AmorePacific will boost online sales in 2022

AmorePacific will boost its online sales in 2022

AmorePacific will boost online sales in 2022

Korea’s biggest beauty company is looking to expand into North America

By Kim Jae Heun

AmorePacific, Korea’s largest cosmetics maker, will increase investment to increase online sales and expand its reach in North America, in a bid to reduce its dependence on China and other Asian markets, according to company officials on Thursday.

“Our plan to boost our online business still stands in 2022,” an AmorePacific official said. “Currently, our online revenue represents around 30% of overall sales and we expect it to increase by up to 50% within the next year or two.”

In Korea, AmorePacific will focus on collaborating with local e-commerce companies such as, Ably and Musinsa, with which it can expand its retail channels. Last year, the cosmetics firm partnered with IT giants like Naver, Coupang and Kakao to help it achieve a turnaround in the fourth quarter of 2021.

The cosmetics firm will no longer open franchise stores for its affiliated brands here, but will instead introduce one or two flagship stores in Seoul to promote its brands by providing in-store customer experience with its high-end brands such as AmorePacific and Sulwhasoo.

In North America, AmorePacific will focus on the clean beauty market with its skincare brands such as Laneige, AmorePacific and Sulwhasoo. Clean beauty refers to skincare products that are “free of harmful ingredients”.

“We have already collaborated with K-pop star group BTS last year to promote our brand in the United States. We also plan to strengthen our partnership with Amazon, which local customers are fond of,” the official added.

Currently, AmorePacific’s sales from China account for 70% of Asian sales, which account for nearly 95% of its overseas revenue. The company wants to reduce its reliance on the Chinese market, but that will be a challenge.

AmorePacific has recently experienced a decline in overseas sales due to the waning popularity of its luxury brand products in China. Several of its stores there have been closed due to poor sales amid the prolonged COVID-19 pandemic.

Its overseas revenue in the fourth quarter of 2020 fell 3%. AmorePacific managed to improve its sales in the North American market by 29%, but its performance in China declined by 6%.

In 2021, its sales rose to 5.32 trillion won from 4.93 trillion won a year earlier, while operating profit jumped to 356.2 billion won from 150.7 billion won.

KB Securities and Yuanta Securities expect the cosmetics company’s business to improve in the second quarter of this year.

“With the end of the pandemic restrictions not seeming too far away, the company’s business will rebound in the second quarter thanks to its restructuring,” said KB analyst Park Shin-ae.

Yuanta analyst Park Eun-jung also predicted that AmorePacific’s overseas business would expand as quarantine measures are expected to ease in Western countries like the United States and England.

“AmorePacific is accelerating the process of restructuring its Innisfree brand in China, which will improve its profitability there. There will also be an increase in demand for AmorePacific in North America as the country decides to try to live with the virus,” Park said.

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David A. Albanese