international Trade Research Institute, 'export ventureization' of startups is the growth formula... Verification of innovation performance and risk → B2B/B2C strategy and selection of customized marketing path are important
tatistics on the export contribution of ventures and startups were announced for the first time. According to the Institute for International Trade (IIT)'s 'Startup Export Status and Export Activation Policy Recommendation' report, the number of chemical industry product companies that include cosmetics is 5,941, and the export amount in 2023 is $618 million ($170 million from China + $0.8 billion from the United States + It was 130 million dollars in Japan + others). It is said that this is a 31-fold increase over 6 years.
In particular, it was revealed that 65% of chemical industry product exports were driven by cosmetics startups within 7 years of establishment . The amount was 401 million dollars.
Regarding this, IIT analyzed that “factors include the revitalization of exports by startups through the development of e-commerce platforms, the use of opportunities to spread Korean Wave content, and the growth of emerging major export markets replacing China, such as the United States, Japan, and Southeast Asia.” Citing this, it can be said that cosmetics startups have a significant contribution to exports.
The Institute for International Trade (IIT) said, “Korea experienced the first venture boom in the 2000s and the second venture boom since 2016 amidst the 4th industrial revolution, artificial intelligence, and digital transformation, and the number and exports of ventures and startups, which are innovative growth companies, have increased significantly. “Participation continues to increase,” he said. He then analyzed, “As a result of examining the export statistics of startups for the first time, exports from 2018 to 2023 were ▲ 5.4 times for startups (venture companies less than 7 years old) ▲ 1.4 times for venture companies ▲ stagnant for general companies.” .
This “suggests a trend in which startups grow over time and grow into global export venture companies.” This result is not only the product of the innovation and efforts of entrepreneurs based on entrepreneurship, but also the continuous support of the government, public, and industry-academic startups for export commercialization, fostering a new growth engine in Korea, which has cultivated export-led economic growth. “It shows that it is continuing,” he explained.
According to the Ministry of Food and Drug Safety's 2023 production performance report, the number of new cosmetics companies increased by 6,900 between 2017 and 2023, and cosmetics exports increased 71% from $5 billion ('17) to $8.5 billion ('23) .
There are 40 brands mentioned by local people in the 'K-Beauty Trend Survey' of Cosmetic Focus '23 Special Edition (US, Japan, France, China) published by the Korea Cosmetic Industry Research Institute. Among them, there are 7 startups founded after 2017, including Joseon Beauty, COSRX, and TirTir, and if expanded to 10 years, there are a total of 12. Ventures and startups are confirmed to be the leading exporters of K-beauty. Like the previous growth trend from IIT startups to export venture companies, it can be inferred that cosmetics startups are acting as a new growth engine for the export-driven cosmetics industry.
Meanwhile, IIT classifies startup export companies as having the characteristics of ▲ industry/product category creator (category creator) ▲ niche market pioneer (Nich market pioneer). While the former can expect large-scale, rapid growth by taking advantage of the market pioneer (first mover) advantage, the failure rate is very high. The latter reduces the creator's pioneering costs and trial and error, and seeks to catch up or form a niche market through minimal advantage technology and innovation. According to a sample survey of 500 brands in 50 product categories in the United States, a report found that 47% of market pioneers failed, while the failure rate of fast followers was only 8%.
As a startup is the development of a technology, product, or service that did not exist before, it requires a step-by-step construction of ➊ Proof of Concept (PoC) → ➋ Prototype → ➌ Pilot → ➍ Minimum Viable Product (MVP). In other words, in the step-by-step verification process, the startup's idea is transformed into a workable product, commercialized to generate sustainable sales in the actual market, and then evolved into a product that can be sold and supplied not only domestically but also in overseas markets. IIT explained that through venture investment at each stage of growth, funds needed to achieve each stage's goals are received, risks are resolved, a J curve (rapid growth graph) is drawn, and export companies are achieved.
Startup export types and routes include ▲ B2B and ▲ B2C. First, B2B is high risk and much more difficult to sell even if it is a novel product because there is no proven market or customers. Establish initial contact with buyers and local partners through overseas exhibitions, consultations, and one-on-one meetups, but expand the scale through samples/initial quantities/year-round regular supply, etc. During this process, PoC and market testing may be necessary to meet local standards, meet local customers, and localize.
B2C is growing mainly in consumer goods, beauty care, and food due to the development of e-commerce platforms and overseas express delivery. For B2C targets, it is difficult to create a first-time purchase experience if there is no marketing accompanied by customer experience (home shopping, pop-up stores, etc.) or WOM (word of mouth). Accordingly, ① organic recognition → interest → purchase → content, SNS, and keyword marketing that will induce repurchase ➁ utilizing B2C malls for customer response verification and sample delivery ③ pioneering large-scale B2B exports through local distributors are effective.
Lee Seong-won, CEO of Healthcare, said in an interview with a media outlet, “Innovative products that are first launched on the market do not sell just because they are on Amazon. Sales only occur when exposure to early adopter target customers and experiential marketing are combined. “Also, it is an effective strategy to discover B2B buyers using B2C channels and customer reviews as references,” he said.
The growth path for cosmetics startups is to become an export venture. In this process, verification of innovation and risk → selection of B2B/B2C strategy and customized marketing path became important.
Comments