This marks a significant step as it aims to capitalise on the rapidly growing market for K-beauty products in the US.
The leading K-beauty retailer CJ Olive Young announced on February 4 that it has set up a local corporation, CJ Olive Young USA, based in Los Angeles, California.
The purpose of the subsidiary is to spearhead its expansion in the US and use it as a launchpad to secure its position in new markets.
As part of its strategy, the firm confirmed that it plans to launch a physical retail store in the US, which would be its first overseas outpost.
The retailer said it was currently evaluating multiple potential locations for its offline store.
Currently, Olive Young reaches its US consumer base through its international e-commerce site, Olive Young Global, which launched in 2019 and serves 150 countries.
The retailer said a “significant” portion of Olive Young Global business was generated by the US, in particular by the market’s young and digitally savvy consumers.
Global ambitions
The company has identified the US as a crucial market in its global ambitions.
“The establishment of a US corporation will serve as a stepping stone to find new growth engines in the global market together with small and medium-sized brands, which are Olive Young’s key partners, and to create a sustainable K-beauty growth environment,” said Lee Sun-jung, chief executive of CJ Olive Young.
“We will do our best to serve as a ‘K-Beauty growth booster’ overseas to ensure the industry’s continued growth.”
The US has emerged as a key market for a number of K-beauty in recent years, such as Laneige, CORSX, and AXIS-Y, which have experienced major successes among beauty aficionados.
The US currently ranks as South Korea’s second-largest cosmetics export market behind China and ahead of Japan.
South Korea’s Ministry of Food and Drug Safety (MFDS) recently published data confirming that K-beauty exports to the US had increased by 57% to USD1.9 bn last year.
Localising efforts
In addition to a new store, Olive Young is working to strengthen its operations in the world’s largest beauty market by “localising core functions”.
Firstly, it will move to improve logistics and delivery in the US.
From this year, it will integrate its global mall system with its headquarters to manage inventory in real time.
In the future, it aims to establish a local logistics network by collaborating with CJ Logistics’ US operations to ship products directly within the region.
It will also localise its platform for its US consumer base, which would include optimising the user experience and user interface, and localising payment methods.
Additionally, the firm will utilise the data it currently has to source products that will meet the needs of its American customers.
These steps would further strengthen its online presence in the US, the retailer believes.
