Ch4. Customers and AMOREPACIFIC’s distribution channels - AMOREPACIFIC STORIES - ENGLISH

NEW BEAUTY

2015.06.16
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Ch4. Customers and AMOREPACIFIC's distribution channels

HISTORY
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Telling a visual story of AMOREPACIFIC's 70-year history of creating Asian Beauty

70-year journey to beauty

Chapter 4. Customers and AMOREPACIFIC's distribution channels



AMOREPACIFIC has always put customers before everything else in a bid to get closer to customers. Through various channels and specially designed products, AMOREPACIFIC has blazed a trail to meet and serve the customer.
In this chapter, we summarize the distribution channels of AMOREPACIFIC which have driven our growth and development over the past 70 years. A web of complicated distribution channels is unraveled here, covering everything from exclusive distributors and the door-to-door sales channel through to department stores, duty free shops and brand shops.


Hwaseongsa supplies ABC products and cosmetic materials

AMOREPACIFIC established a cosmetic material supplier named 'Hwaseongsa.' It was a material supplier and an authorized agent dealing with all kinds of cosmetic materials and tools used by academies and businesses in the beauty market, as well as the ABC series produced by AMOREPACIFIC.

A new sales channel with exclusive distributors

In the late 1950s, competition between cosmetic brands in the Korean market flared up, resulting in a dramatic increase in competition between wholesalers, which were at the heart of distribution and dump pricing as well. To solve this endemic problem in the distribution structure, AMOREPACIFIC established Pacific Cosmetics Sales Co., Ltd, the first specialized distributor in Korea, and introduced an exclusive distribution scheme. AMOREPACIFIC launched sub-branches in the four largest cities in Korea, which helped it clinch a special exclusive distributor agreement with local retail dealers, drug stores and cosmetic shops. The launch of exclusive distributors allowed for direct communication with customers and, as a result, reckless dumping sales were reduced. The market was also fragmented thanks to AMOREPACIFIC, which paved a new sales channel. Meanwhile, customers were able to have greater confidence in products.

Nanchohoi leading communication with customers

After establishing an exclusive distributor scheme through the first distribution revolution, AMOREPACIFIC began operating a customer management program called Nanchohoi to build customer loyalty. Open to everyone upon the purchase of AMOREPACIFIC products, members were provided with the free beauty magazine Nancho, as well as gifts and invitations to cultural events.

Introduction of door-to-door sales system

AMOREPACIFIC introduced a door-to-door system to the field of cosmetic distribution, helping Korean women who lost their husbands during the war to find a voice and get their confidence back. The door-to-door sales system was operated in compliance with regulations on direct visits to customers, price-tag system and distribution territory. What's more, a block map (a kind of map where every household within the territory of each sales representative is marked with a number) was adopted in the early 1970s, helping the customer management system become more systematic.

AMOREPACIFIC then worked on the development of a brand exclusively for the burgeoning door-to-door sales channel, while also building up a network of chain stores covering the whole market, securing in the process exceptional sales representatives which it then trained for the successful establishment of the door-to-door sales scheme. A nationwide sales network was established that was as fine as meshed net, making a great contribution to the growth of AMOREPACIFIC until the 1990s.

Launch of AMORE, a brand dedicated to door-to-door sales

AMOREPACIFIC launched a cosmetic brand exclusively for door-to-door sales channel. Its name was AMORE. The brand name AMORE was chosen through a contest in which all members of AMOREPACIFIC took part. The name AMORE embraces the taste and sensibility of customers, reflecting the intended purpose of cosmetics, which was to heighten people's beauty.

Entering the department store channel

AMOREPACIFIC began operating a department store channel at the main branch of Shinsegae Department Store and soon hit its stride with another store, which opened in Lotte Department Store in 1979. There was still a long way to go before the department store became a popular distribution channel and there were only a few Korean cosmetic companies and AMOREPACIFIC that had their own store in the department store in the early 1990s. The products of AMOREPACIFIC were given a conspicuous place in the department stores next to the entrance doors, so that they would be the first things customers saw upon entering.

TV Home shopping channel debut

In June 1998, AMOREPACIFIC mounted a credible challenge to the TV home shopping channel. Back then, the TV home shopping market saw slow growth due to battered consumer confidence following the IMF intervention and the long-standing customer preference for offline stores. AMOREPACIFIC was able to move fast to build up its sales capacity in this new distribution channel. From the late 2000s, AMOREPACIFIC began to soar with innovative products such as IOPE RETINOL and AIR CUSHION and, come 2010, the brands of AMOREPACIFIC that had entered the TV home shopping channel - IOPE, HANYUL, Ryo, Mamonde and HERA – achieved a whopping KRW 100 billion in combined sales.

Launch of innisfree, a brand dedicated to retail outlets

Large retail outlets were first introduced in Korea with the E-Mart Changdong branch. They soon became a tremendously popular distribution channel thanks to their ability to offer convenience at a competitive price. In the pioneer days of retail outlets, AMOREPACIFIC worried about conflicts with traditional distribution channels, and took an approach of indirect transaction. But, with the increasing number of retail outlets in the run up to the turn of the millennium, AMOREPACIFIC recognized it as an official sales channel and developed innisfree, which was the first brand dedicated to the retail outlet channel in Korea. In its first year, innisfree recorded a significant number of sales across 100 stores nationwide, while also making its presence felt in the retail outlet channel. AMOREPACIFIC then opened up a one-brand shop of brands such as LANEIGE and IOPE in retail outlets and, as a result, it was able to increase its overall market share.

Entering the online shopping channel

In the early 2000s, the online shopping channel emerged as a big thing in the cosmetic distribution market thanks to the skyrocketing number of Internet users. In 2003, AMOREPACIFIC officially recognized online channel and began operation with the help of an e-commerce solution vendor. Through the implementation of independent brand zone, online A/S (after-sales service) and standardization of digital contents, AMOREPACIFIC improved the quality of online service, while also exploring the new value of online shopping to enhance its leadership in the channel.

Opening of a multi-brand shop Hue Place

In 2004, AMOREPACIFIC opened a customer-oriented cosmetic store named Hue Place, strengthening its competitive positioning in the brand shop channel. Hue Place proved a hit with customers for the way it represented a new innovative cosmetic store fulfilling the needs and wants of customers through various beauty experiences and counseling services.

Opening of one-brand shops: ETUDE HOUSE and innisfree

ETUDE HOUSE and innisfree opened their own one-brand shop in 2005. The big growth of both ETUDE HOUSE and innisfree resulted from their differentiated brand strategies and aggressive marketing campaigns, which saw them take prominent position in the cosmetic market.

Launch of ARITAUM, a brand offering pleasant beauty experiences

AMOREPACIFIC launched ARITAUM for the purpose of better communication with customers and the delivery of fun, enjoyable beauty experiences. As a premium total beauty shop and a renowned beauty solution provider delivering Asian Beauty, ARITAUM is proud to provide customized solutions addressing the various skin problems customers may have. Its exceptional achievements include the opening of 1,000 stores nationwide in its first year, which made ARITAUM a benchmark for brand shops ever since.

International duty free shop debut

Starting with the first global duty free shop of the premium brand LANEIGE in Singapore Changi International Airport, AMOREPACIFIC now runs Sulwhasoo and LANEIGE stores in 126 duty free shops worldwide where Asian Beauty is presented to travelers from all over the world.
AMOREPACIFIC is seeing explosive growth in the international duty free channel, but is ever mindful of the fast-changing and ever growing Korean duty free channel. To provide customers with more chances of having a positive brand experience, AMOREPACIFIC promotes various marketing campaigns while enhancing the sales force training program exclusively for the duty free channel.

AMOREPACIFIC has made various attempts in both on and offline channels to present beauty to customers with high-quality products.
AMOREPACIFIC has led the Distribution Revolution with the introduction of door-to-door sales channel providing a personalized service. It remains committed to getting closer to customers through its Omni-Channel approach (encompassing online, offline and mobile channels).

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