[Venture Abroad] Start-up marries online shopping with video
Kyle Kim, co-founder and CEO of newcomer beauty e-commerce platform Woman’sTalk, uses video content to sell cosmetics and fashion by small and mid-sized companies. It was the first of its kind in Korea. [WOMAN'S TALK]
The recently introduced format allows online shoppers to purchase goods after watching a short video marketing products either directly or indirectly. The new platform is supposed to overcome the shortcomings of traditional online shopping, especially consumers doubting whether the image shown on a screen was real or distorted.
Kyle Kim spotted big potential in linking videos on mobile platform and shopping. He started Woman’sTalk, Korea’s first-ever video e-commerce platform. It sells beauty products including cosmetics and fashion brands.
Woman’sTalk incorporates a little bit of everything that is hot in the online retail business at the moment. The platform offers a string of short clips featuring models, news reporters or actors demonstrating how to use makeup or fashion styles sold on the platform. If a consumer spots something he or she would like to purchase, a transaction menu is readily available at the bottom of the page.
The internet market offers many cosmetics brands that are already well-known to consumers, from high-end labels like Yves Saint Laurent and MAC to local road-shop brands like VDL, Banila Co. and Innisfree.
But it also helps introduce lesser-known brands such as Dr. Young and Scinic which have high quality but limited channels to market their products.
What’s even better are the prices. Some are discounted as much as 70 percent.
The company was founded in 2015 and its app was launched last July. There are currently 300,000 subscribers and the e-commerce platform generates monthly sales of 800 million won ($70,000). In a year, 400,000 users have downloaded the app. A month ago, the platform expanded its cosmetics offerings to the fashion sector.
Woman’sTalk success did not go unnoticed, and soon bigger companies were knocking on the door offering to buy it for as much as 20 billion won, Kim said. Telecom companies and content providers were the most interested parties.
Kim said that everything came together with good luck and great timing.
Another factor was his experience as a former team manager at an entertainment company.
“People call us the revolution of the ‘eul’s,” said Kim. Eul refers to subordinate or inferior positions in a relationship of two or more.
“We use celebrities who are not A-list actors. Also, we have certain high-end cosmetics brands but the majority of the products offered at Woman’sTalk are little-known labels made by local small and mid-sized firms,” he said.
“The specific value chain - in which cosmetics generate a high synergy effect when matched with a celebrity - and a revenue model generated from it in which we take commissions on each transaction, is compensating for that and attracting more investors and companies,” he said.
Kim, 37, used to work at SidusHQ, a talent agency that used to handle top stars like Jun Ji-hyun and Han Ye-seul. Working there for four years, he realized that the talent resources his company possessed were highly useful in the retail market and could generate a high level of synergy if matched with the right product. The demand was especially high in cosmetics.
Not long after he was thinking about setting up his own company, Kim came across a highly viral video on YouTube called “First Kiss.” It showed a series of couples awkwardly kissing each other. It was a marketing tool for a clothing startup called WREN. It has more than 100 million hits on YouTube.
“I was dumbstruck at the influence that a single video could have, transcending regions, countries and all other factors,” said Kim. That’s how he conceived of the idea of merging video with something commercial online.
Kim began the company with 400 million won in initial funding from close acquaintances. Currently, he sits on an estimated 4.7 billion won in investment.
The hardest part of running a complex e-commerce site was convincing cosmetics brands to supply their products at highly discounted prices.
“Lowering the price was the hardest thing to do. But we gradually persuaded small and mid-sized brands to offer their products at the cheapest price in return for us making a marketing video about the products and distributing them to every possible video platform out there such as Naver, Kakao TV and more,” he said.
There are already 5 million video clips stacked up in their database. Such a massive library gave the company clout in signing what’s called a content provider contract with several major internet and mobile platforms.
As a content provider, video produced by Woman’sTalk can be displayed on the main pages of such portals. For both models and product manufacturers, being exposed on many platforms is important, which is why they provide their services or products at cheaper prices.
Currently, there are some 500 firms providing products to Woman’sTalk, which translates to a total of 30,000 items.
When asked about competition, Kim said social commerce sites Ticket Monster and Coupang were once rivals in terms of who can come up with cheaper prices. What comes as a bigger threat is any media platform that has the capacity to produce video clips.
“Live-broadcast platforms like Afreeca TV, or public broadcasters like MBC can all be potential rivals,” he said.
“Talent agencies can also jump in the business if they think their human resources - actors and singers - can generate satisfying profit.”
Memebox, another beauty-oriented e-commerce platform, is also a major competitor.
“The competition could have been much fiercer if Memebox had stuck to retailing. But it is delving into another business model, which is selling its private brand. We are still trying to settle in Korea as a retailing business, so I think the companies’ focuses have kind of diverged now.”
By the end of this year, Kim is planning to raise more investment, which he estimates at between five to 10 billion won.
The new investments will be used to move into overseas markets such as China and Southeast Asia.
Achieving economy of scale by attracting more customers and suppliers is Kim’s short-term objective. Currently, monthly sales stand at about 800 million won with 300,000 active users.
Kim wants to increase the number of users to 1 million, which will lead to estimated monthly sales of 2 to 3 trillion won.
“When I started the business two years ago, I actually thought about selling it when its market value surpassed a certain amount,” Kim admitted. “But now, I don’t want to let go of the ‘first mover’ title.”
BY JIN EUN-SOO [jin.eunsoo@joongang.co.kr]
with the Korea JoongAng Daily
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