December 22, 2024

• 

Visitors explore the beauty booths at Kurly Beauty Festa 2024 at Dongdaemun Design Plaza in central Seoul on Friday. (Hwang Joo-young/The Korea Herald)

Kurly, the South Korean e-commerce company, is ramping up efforts to expand its beauty platform Beauty Kurly as a key pillar of its business alongside its flagship overnight grocery delivery service.

As part of this initiative, Kurly hosted the Beauty Kurly Festa 2024, which ran from Thursday to Sunday and drew over 20,000 visitors. The event featured over 90 beauty brands, including luxury names like Lancome and Sisley, alongside mid-range brands. Attendees enjoyed promotions, raffles, product giveaways and live demonstrations by beauty experts.

Beauty Kurly, launched in 2022, was born out of insights into Kurly’s core customers -- professional women in their 30s to 50s with high purchasing power. The company noticed these customers were purchasing premium personal care products, such as high-end shampoos and soaps, through Market Kurly, which prompted the company to expand into the beauty retail business.

Since its launch, Beauty Kurly has achieved over 500 billion won ($370 million) in cumulative sales and processed more than 11 million orders by the first half of 2024. Now contributing about 10 percent to Kurly’s overall sales, the platform saw 30 percent year-on-year growth in the first six months of this year.

“Beauty Kurly is no longer just a sub-business -- it’s evolving into a flagship business alongside Market Kurly,” a Kurly official said. "Additionally, Kurly’s direct purchase model ensures product authenticity, alleviating concerns over counterfeit goods typically associated with luxury cosmetics."

Despite the platform’s growth, visitor feedback at the event was mixed.

“I use Market Kurly for groceries because it’s convenient, but I prefer department stores for luxury cosmetics where I can try the products in person. Without perks like samples or discounts, I’m hesitant to buy luxury items online,” said Kim Sung-hye, a 39-year-old office worker.

On the other hand, Lee Hae-ri, a university student in her early 20s, said, “I typically order cosmetics online because I know what I need, and the prices are better. But I found the selection of color cosmetics at Beauty Kurly somewhat lacking.”

Kurly explains that Beauty Kurly aims to replicate the premium shopping experience of department stores online. The company plans to offer sample products with every purchase and is expanding partnerships with additional beauty brands to diversify its offerings. It also offers discounts through credit card partnerships to provide more competitive pricing.

Founded in 2015, Kurly expanded rapidly but struggled with years of deficits due to the high costs of maintaining its cold chain system for fresh food deliveries. The company began preparations to list on the country's main bourse in 2022, but later postponed it, citing weakened investor sentiment stemming from the global economic downturn.

More recently, Kurly wiped out nearly 2.3 trillion won in accumulated deficits using surplus capital it has secured through external investments, according to industry sources. This move comes as Kurly’s cash flow improves after turning profitable in December. “Much of the deficit was an accounting misperception, which led to misunderstandings about the company’s financial stability,” the company explained.

Market experts noted that clearing deficits before an initial public offering is common practice, though uncertainty remains about Kurly’s long-term growth potential.

“It’s typical for companies to clean up their financials before going public, as seen with Coupang,” said an official from a local securities company on the condition of anonymity.

“However, the fact that Kurly posted a deficit of over 2 trillion won raises concerns about whether it can demonstrate stable and sustainable growth in the future."

Regarding its IPO plans, Kurly stated that it plans to go public when the timing allows it to fully realize the company’s market value.

By Hwang Joo-young (flylikekite@heraldcorp.com)