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The last five years have been tumultuous for K-beauty retailer Memebox, and it’s only going to get more chaotic from here. As of today, Memebox will no longer directly sell K-beauty products in the US. Instead, the site will be a clearinghouse for education, reviews, and product information — like a Tripadvisor for beauty, as the company noted in a press release.
When Memebox announced in March that it was discontinuing its loyalty program and would start sending shoppers to other sites for products when its own stock ran out, it was fairly obvious that it was getting out of the K-beauty retail game. With four private label house brands, the assumption was that maybe Memebox was going to focus its business solely on its own labels and stop selling other brands. That’s true, but not quite the whole story.
Dino Ha, Memebox’s founder, said on a call that May 1st marks the soft launch of the new Memebox concept, which is to become a one-stop-shop for learning about K-beauty products, but without the actual shop. “What we learned is that what we really need is the education and the content piece to let the users know what K-beauty really means,” Ha says. “[We are] solving a bigger problem by narrowing down the bigger category of K-beauty.” Per a press release: “Ultimately, Memebox is setting out for it be more useful to search a product on Memebox than it is to search on Google.”
What this means is that when users search for a product on the site, they’ll see about 12 to 15 YouTube videos featuring reviews of and tutorials for the product, ingredient lists, descriptions of the product, instructions for use, user reviews, and swatches. Eventually, Instagram photos will be mapped to certain products as well. Users can also search by ingredient, by benefit, and by skin concern. Ha estimates that this data will be available for about 2,400 products at launch, and the company plans to scale that up to 100,000 by July, though Ha later acknowledged that August or September might be more realistic. The company also plans to add live chat and live video by influencers, such as Korean makeup artist Pony, a longtime Memebox collaborator. In addition, Memebox wants to expand its database to eventually include products that are beyond the realm of K-beauty.
Memebox is not officially working with influencers to bring the videos to Memebox’s site, but is searching YouTube and embedding creators’ videos on the appropriate product pages. (Example here.) Ha says that since Memebox has started introducing these videos to the site two months ago, people have been staying on the page four times longer than before. He also says that he’s received over a hundred requests from influencers requesting to be placed at the top of Memebox’s individual product pages “because it increases their views.” Because it’s so early, it’s unclear how using ostensibly unpaid influencer content will play out.
But what about when someone actually wants to buy products? Memebox was beloved by fans for its large product selection, relatively reasonable prices, and for shipping faster than sites in Korea. Ha says that Memebox has worked with over 3,000 partner brands, which is a lot compared to smaller US shops like Glow Recipe and Soko Glam. There will now be links to shop every product, but shoppers will be sent to Amazon, with which Memebox now has a formal affiliate agreement, and eventually Sephora, which Ha says he is “in talks” with.
Therefore, Memebox’s new revenue model is affiliate links, which means that every time a customer clicks over to buy a product at Amazon from Memebox, Memebox gets a small percentage. “Whoever can do the best job sending these products to users is where we’ll partner as much as we can,” Ha explains. “Our profit will decrease in the market, but we’re seeing really active users.” Ha hopes to keep the 1.5 million customers Memebox currently has, and increase that to 10 million by the end of 2017.
Then there are Memebox’s four private labels — Nooni, Bonvivant, Pony Effect, and I’m Meme. Bonvivant will be rebranded to be called I Dew Care, and a fifth line, Shine Easy Glam, is being added. Ha says the lines are profitable and Meme will continue to offer new products within the brands, but you’ll still be sent to Amazon to purchase them. These brands aren’t really a business priority for the company until this new model gets off the ground successfully. (Ha said that at some point the company “possibly might bring an e-commerce element back,” but he was vague on that. Memebox will still be offering e-commerce in Korea and China.)
There’s some obvious collateral damage here. Buying beauty products on Amazon is sometimes a crap shoot — K-beauty in particular is plagued with knock-offs — and brands sometimes lose control of their own products by using too many distributors. (For example, at one point Tony Moly masks could be found at dollar stores and also Sephora.) One of Memebox’s biggest strengths was that customers trusted it to vet the products. That gets murkier now.
Ha says that Memebox will implement quality control for the sellers that it sends buyers to, but didn’t have many specifics. “There are some distributors we know already from working with them for the last three years, so initially [shoppers] will be forwarded to the most credible sellers we know. When we try to scale in July, we’ll have a process built in to make sure we check that it’s a legitimate seller before we forward that traffic.”
Memebox itself used to have an affiliate program agreement with bloggers and YouTubers who could link to products there and earn income. That will also end, since Memebox won’t actually have anything to link to anymore. It could hurt the bottom line of some bloggers who relied on it for income. In an email sent to affiliates that Racked obtained, Memebox informed them that sales commissions would not accrue after April 28th, and that they were “required to remove any and all banners, buttons, text links, product images and store fronts that link to Memebox by End of Business Day April 28, 2017.” (Ha says that 90 percent of people have used their outstanding rewards points, however.)
So why the pivot? Memebox has not had the most stable business model, despite receiving $160 million in funding over the years. It started out as a subscription box model and then transitioned to more traditional e-commerce, but has always struggled in the US. Ha says that the business wasn’t scalable here because Memebox “was doing everything” for the Korean brands. “We wanted to be the company that brought these brands overseas, but we had to start with the translation, rebranding, re-marketing, and finding the position within the local markets that we expanded to, so there was a lot of backend work that was needed. But at the same time, not many customers really understood what K-beauty stood for,” Ha says. “We thought that we need this cultural movement before we try to sell all the products.”
A small, loyal group of K-beauty enthusiasts had already seen the writing on the wall, taking to the Asian Beauty subreddit to discuss alternatives for K-beauty shopping: “Memebox will leave shoes that are hard to fill. I, and many others here, have no desire to use them as some middle man to unknown Amazon sellers. It's a shame though. They were US based and you didn't have to wonder if what you were getting was legit or not.” Some redditors, though, said that their experiences shopping for products on Amazon were positive, particularly for Prime members who have more access to customer service when issues arise.
One redditor asked, “A lot of comments mention just directly searching and buying brands (via Amazon or elsewhere) which is awesome for like the 2 or 3 items I know I like and trust, but the thing that I (a major newbie) liked about Memebox was it was easy to try a wide variety of new things at a shallow learning curve. Are there similar sites or recommendations for places that have a lot of the variety sets and good instructions /reviews?” This is exactly the consumer Memebox hopes to capture with its new model.
“We want to own that information layer,” Ha says. Whether it will translate to a viable business model remains to be seen.