Luxury beauty brands shift focus to e-commerce in Korea

Dior brand ambassador, Blackpink Jisoo

Well-known foreign luxury cosmetic brands are increasingly turning to e-commerce platforms in South Korea, moving away from relying solely on their own websites.

This change comes as growth in offline markets, such as department stores and standalone boutiques, has slowed, prompting luxury brands to move their sales channels to local online marketplaces.

According to sources on Thursday, a growing number of international high-end beauty brands have recently started selling their products on Naver’s Brand Store and KakaoTalk’s gift section.

The number of luxury beauty brands available on Naver’s Brand Store has risen from 61 in 2021 to 87 this year, with transaction volumes surging 86 percent last year compared to 2021.

Naver’s Brand Store, launched in 2020, operates on a direct-to-customer (D2C) model, allowing individual brands to set up and manage their stores within Naver, much like their own official websites.

Although luxury brands typically maintain their own e-commerce sites, they are increasingly opting to partner with popular e-commerce channels to reach a broader audience in Korea.

Notable brands from French luxury conglomerate LVMH, including Fresh, Benefit Cosmetics, Make Up For Ever, Guerlain, and Givenchy Beauty, have all established a presence on Naver’s Brand Store.

This marks Naver as the sole e-commerce platform where these LVMH brands have an official presence outside of traditional department stores and their own websites.

Brands such as Jovoy, Acqua di Parma, and Sabon are also available on both Naver and KakaoTalk’s gift platform.

Kakao introduced a luxury-specific service called LuX within its KakaoTalk Gift section in June last year.

Within a year, 118 luxury brands had joined, with 81 of them being in the fashion and beauty sectors. This platform’s advantage lies in its appeal to younger consumers and the ease of using the gift-giving feature.

Recently, Christian Dior Beauty Korea entered into a partnership with Kakao to launch exclusive products and new releases on KakaoTalk’s gift platform.

[Graphics by Song Ji-yoon and Minu Kim]

The push towards e-commerce is driven by the stagnation in sales growth through offline channels. This year, beauty sales at major department stores in Korea have seen only about a 10 percent increase. While this represents steady growth, it pales in comparison to the rapid expansion of online markets.

The primary demographic of department store shoppers is aging, with most being in their 40s and 50s. This trend is accelerating the shift to e-commerce.

At Shinsegae Department Store, the proportion of beauty product purchases by customers in their 20s and 30s has dropped from 46 percent in 2021 to 36.9 percent between January and May in 2024.

At Hyundai Department Store, customers in their 20s and 30s account for just 25.5 percent of beauty product purchases. With limited mainstream sales channels outside of department stores, luxury brands are increasingly viewing online platforms as a viable alternative.

Moreover, the decline in group tourism from China, which previously drove significant sales at major stores in Korea, has also impacted offline sales.

For instance, at Lotte Department Store’s main and Jamsil branches, the proportion of Chinese customers buying beauty products dropped from a dominant 80 percent in 2019 to 40 percent this year.