Korean cosmetics are a very popular product that is sold mainly through social networks. In this article we will tell you how to open a Korean cosmetics store on Instagram with a minimal budget.
Today, online platforms are a promising direction in the field of sales. And among them, Instagram is the most popular and competitive platform in 2020. But difficulties do not stop entrepreneurs: the number of Instagram stores continues to grow, and here’s why:
- Creating a store based on Instagram requires minimal investment: you save on domain registration, website development and hosting fees. All you need to do is register an account on a social network and fill it out;
- For an online store, it is not necessary to purchase goods at the start. You can publish products and immediately track demand for them. And make purchases of those items that are of interest to buyers;
- Cosmetics - refers to products that fit perfectly on Instagram: both in terms of visuals and target audience;
- Instagram has a convenient system of communication with subscribers. And this is very important for a cosmetics store, where a client may need a personal consultation and an individual selection of cosmetics;
- Korean cosmetics are very popular on Instagram - this means a wide range of consumers and a large selection of bloggers who can advertise your store;
- Instagram is the launching pad for your business. By developing your store on a social network, you can plan to open your website or a real retail outlet.
We wrote about the general principles of trading on Instagram here, now we’ll take a closer look at cosmetics.
Market analysis
Currently, cosmetics are one of the most popular products. The Russian market for cosmetic products is growing every year, while the online trading sector is actively developing. According to marketing research, about 50% of online shoppers have made an online purchase of cosmetics. Every month the Yandex search engine processes more than 2 million requests for “cosmetics”.
Why Korean cosmetics? Korean cosmetics appeared on the domestic market in 2009-2010 and immediately won over buyers.
- The growth rate of Korean cosmetics is increasing every year.
Sales volumes of Korean products reach up to 17% of total cosmetics sales. This is an impressive result;
- Korean skin care system involves several stages
, so buyers usually purchase not just one product, but a whole complex.
- low cost.
Compared to luxury cosmetics, Korean cosmetics have very affordable prices. Good value for money makes Korean products so popular;
- different price segment.
Korean cosmetics are so diverse that they take into account the interests of consumers with different incomes. The products include both budget options and luxury cosmetics. At the same time, there is a wide choice in each price segment. Thus, your store can organically combine products for different categories of consumers, which expands the range of potential audiences;
- quality.
In Korean cosmetics, consumers value natural ingredients and high quality. The product has already been rated by customers, so you don’t have to prove anything to them or take risks. You can be sure that you are selling a quality product, and your customers will be satisfied.
Let's take a step-by-step look at how to open a Korean cosmetics store on Instagram.
What are the advantages of multi-brand cosmetics suppliers?
Next, we’ll look at why it’s better to choose a multi-brand cosmetics supplier rather than a mono-brand one, and how this will help increase sales and reduce costs.
- Reliability;
When a cosmetics supplier has several product lines, the beauty salon will be able to offer customers various products. - Simplification of doing business;
If you choose several mono-brand cosmetics suppliers for cooperation, this will complicate the process of doing business. If you decide to work with a multi-brand supplier, it will be easier to increase profits and reach a wider segment of customers. - Opportunity to offer an alternative;
If the product the client needs is not available, the specialist will always be able to offer a similar product from the supplier. Subsequent discounts and product turnover depend on this. - Unified payment system;
Each cosmetics supplier prefers a different payment option, and accordingly, the beauty salon adapts to it. If you cooperate with one distributor, you will have a single payment system, which has a positive effect on business profits. - Wider range;
If a cosmetics supplier offers products for various purposes (for example, hair care products, body care products, face care products, etc.), then most likely the client will not go to another salon to buy the desired product. If the salon does not sell, say, a facial moisturizer, the client will be forced to purchase it elsewhere or order it online. A cosmetics supplier can also provide children's and men's products - this will help increase the profit of your salon. - General discount on all products;
When there are many suppliers of cosmetics, it is labor-intensive to negotiate a discount with everyone. Some will agree to reduce the price by ten percent, while others will refuse to provide a discount at all. It is easier to cooperate with a multi-brand company. As a rule, in this case, the supplier provides a general discount, which increases the profit of the beauty salon. Since product demand is difficult to predict, a blanket discount allows the salon to meet its purchasing obligations across brands. - Lack of competition between brands;
You should not sell products from competing brands, otherwise internal competition between the lines is inevitable. When the assortment of goods is selected correctly, the salon presents different directions and different pricing policies. “Rob Peter to pay Paul” (rob Peter to pay Paul) - this is exactly what happens when selling products from competing brands. It is extremely rare for beauty salon owners to sell many products of similar brands, because this is unlikely to have a good effect on profits. Most salons follow the 20/80 rule. - Single source of information;
If you have five brands represented in your salon, then each time you will have to call five contact people to find out about new products and prices. When problems arise, managers are usually difficult to find. It is much better when you have one cosmetics supplier. Accordingly, there is only one manager from whom you can find out all the information you need on brands. You can save time and also minimize misunderstandings. More cosmetics suppliers do not mean better. - Simplification of staff training;
When there are several suppliers of cosmetics, technologists from companies conduct training in different ways: each has its own way of conveying information, its own training schedule, etc. If there is only one technologist, he knows all the brands and can easily answer questions about the products provided to you and your specialists. You can save a lot of effort and time, increase the profit and efficiency of your beauty salon. - Saving time on deliveries;
The salon administrator takes a lot of time to accept delivery of goods, check the order with the delivery, check whether the products were damaged during transportation, and also sign invoices. At this time, you still need to have time to accept payments from clients, answer calls and greet new visitors. And when there are several brands, this time increases significantly. When working with one cosmetics supplier, the driver will deliver you products from all brands at once. The administrator has time to serve clients.
How much can you earn on Korean cosmetics?
It is difficult to name specific amounts, since your profit will depend on the initial project budget, the chosen niche, and business strategy. And the initial investments mainly consist of: costs for creating content, advertising an account, small expenses that add up to significant amounts: registering a business, searching for suppliers, test purchases, delivery costs, etc.
Your profit can be from 10 thousand rubles to 1 million rubles per month. But if we talk about average indicators, then a more or less promoted store on Instagram can bring in 100-200 thousand rubles in profit per month.
Korean cosmetics are a popular product with a good markup, and the demand for products is growing year by year. So the business is profitable and promising. The main thing is to find your buyer.
Difficulties of a novice owner of a Korean cosmetics store:
- Competitors.
The cosmetics market is highly competitive. And if you can still fight with direct competitors, then it is useless with large chain stores.
- Increase in prices from suppliers.
The growth may be caused by the economic situation or increased demand.
- Difficulty attracting buyers.
High-quality advertising requires serious cash injections, which a beginner does not have at the start. Or it may turn out that the purchased advertising did not produce the expected effect.
- Incorrectly selected assortment.
Many Korean new products have not taken root in the Russian market, so it is important to analyze consumer demand before forming an assortment.
What requirements must a supplier of professional cosmetics meet?
It turns out that you can search for a cosmetics supplier on social networks, through advertising and on the Internet.
But still, the best option is to start cooperation at a professional exhibition, because that is where you can get to know the brand you are interested in as closely as possible. Particular attention should be paid to the following aspects:
- Price policy
. It must be acceptable to you; - Product composition
. Different products have different requirements. But you should always pay attention to the composition; - Availability of certificates
; - Availability of products in stock;
- Efficiency of work
. Efficiency refers to the speed of order processing, collection and delivery; - Availability of support service. It’s a big plus if the cosmetics supplier provides clients with consultations, testers, reference materials, samples, etc. Some suppliers conduct seminars where they talk about the features of the brand;
- Reputation of the cosmetics supplier
. There should be a lot of positive reviews about the brand (at least more than negative ones). Also, the brand must conquer a certain part of the market; - Product labeling;
- Compliance with product expiration dates;
- Activity of company managers
. It consists of timely information about new products, discounts and promotions; - Cosmetics safety
. Obviously, the goods purchased must be safe for health, without side effects, with minimal risk of allergies;
Each product has a label, in other words, complete information about the product. The manufacturer is obliged to record the name, purpose, country of origin, date of manufacture, composition, expiration date, methods of use, as well as precautions if necessary.
Read the material on the topic: Increasing sales in a beauty salon: 10 effective techniques
Many beauty salon owners prefer to cooperate with cosmetics suppliers of famous brands. But there are many not very famous companies that sell quality goods at better prices.
How to start a Korean cosmetics business
So, the question of where to look for suppliers has been resolved, but the first step to starting your own business should, of course, be its registration. To begin with, it is worth deciding on two points:
- What batches of goods are planned to be dealt with? For the development of large and medium-sized businesses, it is necessary to create an LLC; for small stores, an individual entrepreneur is sufficient.
- Where you plan to trade - for selling cosmetics in regular stores, you can select OKVED code 52.33, and for online trading you must also open category 47.91.1.
In most cases, at the initial stage, you can do without a full-time accountant, conducting all financial transactions yourself (especially for individual entrepreneurs). In the future, you can either hire a specialist on staff or use the services of accounting firms.
After registering a business, you need to open a current account, and then you can rent or purchase a trading platform. If this is an offline store, places in large shopping centers, near beauty salons, and in busy areas of the city are suitable for selling cosmetics. It is worth considering that the main target group will be women.
Important requirements for premises for a cosmetics store:
- fresh renovation,
- good lighting,
- presence of mirrors,
- minimalistic design.
It is important that nothing distracts customers from choosing a product, but at the same time they should feel comfortable. It is optimal if the store has samples of cosmetic products, as well as the opportunity to test them on site.
What is better: a regular store or online trading?
Both formats are suitable for starting a Korean cosmetics business, but each of them has its own characteristics. On the one hand, opening an online store is easier in terms of time and material costs. It is also possible to avoid the preparation of certain documents - for example, permission from the fire inspectorate. Another advantage is that an online store allows distance trading and does not require a permanent presence in a particular city. But it is worth considering that a number of consumers rarely make online purchases due to the inability to look at and touch an unfamiliar product.
Regular stores have their own advantages. Firstly, this is a constant traffic of customers - if the outlet is located in a busy place, they will come in even without any effort to attract. Secondly, at the initial stage, the owner can carry out the entire sales process independently - he does not need the services of transport companies or a courier to deliver the goods to the client. Finally, regular stores have more opportunities to offer new goods unfamiliar to the general public due to the presence of samples in the store.
Business for three: how to make money on personalized cosmetics
Natalya Martynova, Kristina Farberova and Dina Berezina worked in different fields, and then decided to combine their competencies on one project. This is how a chemist-financier, journalist and product manager created the first personalized cosmetics service in Russia, Openface. The company started with the production of serums, but in the future plans to develop a full range of individual care products. The founders of the project told Biz360.ru how to find a foreign investor and why Instagram has a bad influence on the perception of cosmetics.
Dossier
Natalia Martynova
,
Kristina Farberova
,
Dina Berezina
are entrepreneurs from Moscow, co-owners of a skin analysis and personalized cosmetics service. Natalia is 30 years old, has two higher educations - she graduated from the Chemistry Department of Moscow State University and the Higher School of Economics. Kristina is 30 years old and graduated from the Faculty of Journalism of Novosibirsk State University. Dina is 33 years old and graduated from the Institute of Advertising and Public Relations at the Novosibirsk Pedagogical University. The Openface service was launched in 2020.
How it all began
Christina
: Dina and I were colleagues for a long time - we worked together at the IT company 2GIS, then at the startup Shelly (a service for calling a beauty specialist to your home or office). At some point, I was fascinated by the idea of personalization in various areas - individual services and products tailored to everyone. Personalization carries the right message: the focus is on a specific person.
Openface was founded on this idea, a service that analyzes the condition of the skin and selects effective cosmetic products. I told Dina about the idea, she began helping me with the first hypotheses in parallel with my main work. Then, at a party in the entrepreneurial community, I met Natasha.
Natalia
: Before that, I worked for seven years at , a large Russian manufacturer and distributor of cosmetics. Then she was the financial director at the educational startup Kodabra. I liked Christina’s idea: when you work in the FMCG field for many years, you understand how analog and conservative the business is. The task of bringing some kind of digital into it is very interesting.
Christina
: For a long time, Natasha, as a true philanthropist, consulted Openface for free. She developed the first financial model and helped with various tests and hypotheses. And subsequently she became the third partner in the project.
Especially for you
Natalia
: From the very beginning we understood quite clearly what needed to be done. Openface has three major components: manufacturing and chemistry, IT and data science, and product + communications + packaging. We began to work on them in parallel: we found chemical technologists, selected production and packaging, and involved dermatologists and other specialists.
The hypothesis we started from is the following: no one really knows what kind of skin they have and what kind of care it needs. We decided to invite people to study their personal needs for leather and create an appropriate product that would solve exactly their problem.
Christina
: To do this, the client takes an online test, which was compiled and calculated by dermatologists and analysts, uploads a photo of his face, then they contact him and clarify the input data. Next, the active ingredients for the serum are selected for the person. After about a week, it arrives to the buyer by mail or courier.
Initially, we planned to produce our products in sets that would include a personal cleanser, moisturizer and functional product (serum). However, we decided to start with serums, since at the start we didn’t have much money and we needed to test how popular the product was in general. It is right from the point of view of a young company to act gradually. Full sets are in our immediate plans.
Scientific approach
Natalia
: Serum is a product that contains a slightly higher concentration of active ingredients than, for example, cream. Serums are very common in Korea and Japan, and now they are gradually conquering the West. All our products cost the same, regardless of composition - 1,690 rubles for a subscription or 1,990 rubles for a one-time purchase.
Christina
: It is important to understand: personalization is, first of all, analysis and accurate selection. Selection of ingredients, texture, concentration specifically for you.
We do not brew each whey separately. The first reason is for safety reasons: every product must be certified, and this takes time. The second reason: we work only with components that have proven effectiveness, and their quantity is limited. Possible combinations and concentrations of these substances are also limited. We have built a matrix of possible effective combinations and are working on it.
We are constantly developing new formulas: tests and brewing take place every month. We leave some as they are, others we refine – and in the end we select for the client a combination of assets that has already been verified and certified. About once a quarter we review the matrix and change something in it.
Natalia
: For the same reason, we do not have any magical, rare or prohibited ingredients in our products. Because each component must pass many different tests before it can be put into production. We use raw materials that have already passed all the necessary tests.
Christina
: True personalization is not about having a unique potion brewed just for you. The point is that you receive the most effective product focused on you that will solve the problem of your skin.
Consult the algorithm
Christina
: At the start, we brought dermatologists into the team who helped us refine the testing methodology. Then chemists joined in to work with the formulas of our products and tests. And, of course, developers, because most of the functionality of our product cannot work only on the website builder. Any personalization and targeting requires more complex systems.
When we collected a sufficient amount of data (more than 5 thousand completed questionnaires from clients), we involved a data scientist in the project. He deals with marking and analyzing data, building models and algorithms.
We are creating the first version of the Openface algorithm to imitate the way a dermatologist thinks. It takes into account the data that a specialist usually relies on to draw conclusions about the condition of the skin and decide on the prescription of a specific care product.
As we accumulate more customer data by combining online test responses and uploaded selfies, we apply machine learning algorithms. These algorithms allow you to train a program to find patterns in data by showing it many examples. If there are enough such examples, then the model can learn to recognize such patterns at the level of a highly qualified specialist.
Feedback from dermatology experts and our customers allows us to continually evaluate the accuracy of our models and find examples that help them learn faster. The more clients use our services and provide feedback, the more advanced our algorithms become in determining skin type and recommending proper care.
Part of our team works on projects (for example, programmers and chemists). Some are on full time. The same chemists do not need to sit with us all the time: they prepare formulas and conduct tests in the laboratory when required.
Non-standard cooking
Natalia
: It didn’t take long to look for a production site, since we already knew about all the options. We chose Podolsk, where the products of many Russian cosmetic brands are produced. This enterprise is one of the few in Russia operating under the European GMP quality certificate. We needed a production facility with very small cooking kettles (due to the specifics of our product) and a suitable level of quality.
Christina
: We are a non-standard project for cosmetic production, since we brew often, in very small batches and overcook a lot. This is due to the fact that our entire system is designed for feedback. We receive a lot of input data from users, and based on them we constantly fine-tune the system.
For example, when a person buys our product, he is then “touched” at different stages. We ask for feedback and find out how the client interacts with the serum, what sensations and results they have. Then we collect this data, analyze it and understand that some things need to be redone/scaled/removed.
All this makes our production cycle non-classical compared to how cosmetics are usually produced.
On the way to ideal
Natalia
: We do not work on the principle “if you buy a jar of funds, then do whatever you want,” we are focused on results. Therefore, we give our customers a lot of support, pay great attention to the content on our digital platforms, and talk about how to use our products correctly.
We send about 300-350 orders per month and today we already know exactly what the share of satisfied customers is – 77%. Among those who have not reported their satisfaction, there are those who simply do not respond to our messages, and there are people who give us reason to improve our work with their expectations.
Christina
: Instagram is making adjustments to the way people perceive themselves: we want our skin to be the same as it appears under the filters in the photo - not only without flaws, but even without pores. This doesn’t happen in life, but people have gotten used to it. Serum cannot remove pores because skin without them does not exist.
Natalia
: Plus there is this point: cosmetics have no effect on the body’s metabolism. It works on the surface of the skin. What can serums do? Moisturize, remove shallow pigmentation, correct oily shine, get rid of acne (only those types that reach moderate severity), make some wrinkles less noticeable and smooth the skin, give it an even tone, remove small pimples.
However, sometimes people see problems in themselves that are not real. For example, sebum lines the inside of the pores - and that’s where it should be. But the client may want the pores to become hollow. But this is impossible, and in general it is not necessary.
Angels and Demons
Natalia
: The average volume of one batch of whey in our production is from 100 to 500 pieces. Taking into account the specifics of the project, it is important to understand that we brew at different times and in different batches. Revenue today is about 600-700 thousand rubles per month. Of course, this is just the beginning.
Christina
: At the start, two business angels helped us - together they provided the project with 4 million rubles. We also invested our own funds. This was our starting capital. One of these investors is from Russia, the other is from the USA. While we found them, we walked around the Russian venture capital market quite a bit. We used contacts that remained from previous places of work.
We met with Russian funds that were ready to give us money, but in our country the venture investment model is quite enslaving. For a small amount of investment, you will give away a significant part of your project, which will paralyze the further development of the company.
We managed to find investors who received small shares in the project, but at the same time joined it with their expertise; and as a result we get productive synergy. In general, we were lucky with them.
Self-isolation didn’t hurt
Christina
: Since Openface is a rather unusual project, many media outlets wrote about its start - this is how we got good media coverage. We also maintain accounts on Facebook and Instagram for promotion, and use targeting and bloggers. At the same time, we place a big emphasis on content - we create useful newsletters, live broadcasts with chemists and dermatologists in stories, and write articles for the blog.
Our marketing budget is still small, depending on our current goals. For example, during the self-isolation period, we completely turned off paid marketing because it worked less effectively than other channels. In general, by the way, the quarantine had almost no impact on the project, since only a small number of our processes take place offline.
We recently launched a subscription to our serums. According to it, you receive a new bottle every two months - either with the same composition or with a different one - to solve some new problem.
In the future, we intend to develop the range so that a person can receive complete care from us. There are also plans to enter foreign markets.
Heading to the West
Christina
: In September we completed acceleration in the Lithuanian Baltic Sandbox, after which we began the process of opening a company in Lithuania. Unfortunately, due to the pandemic, we were unable to complete it. But now they have resumed and resolved most of the issues (account, legal address, etc.). After this, European investments will go into the project and we will test our hypotheses on product sales in Europe.
There are no projects similar to ours in Russia. There are some in the US, but they are more focused on acne treatments, or organic cosmetics.
Natalia
: I can say this about organic cosmetics. Natural ingredients, firstly, are guaranteed to be less effective. Because chemists specifically design molecules so that they work for your skin, but nature does not have such a goal. Secondly, they are guaranteed to be more allergenic - all for the same reason: nature does not have the task of making anything hypoallergenic. Thirdly, it is much more difficult to control the quality of any organic substrate - the same lavender extract always turns out different depending on many factors. And this, again, makes the effect less predictable.
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