K-beauty startup Memebox relaunched the U.S. e-commerce portion of its website on Wednesday, after putting it on hold last year to focus on building a community of sellers and launching partnerships with key retailers.
Memebox has undergone a tumultuous few years since it helped usher in the K-beauty consumer craze — along with other e-commerce sites like Soko Glam and Glow Recipe — when it launched in 2012. The website initially began in South Korea as a subscription box, before branching out into the U.S. in 2014 as a one-stop shop for K-beauty with hundreds of brands on its website. The startup scooped up $160 million in funding along the way and became the first Korean company accepted into the prestigious Y Combinator accelerator program, before closing its e-commerce shop and affiliated offerings in the U.S. in May 2017.
Now, the U.S. site — scrubbed free of outside brands for direct purchase — has shifted to become something akin to Sephora reviews on steroids: Customers in the “Insider Access” program can not only see what influencers like The Beauty Vanity (who has 32 thousand followers on Instagram) or KoreanLovesBeauty (who has over 50 thousand YouTube subscribers) are suggesting, but also read reviews, see ingredients and discover where to purchase the product on a third-party site.
The business model now largely centers on affiliate links directing people to third-party sites like Amazon, Urban Outfitters or iHerb.com. Influencers in the program are only getting a percentage on Memebox private label brands I Dew Care & Nooni at this time, not affiliated links, but can make five to 10 percent commission on the private label sales. Customers can also directly purchase Memebox’s own products, see trending products, view personalized content and share their own.
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Here’s a breakdown of the company’s strategy, as it stands.
Streamlining for survival
“One of the reasons we stopped selling [outside brands] was to pursue the community direction,” said Danielle Zhu, product manager for Memebox. “That’s why we took the last year to transition away from e-commerce and drive education of [K-beauty] products, and we did a lot of experimenting.”
But there were other reasons Memebox stopped selling third-party products. With only 400 employees globally, the company couldn’t keep up. The company was sourcing products, importing them, translating packaging and educating consumers on how to use products for small Korean brands that didn’t have the resources to do it themselves. It took a toll on the company.
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Despite dropping those brands, the site’s users and time spent on the site has remained steady: It has approximately 5 million global users, the same as this time last year, and the average time users are spending on the site has grown to around 25 minutes, said Dino Ha, Memebox co-founder and CEO. He noted that bringing back third-party brands remains an option.
“We still have all the [brand] connections, but we will let the community decide on that part,” he said. “It’s only been a day, so we are looking for community feedback.”
Leaning on Ulta and Sephora
Without third-party partners, Memebox has started to branch out with its own products, both online and through retail partnerships.
In June 2017, a month after e-commerce sales halted, Memebox launched I Dew Care — a rebrand of its bon vivant label — exclusively at Ulta Beauty and brought its other private label, Nooni, to 300 Ulta locations. This fall, Memebox is releasing a new product line at Sephora, which it created with the retailer.
“The one thing to emphasize here is that Sephora and the Memebox team got together and designed it from scratch. We wanted to take a different approach on more than just lip or eye makeup. We wanted to create an experiential makeup brand,” he said, declining to provide further details other than that the number of SKUs is still being determined.
K-beauty is a huge market in the U.S. and one that retailers like Ulta and Sephora have been eager to get into. In 2015, South Korea’s beauty exports to the U.S. grew 59 percent, reaching $207 million, according to a report from market research group Euromonitor International. Sephora even has a dedicated K-beauty section on its site and in stores.
In addition to Nooni and I Dew Care, Memebox has private labels I’m Meme, Pony Effect and Shine Easy Glam, which are currently available exclusively on its Asian websites but will be available in the U.S. beginning in July. Additionally, the company is considering products outside of K-beauty by looking at what influencers are tagging and what users are searching for.
A Memebox ambassador’s My Shop page
Arming ambassadors to sell
Finally, Memebox is arming ambassadors with the tools it needs to effectively sell product. Ambassador can create their own branded shop page reflective of their style and gives them full control over their personal branding as well as their favorite products from Memebox’s e-comm selection.
Additionally, they have access to a great deal of data — not only can they view how much money they are making and the engagement of posts on their individual “My Shop” pages, but they can also see what products they’re selling best, and to shoppers of what age range, what skin type and more.
There are 50 ambassadors on the platform, which are set to grow to 350 by the end of June and one thousand by the end of the year, Ha said.
“The user data and information is something we will rely on more,” he said.
