Beauty Companies That Failed to Capitalize on the Subscription Economy

[Asia Economy Reporter Yujin Cho] Subscription economy-based services have gained attention due to the impact of the novel coronavirus infection (COVID-19), but domestic beauty companies that had previously led this market have not seen significant success.

According to the industry on the 25th, Aekyung Industrial discontinued its cosmetics subscription service operated under the basic cosmetics brand 'Flow' at the end of last year. The cosmetics subscription service was a service that curated and delivered products every two weeks to consumers who applied for regular subscription online, introduced and operated since the launch of the Flow brand in 2017. Aekyung Industrial officials said, "We started and operated the subscription service at the early stage of the brand launch, but judged the marketability to be insufficient and have currently suspended it."

LG Household & Health Care also ended its subscription service conducted through external partnerships around the same time the following year. LG Household & Health Care provided some daily necessities such as the men's cosmetics brand 'Gentology', 'Perio (oral care)', 'Elastine (hair care)', and 'On The Body (body care)' as subscription services through Stripes, in which it held shares at the time, but closed the business within a year. An LG Household & Health Care official said, "We temporarily operated the subscription service in cooperation with an external company in which we had invested shares at the time, but the service was terminated due to the partner company's decision and is currently not in operation."

Regular subscription services are positive in that they can secure regular customers and increase sales. This is because customers continue to use the company until they consume the products after paying regular fees. There is also a secondary effect of increasing revenue from leftover funds if the benefits are not fully utilized, which helps companies whose performance has sharply declined due to COVID-19 through advance payments.

However, there are also criticisms that it has limitations as a profit model. In a market flooded with almost unlimited products and fierce price competition, the strategy of locking consumers into one place is less effective. An industry official said, "Subscription services competitively introduced by domestic distributors after COVID-19 emphasize only discounts and lack a profit model," adding, "Overcoming the limitations of market development and monetization will be the key to the success of the subscription economy."

This content was produced with the assistance of AI translation services.