Experts also add that as some of the marketplaces and local brands have launched similar products at more affordable ranges, K-Beauty brands might face stiff competition going ahead.
South Korean beauty products have been witnessing rapid growth recently on Indian e-commerce marketplaces such as Nykaa, Purplle and Flipkart. Aishwarya Mahesh, category director, Purplle.com, says in the last one year the sheet masks category, which is dominated by South Korean brands, grew by 27 times on its platform. Nihir Parikh, chief business officer, Nykaa.com, shares that Korean beauty brands contribute about 15% to its overall skincare sales.
While K-beauty brands have been present in the market for some time now, the growing popularity of South Korean pop and drama, widely known as K-pop and K-drama, have led to increased demand for these products in the country. Their products such as sheet masks and serums, known for their innovative ingredients such as green tea, volcanic pore, chia seeds, etc, are the largest sellers in the category. Though relatively new to India, K-Beauty products are quite popular worldwide: market research company Mintel shares that the Korean beauty industry saw $13.1 billion worth of sales worldwide in 2018.
“We are seeing encouraging growth in the K-Beauty category, on the back of trendy products and the increasing affordability of such brands. Some of the popular K-Beauty brands on Flipkart include The Face Shop, Innisfree, etc, and we are working to ramp up selection and availability,” says a Flipkart spokesperson.
Nykaa, too, has launched several K-Beauty brands in the Indian market such as Laneige, belif, TonyMoly, The Face Shop, Innisfree, Klairs, Etude House, etc. South Korean beauty company Amorepacific Group earlier in the year introduced Etude House exclusively on Nykaa. The company had introduced its brand Laneige last year, while its other brand Innisfree has been present in India since 2013 and has been sprucing up its offline presence too. Most of these companies are roping in influencers on digital media to market such products.
“We have 22 stores in India and plan to expand this further, with a shop-in-shop soon coming up in Kolkata as we want to capture the eastern and north-eastern parts of the country,” says Mini Sood Banerjee, senior manager, marketing, Innisfree.
However, despite scaling up its offline presence, the company still gets about 50% of its sales from the five online marketplaces it is present on — Nykaa, Amazon, Flipkart, Purplle and Myntra. Nykaa contributes highest to this and the company on average gets B2C (business to customer) sale of Rs 2-3 crore in a month from Nykaa. According to Sood, the company frequently introduces exclusive ranges on e-commerce sites to tap the demand there.
While tier I cities are majorly responsible for this traction, marketplaces report a growing demand for these products from tier II and beyond too, especially from the north-east, where K-Pop is very popular. “One of the most interesting trends we have noticed on Flipkart is the high demand for these skincare products outside metros, which displays how these consumers are aspirational but might be facing obstacles in accessing a large variety of affordable brands. We have seen robust demand from non-metro markets such as Assam, Nagaland and Sikkim, among others,” says a Flipkart spokesperson.
Industry watchers also say that as these products try to expand their presence in the country to smaller towns, pricing would be a key factor.
“It is difficult for these brands to understand the complex Indian market and as this makes them nervous, they may incur more distribution costs and the products may end up becoming more expensive,” says Anil Talreja, partner, Deloitte India. According to Ankur Pahwa, partner, e-commerce and consumer internet, EY India, creating awareness about their unique ingredients such as volcanic pore, sea kelp, snail slime, etc, would be another challenge for these players to build traction in tier II markets as consumers are not aware about their benefits.
Experts also add that as some of the marketplaces and local brands have launched similar products at more affordable ranges, K-Beauty brands might face stiff competition going ahead. Sheet masks ranges from Garnier and Nykaa’s private labels, for example, are priced as low as Rs 100.