[THE INVESTOR] NEW YORK -- From BB cream to facial sheet masks, Korean cosmetics have become must-haves for skincare enthusiasts in the world’s fashionable mecca of the Big Apple thanks to both their excellent quality and the hallyu wave.
Riding high on this momentum is Glow Recipe, a startup founded in November 2014 by former L’Oreal executives Christine Chang and Sarah Lee.
Sarah Lee (left) and Christine Chang. Glow Recipe
The duo started the cosmetics startup with US$50,000 from their own pockets. Without a proper office or site in the very beginning stages of their business, they had to do a lot of legwork to find brands willing to work with them to launch in the US. At night, they packaged their goods, together with an intern.
“We started from scratch. We didn’t even have a website, but we did manage to get five cosmetics brands to work with us,” Chang told The Investor in a recent interview in Manhattan.
Chang and Lee said they firmly believed, based on their experience at L’Oreal, that what many now call the K-beauty trend would sweep the world.
“Korean products and technologies were always considered standouts at industry events where beauty execs and employees would compare hundreds of cosmetics fomulas and packages from around the world,” they said.
The big break came for Glow Recipe in 2015 when it took part in Shark Tank, a US reality TV show on ABC that connects investors with budding entrepreneurs. Later on, Glow Recipe also launched a series of pop-up stores, starting with a two story pop-up in the heart of Soho, and then in partnership with Saks Fifth Avenue and upscale retailer Henri Bendel. Those stores were all buzzed about in the New York beauty industry.
The startup is now one of the hottest K-beauty platforms in New York, with annual sales reaching around high seven figures in USD revenue. Products are supplied by more than 30 cosmetics brands, including Whamisa, Make P:rum, J.One, and LJH, through an independent e-commerce website. Glow Recipe also strategically partners with leading retaliers by channel, such as Sephora from the selective market, Target at mass and QVC home shopping.
Glow Recipe has become popular so fast that so far, it hasn’t needed funding. This year, though, things may change.
The following are excerpts from the interview.
The Investor: Can you tell us about running a startup in New York?
Chang: The US is not an easy market to penetrate. It is extremely dynamic, caters to a diverse customer demographic and the beauty industry, in particular, is becoming really saturated with a number of new 'indie' beauty brands on the scene.
There are also cultural differences to consider. Although I (Chang) grew up in the US, and Sarah had attended American school in Asia for years, there was still a cultural shift at work when we first started working at L’Oreal US offices after years of experience at the firm's Korean branch. In the US, it’s incredibly important to proactively pitch your ideas at meetings and be outspoken to push through what you believe in.
We were fortunate to have been surrounded by inspirational female role models and mentors while working at L’Oreal and the beauty industry for a combined 25+ yeras. We’re both voracious beauty junkies and our passion for beauty has served us well throughout our careers and is the driving force behind Glow Recipe today.
TI: Has Glow Recipe received any funding so far?
Lee: No, we haven’t. Glow Recipe was already profitable within three months of launch, and we’ve consistently had robust triple digit growth year-over-year. Although we had three funding offers from the investors on Shark Tank, we eventually decided to continue to bootstrap as we were looking for a long-term strategic partner.
Having said that, participating in the TV show, which is broadcast to 9 million viewers across the US, was one of our big milestones. We are still financially independent.
TI: Can you give us your sales figures?
Chang: The company’s sales in 2017 reached around high seven figures with a healthy profit margin.
We've had incredible opportunities since starting Glow Recipe—at the end of 2015, we were featured in ABC's top business reality program. We were thrilled to present Korean beauty to such a broad, diverse audience and extremely humbled to receive three investment offers from the Sharks. Then in 2016, we launched a select number of our partner brands within Sephora's covetable K-beauty wall and partnered with QVC on their first-ever one-hour show dedicated solely to K-beauty. In 2017, we had an extremely successful and popular month-long pop-up shop in the heart of Soho and opened Saks Fifth Avenue's first K-beauty pop-up at their 5th Ave flagship.
We also launched our namesake brand, Glow Recipe Skincare in mid 2017. The star product of this launch, the ‘Watermelon Glow Sleeping Mask,’ has been very well received and was recently highlighted as one of Sephora’s bestselling products on the year on Sephora’s own Instastory. (https://www.thecut.com/2017/12/sephoras-best-selling-beauty-products.html)
TI: What are your winning strategies?
Lee: We have an extremely stringent curation process where we partner with K-beauty brands that stand for quality, natural ingredients and innovation. We often have exclusive partnerships with brands we really believe in so that we are able to spearhead a consistent and controlled channel and retail strategy in the US. Recently we also partnered to create Whamisa by Glow Recipe, with one of our partner brands – this line rolled out to 1,500 Target doors at the end of last year.
Customer service and education is also incredibly important to us. We’ve invested in really training our customer service team so that our customers are having the best K-beauty and skincare experience possible with Glow Recipe. We also continue to create digital tutorial videos on YouTube and Instagram to help our customers understand what we think is one of the strengths of K-beauty: easy, accessible, fun skincare that delivers real results.
TI: How did you survive in the competitive New York market?
Chang: We think it’s incredibly important to have a clear point of difference. You can launch Lyft to compete with Uber, but you can also launch Via, a mini-van ride sharing service, to avoid direct completion. As a startup, I think, the latter is the right way.
We were both executives when we left L'Oreal and it was a huge decision to jump into entrepreneurship from having a successful career. Global beauty companies were looking to Korea for first-to-market trends and customers were increasingly interested in K-beauty, but at the time, many K-beauty brands in the US relied heavily on promotional discounts and kitschy packaging. We were the only two people at the L'Oreal US offices that had beauty experience in both cultures and we realized that we would be able to leverage that unique experience to curate and market K-beauty brands in a new, unique way.
TI: What’s necessary to keep up the K-beauty momentum?
Lee: While we are thrilled and grateful to see many more players in the K-beauty market in the US, which will help keep the interest and dialogue around the category, we feel strongly that Korean beauty products need to be supported with the right context and education to have longevity and break into the highly saturated US beauty market. Our hope is that brands will continue to invest in these types of critical marketing and brand-building initiatives.
Currently, we're seeing interesting new textures, sheet mask ingredients, and new delivery systems such as pads and puffs. These unique technologies help make the skincare experience fun and accessible versus being a daily chore. That K-beauty approach to skincare is what we call ‘skin-tertainment'.
TI: What are some of the lessons you learned at L’Oreal?
Chang: At L’Oreal you are given a lot of responsibility from the very beginning – it’s important to be entrepreneurial and create your own role. Another part of the company culture is that having spirited discussions to ensure you arrive at the most productive outcome is key. Similar to how a sword welded in heat and fire is ultimately stronger.
At Glow Recipe, we also have a lot of discussions and creative debate Sure, you can get things done fast if you make decisions alone, but it may not be the best decision for the company.
TI: What are your plans for 2018?
Chang: We want to pursue more online growth by diversifying our content and optimize our customer site experience, as well as continuing to curate and create exciting, best-in-class K-beauty products
Now in our third year, we’re challenged to take Glow Recipe to the next level. Our team has grown and we’re proud to say that our design, editorial, marketing and PR efforts are all managed in-house. We can’t wait to share all the newness and exciting projects for this year.
By Kim Young-won (firstname.lastname@example.org)
This story was sponsored by the Samsung Press Foundation. - Editor