the previous year.
Also, popular brands Dr. Jart+ and Isoi, which have their directly-managed street-level stores, have been offering products exclusively to Olive Young and even bringing out Olive Young-inspired original products, forging a close relationship with the franchise.
However, the vigorous store-opening in South Korea that has fueled Olive Young’s growth has been put on pause as of 2018. Currently, while they also restructure their overseas stores, they’re changing direction towards a mostly online-based promotional strategy for both their domestic and overseas businesses. In May 2019, they opened their online-exclusive “Premium Hall” site that sells famous overseas brands, and also started selling their own popular PB Roundaround on Amazon’s US site.
In May, Olive Young started selling their products on one of Japan’s biggest online stores, Rakuten. These include over 500 products from 51 different brands, including Wakemake, 3CE, and AHC. It’s anticipated that this will be a great opportunity for the products of emerging South Korean brands to make their way into the Japanese market.
Another endeavor has been the opening in May of Olive Young’s global online shopping site, the first of its kind for a South Korean H&B store. Their chief target is the United States, which has the largest health and beauty market in the world, and also plenty of K-beauty fans. Other than the US, the site is accessible to 150 countries around the world — excluding the EU* — and shipping is free for purchases of over US$50. The site was launched first in English, with versions in Chinese, Japanese, and Spanish scheduled to follow. The range of products features many low-priced items, such as sheet masks available by the piece (starting from US$2), and the site showcases an ease-of-use that makes finding and buying new items you’ve never seen before an effortless task.
* Due to a matter concerning the GDPR (General Data Protection Regulation), access from European countries is unavailable.
While in South Korea Olive Young is synonymous with H&B stores, whether the franchise can grow to become known globally as the number one place to go for K-beauty is something that remains to be seen.
Text: Tor Ching Li
Original text (Japanese): Manachrome and BeautyTech.jp
