Musinsa Beauty has introduced a direct-purchase model for cosmetics to break into the market. The strategy is to bring in promising small and midsize brands and startup products directly and widen the distribution structure. Small and midsize cosmetics brands say they expect to gain a new entry channel while reducing their dependence on Olive Young and Coupang.
On the 12th, the cosmetics industry said Musinsa Beauty plans to adopt a direct-purchase model in which it buys cosmetics directly from brands, holds inventory, and sells the products. Moving beyond a platform centered on tenant brands, it aims to boost competitiveness by selecting promising small and midsize brands and startup products and distributing them directly.
In cosmetics, Olive Young and Coupang are distributing products mainly through a direct-purchase model. Direct purchase is a structure in which the distributor buys products outright and sells them, a method favored by small and startup brands. It has the advantage of securing stable supply volumes and increasing sales.
Musinsa Beauty introduced the direct-purchase model in line with the opening of the select shop "Musinsa Megastore Seongsu" in Seongsu-dong, Seoul, in the second quarter of this year. Musinsa Megastore Seongsu will host the first permanent space where consumers can experience various cosmetics in person. About 800 brands are slated to move in. As it pushes into offline stores in earnest, Musinsa Beauty chose the direct-purchase model to strengthen competitiveness and partnerships with indie brands.
A Musinsa official said, "We are preparing sales via a direct-purchase model for select brands so tenant brands can secure offline touchpoints without the burden of complex inventory management."
Small and startup cosmetics brands are expressing optimism about Musinsa Beauty's move. Attention is on whether the cosmetics distribution structure, split between Olive Young and Coupang, will change. Olive Young holds a dominant position, with about a 70%–80% market share offline. Coupang has secured a market share of around 25% based on online beauty transaction value.
A cosmetics startup official said, "For startups, staking everything on getting into Olive Young and Coupang is the reality." The person added, "Since these distributors use a direct-purchase model, smaller beauty companies are more dependent on them for sales," and explained, "If Musinsa Beauty's offline store performs well, new sales channels are likely to open both online and offline."
Some also say bargaining power against Olive Young and Coupang will rise. Commissions for cosmetics at Olive Young stores reach 40%–45%. Coupang also sometimes demands a margin rate above 40%. If Musinsa Beauty, which is growing online, posts results offline as well, intensified competition across channels could lower commission burdens for small and startup brands.
The cosmetics industry is watching whether Musinsa Beauty's offline store can gain a foothold in the market. In the past, beauty select shops where indie brands entered, such as "Chicor," and H&B (health and beauty) stores like "Lalavla," failed to establish themselves in the market even with the backing of distribution giants such as Shinsegae Department Store and GS Retail.
An industry official said, "From a brand's perspective, the more sales channels, the more opportunities to expose products and the effect of reducing marketing expenses," and added, "Depending on its assortment, price competitiveness, and store operation strategy, Musinsa Beauty's offline store could alter the two-horse race between Olive Young and Coupang."