|B2LiNK CEO Lee So-hyung / Courtesy of B2LiNK|
B2LiNK seeking to create global network for beauty brands
By Jun Ji-hye
B2LiNK, a Seoul-based startup founded in 2014, has since provided a sales platform and marketing consultation for local skincare and makeup brands that want to export their products.
CEO Lee So-hyung said his company plays a bridging role for Korean beauty brands to make inroads abroad, noting that the role of the company is similar to that of publishers in the game industry or distributors in the movie industry.
The K-beauty IT platform provider first targeted the Chinese market and then moved on to the U.S., achieving meaningful results in both. In 2018 alone, the startup had an aggregate turnover of 100 billion won ($85 million).
Lee attributed the achievement to the firm's rich, accurate data that help manage commodity prices, establish marketing strategies and decide on distribution channels easily and effectively.
"When setting prices of products, companies need to collect various information such as prices of other products in their peer group, and differences in prices between online and offline markets. In the past, there were no effective tools to collect such information, so beauty brands had to set prices roughly at the beginning and then adjust them in between depending on the situation," Lee said in a recent interview with The Korea Times.
"Now, our data enables our partner companies to establish a pricing strategy more effectively, and monitor whether the prices are maintained afterward."
Lee said the data can also be used in carrying out marketing activities and deciding on distribution channels as it offers effect analysis.
The startup set up a branch in China in 2015 a year after its foundation, selecting the country as an initial target market.
Lee said he made the decision as he found that Korean beauty brands were experiencing difficulties in exporting their products to China due to complicated customs procedures and the lack of effective delivery systems, though the popularity of Korean skincare and makeup products was growing among Chinese consumers.
"An increasing number of Chinese consumers became interested in buying Korean beauty products online from 2015, but the market was complicated at the time as legal and illegal retailing operations were mixed up," Lee said.
"Plus, customs procedures were so complicated, and delivery was too slow and expensive. B2LiNK helped Korean brands distribute their products safely and more effectively through official channels, while reducing delivery charges. I would say we pioneered a new way to trade."
The startup has offered consistent data-based marketing and logistics services to beauty brands, helping them continue to grow even after making inroads into the Chinese market, Lee said, noting that sales of his company grew 230 percent year-on-year even in 2017 when the market was squeezed due to Beijing's economic retaliation to protest Seoul's deployment of a U.S. Terminal High Altitude Area Defense (THAAD) system.
B2LiNK entered the U.S. market in 2017 with a branch office, and saw a rapid turnover increase from 1.5 billion won to 30 billion won in just a year.
In the first half of 2018, the firm's sales in the U.S. market accounted for 32.8 percent of the total, while that in the Chinese market accounted for 62.9 percent.
Lee said the achievement in the world's two prominent markets will lead to his company's expansion to other countries.
"The U.S. market is the world's largest beauty market that leads market trends," he said. "After our success in the United States, we have received an increasing number of inquiries from companies in Southeast Asia and Europe for partnerships."
Lee said the success in the United States was also meaningful in that his firm has reduced any business risk that may be caused by political and diplomatic issues.
Companies in Korea, which is sandwiched between China and the United States, sometime become victims of political and diplomatic conflicts ― the THAAD issue was a fairly typical case as several Korean companies suffered from China's economic retaliation following the government's decision to host the U.S. missile defense system.
"We have thriving businesses both in China and the United States, thus we can operate more stably regardless of other issues," Lee said.
B2LiNK currently has overseas branches in China, the United States, Japan and Vietnam, Lee said, adding that his firm is planning to open a new branch in Europe within the first half of next year.
Connecting retailers and beauty brands
In a bid to connect retailers and beauty brands more effectively, B2LiNK launched a business-to-business (B2B) platform, called UMMA, in May.
Lee said his firm designed the platform as part of efforts to resolve information asymmetry in the trade market.
"Buyers have had difficulties in finding products they want, while beauty brands have faced difficulties in finding appropriate retailers," Lee said. "Our B2B platform directly connects retailers and brands, enabling retailers to find necessary products with just a few clicks and be connected to brands for direct dealing."
|B2LiNK's B2B platform UMMA launched in May / Courtesy of B2LiNK|
Lee said the company will seek to consistently resolve any information asymmetry issues in the market, noting this will benefit consumers.
"If buyers are able to explore products they want more easily and take them to markets right away, distribution processes will be significantly simplified," he said. "This will reduce distortions in the pricing system."
B2LiNK has signed partnerships with more than 80 skincare and makeup brands here, and with about 60 retailers.
In a bid to achieve its long-term goal of bringing about changes in the market, the company will push for partnerships with beauty brands in other countries including the United States, Europe and Japan, beyond the K-beauty industry, Lee said.
"We want brands of all countries in which we have branches to be connected to retailers directly," he said.
Lee studied at the department of business administration of Seoul National University and worked at McKinsey & Company, the American worldwide management consulting firm, before he founded B2LiNK.
The startup has attracted about 2.7 billion won in investment from KTB China, Kolmar Korea and other major firms.