Olive Young, Daiso, Musin, Olive Young’s success strategy, and Harvard textbook. In February, a local corporation was established in LA
Since two years ago, the routes of foreign tourists visiting Korea have changed significantly. In particular, there is a must-visit place for foreign MZ generations visiting Korea. They are ‘Olive Young, Daiso, Musinsa’ and ‘All, Da, Mu’. Among them, Olive Young established a local corporation called ‘CJ Olive Young USA’ in Los Angeles in February. Recently, Harvard Business School (HBS) visited Korea last year to conduct an in-depth investigation into Olive Young and published a success storybook called Olive Young: Formulating Beauty Innovation.
“Olive Young was founded and has grown based on CJ Group’s ‘ONLYONE’ management philosophy aimed at ‘first, best, and differentiation’,” Harvard’s faculty said in the textbook. “Chairman Lee Jae-hyun’s leadership that ‘distributors should prioritize long-term partnerships based on win-win growth’ is one of the factors that made Korea the world’s fourth-largest beauty exporter.” With “K-beauty” at the forefront, Korea has become the fourth-largest beauty powerhouse in the world’s exports. Its leader, Olive Young, posted 3.8682 trillion won in sales in 2023, following a break of 2 trillion won in sales in 2021.
Olive Young’s annual sales in 2024 stood at 4.8 trillion won, now approaching 5 trillion won. Olive Young has also become a must-visit shopping place for foreign tourists visiting Korea. According to the Tourism Knowledge Information System, the number of foreign visitors to Korea in the first half of 2024 is 6 million, with 4 million foreign tourists visiting Olive Young during the same period. This means that 7 out of 10 people visit Olive Young.
“Oliveyoung’s focus on K-beauty was a variety of marketing techniques, including trendy product curation, online and offline connection, experiential and premium stores. One of them is the quick product launch and trend-leading curation that reflects customer feedback.”
Shopping attractions of overseas MZs ‘All, Da, Mu’
Since two years ago, the routes of foreign tourists visiting Korea have changed significantly. In particular, three places, Olive Young, Daiso, and Musinsa, have become attractions for foreign MZ generations who visit Korea individually, not group inbound tourists. Seongsu-dong, home to trendy brands, pop-ups, cafes, bakeries, and restaurants, has already become a “hot place” for MZs around the world, including the Musinsa store Seongsu @ Daerim Warehouse, which has become a symbol of K-fashion. Olive Young has opened a total of five stores in Seongsu-dong, including Olive Young N Seongsu. Most of those who visit this store are foreigners. They especially love “Skinfit Studio,” which checks the condition of the skin’s scalp and recommends cosmetics suitable for it, and “Makeup Studio,” which experiences Korean color makeup.
The same goes for Daiso. A cost-effective shopping list of 1,000 won to 5,000 won relieves foreign tourists of pocket worries. What Aldamu has in common is that small and medium-sized brands and new brands, which have been difficult to enter department stores or large retailers, are its main sales products. This is a new distribution innovation. This is because the platform has co-existed by becoming a kind of “encubator” of a new brand, away from simply marketing selling products. It is general store-style marketing, but it is perfect for the shopping method of the MZ generation, who want efficiency, cost-effectiveness, and proven quality of shopping.
Olive Young, which opened its first drug store in Sinsa-dong, Seoul in 1999, mainly dealt with products from large domestic manufacturers in the early days, but found new and high-quality brands. It was the MDs who played that role. They discovered hidden cosmetic brands that did not get marketing opportunities across the country, displayed and sold them in stores. Olive Young has “shared growth” with so-called delivery brands. The number of stores more than tripled from 417 in 2014 to more than 1,370 as of the end of December 2024 and the number of employees also increased from 8,800 at the end of 2022 to 13,000 at the end of 2024. The number of international membership membership amounts to 15 million.
In terms of sales, it has become an absolute powerhouse, accounting for 90% of Korea’s “Health & Beauty H&B” market. Foreign sales increased 140% in 2024 compared to 2023. The total number of foreign customers who visited Olive Young is 189, nearly 193 UN member states. The number of payments they made at Olive Young is 9.42 million, and the number of Olive Young stores they found is 1,264 times. South Korea, which increased from $1 billion in exports in 2012 to $10.2 billion in 2024, has become the world’s fourth-largest beauty exporter after France, the United States and Germany.
Curation, Global Online Mall, Quick Trend Response
There is a hidden “Korean Wave” in Olive Young’s growth. In addition, various marketing techniques such as trendy product curation, online and offline connection, experiential and premium stores were used. Olive Young displays products in categories rather than brands. In other words, all brands’ products are displayed in one place through sections divided into skincare, hair, mask packs, and sunscreen, giving customers the convenience of choosing products by comparing them easily. This increased efficiency by a strategy that broke away from the existing product exhibition formula. It also improved interest by accurately identifying the needs of foreign shoppers through SNS feeds and displaying them separately as “K-Beauty Now,” “Global Hot Issue,” and “Today’s Special Price.” In addition, he also worked hard on ‘persistence’ for foreign tourists. It encouraged 330,000 new subscribers to join the “Olive Young Global Mall” so that interest can continue even after returning home, and through this, 330,000 new subscribers joined in 2024.
The strategy of integrating online and offline also played a role. Olive Young launched a global mall in 2019 where K-beauty products can be purchased directly from more than 150 countries abroad. At the end of 2024, there are 2.46 million members, and about 15,000 products are handled. Above all, Olive Young’s strength is the diverse and new products of small and medium-sized and new brands. They quickly produced high-quality products through a trend check meeting with Olive Young’s MDs. As a result, nine of Olive Young’s top 10 brands in 2024 are small and medium-sized brands, and 61% of Olive Young’s 10 billion won sales brands are small and medium-sized brands.
Olive Young said there are a total of 100 beauty brands that have achieved annual sales of 10 billion clubs in 2024. This is the first record in 11 years since the first 10 billion club was achieved in 2013. In particular, skin care brands Torriden, Mediheal, and RoundLab have sales of more than 100 billion won. The top 10 brands in annual sales, including these brands, are also small and medium-sized companies such as Goodall, Doctor G, Rom&N, VanillaCo, Annove, and Clio.
Another strength of Olive Young is the discovery of new markets. The ‘Clean Beauty’ category, which deals with eco-friendliness and veganism, is representative. Sales of clean beauty brands have grown by about 51%, and sales of “Eating Cosmetics” and “Inner Beauty” categories created from 2023 are also growing.
Olive Young competes with Ulta in the world’s largest market in the U.S
Olive Young is now starting a new challenge. On February 9, Olive Young established a local corporation called CJ Olive Young USA in LA, USA. First of all, it is planning to raise brand awareness first, focusing on online malls rather than offline stores. The United States is the world’s largest beauty market, and various distribution chains, from luxury beauty brands around the world, are already in place.
Beauty chains such as Sephora and Ulta Beauty are already in place in the United States. Among them, Sephora’s main sales are luxury brands, slightly different from Olive Young’s business model, but Ulta Beauty has a similar structure to Olive Young. Ulta Beauty, founded in 1990, is a leading cosmetics chain in the United States and operates about 1,500 stores in the United States alone, especially about 180 stores in California alone. Ulta Beauty’s 2023 sales, which range from high-priced premium brands to affordable products, are about $11 billion, or 16.1 trillion won.
Let’s take a look at the top cosmetics brands around the world here. France’s L’Oreal ranked first with $44.5 billion, the second with Unilever, the UK with $26.5 billion, the third with Estee Lauder, the US with $15.2 billion, the fourth with US P&G with $15 billion, and the fifth with LVMH, France with $8.9 billion. In Korea, LG Household & Health Care ranked 18th with $3 billion, followed by AmorePacific with $2.9 billion. This means that Olive Young’s retail shop sales structure has some limitations. Cosmax and Kolmar Korea, the two largest mountain ranges of ODM (manufacturer development and production) in Korea, surpassed 2 trillion won in sales in 2024. Exports are worth 10.2 billion dollars.
In any case, Olive Young’s contribution to opening a new market through various marketing, coexistence with delivery brands, and innovation in curation and promoting Korea’s K-beauty to the world is clear. Now it’s time to see Olive Young’s real skills. It is settlement and success in the U.S. market. I look forward to it.
[Gwon Lee Hyun (Life Culture Columnist) Photography Kwon Lee Hyun, CJ Olive Young, Maekyung DB]
[This article is about Mail Business City Life No. 973 (25.04.01)]
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