Last year, AmorePacific lost its No. 1 cosmetics firm position in sales in Korea to LG Household & Health Care (LG H&H) after reporting US$4.4 billion in sales compared to the latter’s US$4.9 billion.
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In response, AmorePacific declared that it would go all-out in its online business to reclaim its former title, while LG H&H promised to maintain its current position through global diversification.
Until recently, AmorePacific had decided not to focus on the e-commerce sector as it believed it would have to offer discounts for online products, which could impact sales at its physical outlets. Franchisees of its sub-label skincare brands also agreed with this strategy.
However, the company has no choice now, especially after its Chinese market was struck hard by the COVID-19 pandemic; although the situation enabled the online cosmetics market to flourish at the same time.
In March, AmorePacific established a new digital sales team and started to sell promotional products online both in Korea and China. Two months earlier, it offered its premium brand Sulwhasoo products on a live e-commerce platform, and achieved US$142,638 in sales in one hour.
“We are aiming to increase revenue from our premium brands via e-commerce by at least 30 percent this year,” an AmorePacific official said.
LG H&H’s strategy, on the other hand, is to target a broader international customer base through global expansion.
The firm is targeting the North American market first through New Avon, which it acquired in 2019. It will use New Avon’s local retail channels to sell its Belif and Beyond brands.
LG H&H also secured a business license to sell Physiogel’s skin care products, and is targeting the Chinese market with the brand.
Physiogel’s business performance in the Chinese market will decide which among the two corporate cosmetic giants wins. AmorePacific’s sales coming from China make up 80 percent of its overseas sales, while LG H&H’s sales there constitute 50 percent.
The Chinese market is back on track again as cosmetics sales there grew by 40 percent between January and February compared to the same period last year.
AmorePacific closed 200 stores in China last year; but this year is looking for opportunities through online shopping platforms such as Tmall.
LG H&H saw its online cosmetics business in China soar 21 percent in 2020, and will focus on selling premium brands there this year.
“Whether local cosmetics brands will be able to accomplish a third boom will depend on their performance in the Chinese market,” said Daishin Securities researcher Han Yoo-jung.
(Source: Korea Times)