Peek inside cutthroat K-beauty market

This is the ninth in a series of columns chronicling the entrepreneurial journey of an aspiring e-commerce business owner and the ins and outs of starting an Amazon business.

By Jane Han

SEATTLE ― I received a proposal recently from a startup K-beauty brand to sell as their sole distributor in the U.S. Considering K-beauty's prolonged dominance in the U.S., the offer was pretty tempting.

So I began my feasibility research into the market.

A simple search on Google and Amazon made me immediately realize that I knew very little about K-beauty.

The few well-known brands that I'm familiar with were just the very small tip of a gigantic K-beauty iceberg.

K-beauty is definitely much bigger and far more popular than I thought.

Korean cosmetics products are now easily accessible at mainstream U.S. store chains including Target, Walmart, Sephora and Costco, to name just a few. And online, the variety and selection are even farther-reaching.

Amazon, as expected, offers the largest and most comprehensive selection with search results easily in the thousands.

K-beauty is definitely not a fleeting trend, but here to stay.

So aside from companies with direct distribution and sales, who are these businesses selling Korean cosmetics?

Many of them are apparently people like me ― individual sellers with a few years of experience doing business on e-commerce platforms.

Some of these sellers reach out to brands and make a request to purchase and distribute their products in the U.S., while some brands look for sellers to do the selling for them.

While doing my research into the beauty market, I asked around to connect with people who have experience handling cosmetics imported from Korea.

All of them have the same problem.

“The competition is insane,'' said Lin Park, who primarily sells sheet masks that are made in Korea. “Unless you have the capital to pour in on major ad campaigns, you have almost no chance of even showing up on search results.''

Park, who began selling Korean sheet masks less than a year ago, spends on average $1,000 a month on ads on Amazon and social media to attract potential shoppers to her product listings.

“I'm tempted to give up every day, but I already spent too much money, time and effort to stop now,'' she said.

Sellers usually gauge the market for at least six months to evaluate whether to discontinue or to move forward with the product.

For those in the K-beauty business, giving up may not be so easy because of the initial hurdle that is tougher than it is for other product categories.

Cosmetics and skincare products must follow many compliance requirements as well as undergo numerous rounds of mandatory lab testing to ensure safety and eligibility to be legally listed for sale.

“Selling skincare products isn't as easy as selling a pair of socks,'' said Lee Jin-wook, who runs a business based in Korea. “Checking off all the boxes to become compliant in the U.S. took at least three months for me. It felt like a huge accomplishment, but after that was when the real work began.''

He said building brand awareness is not a choice but an absolute necessity in order to survive.

And even if products do sell well, making money off of them may be another story.

“The K-beauty category is the single most difficult market to make a profit in,'' another business owner said on condition of anonymity. “It's a competition to make literally a few cents per unit.''

He said K-beauty sellers only make business tougher on each other by constantly lowering prices, forcing more competition and shaving off profits.

“I make literally 50 cents per unit on one of my serum products,'' said the seller, who imports mainly serums and moisturizers from lesser-known brands in Korea. “Korean businesses shouldn't do this to each other, but the industry is already way too saturated with too many good products priced with razor-thin margins.''

Hearing from just a few people was enough of a warning to make me think again about setting foot into the K-beauty market.

But as a consumer, it felt good to know that so many premium quality cosmetics products are being offered at a competitive price with little markup.

No wonder Korean beauty products are now everywhere in the U.S.

Beauty experts echo that Korean products have revolutionized the U.S. beauty market with innovational products like BB cream, or beauty balm, cushion compacts and most recently the under-eye sunscreen patch.

As a potential seller, the K-beauty market looks like an impossible industry to succeed in. But as a consumer and Korean living in the U.S., it gives me pride that Korean beauty products have long moved beyond the small mom-and-pop shops in Koreatown and into the mainstream market.

Jane Han (jhan@koreatimes.co.kr) is an e-commerce entrepreneur who currently owns and sells several brands of products on various online platforms. Based in Seattle, she also writes as a freelance correspondent for The Korea Times.