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Amorepacific criticized by Innisfree franchisees for unfair marketing
Innisfree franchisees stage a protest in front of Amorepacific’s headquarters in Seoul’s Yongsan District, Wednesday, demanding that the company stop excessive marketing benefits for multi-brand shopping channels that sell Innisfree products, which they say is hurting their offline sales. Courtesy of the Innisfree Franchisees’ Union
By Ko Dong-hwan
Multi-brand platforms receive more marketing benefits than offline stores
Major beauty company Amorepacific faced an angry group of Innisfree franchise owners on Wednesday, as the brand’s struggling sellers blamed the flawed marketing for their declining sales.
Some 70 franchisees protested in front of Amorepacific’s headquarters in Seoul’s Yongsan District, demanding that the company provide more practical business support and stop giving greater marketing benefits to multi-brand shopping (MBS) channels than to their offline franchise stores. Innisfree’s annual sales have steadily declined over the past few years, dropping from 552 billion won ($377 million) in 2019 to 225 billion won last year.
The frustrated sellers said Amorepacific has been giving more support to the country’s major MBS platforms that carry Innisfree products — including CJ Olive Young, Coupang and Naver Store — over their stores. They claimed that the company, "through such unfair measures, has discriminated against their offline franchise businesses."
The franchisees said that Innisfree’s Perfect Intensive Skincare set, which includes five items, sells on Coupang, the country’s largest e-commerce platform, for 32,130 won. Amorepacific supplies the same product to their offline stores for 40,700 won — about 20 percent more expensive, forcing retailers to raise prices even further to make a profit.
Store owners said the lopsided supply policy undermines the foundation of Innisfree’s franchise business. They added that it "makes more sense for customers to buy their products from Coupang, rather than getting them from the company."
Innisfree Green Tea Ceramide Milk was sold on Naver Shopping Live during a Black Friday promotion on Monday for 48,450 won, a 57 percent discount. The promotion also included free items such as cosmetic samples and a tote bag. Meanwhile, Amorepacific supplied the same product to its franchises for 62,700 won.
Franchise owners argued that they could never make a profit with such discounted pricing, criticizing Amorepacific’s large-scale online promotions and giveaway events for “seriously disrupting the franchise sector.”
Coupang promotes a discount campaign for Innisfree products in December 2023, featuring IVE’s Jang Won-young. Captured from Coupang’s website.
“The company has created a marketing structure that benefits only online platforms, leaving franchisees behind. The company is aware of this but continues to ignore it,” they said.
The franchisees also blamed Amorepacific’s 2023 Innisfree rebrand for their slumping sales, saying it failed to boost revenues. They rebranding cut the product lineup from 1,400 to 300 items, discontinuing many best- and steady-sellers, which contributed to the overall sales drop.
“Amorepacific’s support for its franchisees is only superficial. The company has increased its sample provision by 55 percent, but that amounts to just 30,000 won, which does nothing to help our businesses. It also develops and supplies certain products exclusively to CJ Olive Young, not to us. Our number of offline stores has fallen from 1,600 in 2018 to 147 this year,” franchise owners said.
Following the protest, Amorepacific said it is currently in discussions with Innisfree franchisees on how to recover customers and sales and improve its product lineup.
“MBS is now on [the] rise. To support our franchisees, we’ll help their market competitiveness against MBS channels and share sales from our official online mall with them,” an Amorepacific official said.
He added, “We signed a mutual partnership with our franchisees on Dec. 30, 2024. That also makes us responsible for discussing with the franchisees when we decide which products to put on shelves at Olive Young so that the measure won’t affect the franchisees' market competitiveness.”