Beauty boxes, a once great ecommerce trend in Asia, has unraveled

For wannabe entrepreneurs, it offered the promise of guaranteed recurring revenue and a treasure trove of customer data. Consumers, meanwhile, could benefit from its convenience and the element of surprise, since they can opt to have the service decide which products they’d receive.

Last year, the number of beauty box companies, a variant of subscription ecommerce focusing on cosmetics products, exploded in Asia. Estimates say there were over 50 of such services in Southeast Asia alone, and around 20 of them in South Korea.

Prominent examples include Memebox in South Korea, VanityTrove and Bellabox in Singapore, as well as Glamabox in Hong Kong.

Even Rocket Internet, the master of clone businesses, got in on the act, pushing Glossybox into Japan, South Korea, China, Taiwan, and Australia on the back of US$72.3 million in funding.

Subscription ecommerce was expected to repeat the daily deals phenomenon that swept around the world. With the massive influx of clones, act one was over, setting the stage for rapid expansion, consolidation, dying off, and finally, diversification. But things didn’t go as planned.

Untimely deaths

The warning signs were already present even as every hack thought they could earn a quick buck with another beauty box clone. The sheer number of these companies were a clue: the idea is too easy to replicate, even if executing it well is tough.

Rocket Internet fled out of Australia early as they realized the market was too small, selling the unwanted leftovers of their beauty box business to Lust Have It, a competitor.

Clones were shutting down even as new ones came up. They realized too late that buying cosmetics off-the-shelf was never going to cut it in a business model reliant on an abundant supply of free samples.

While their arrival in Asia was met with strong media publicity and a slew of unwrapping videos on YouTube, their deaths happened slowly and quietly. But the totality is staggering.

According to Douglas Gan, founder and CEO of VanityTrove, the number of beauty box companies in Southeast Asia has shrunk from 51 to less than 20 in the second half of 2013.

“Many beauty box companies [pivoted] to ecommerce or forum-based or portal-based websites,” he says.

Companies that are still in the game have struggled to grow their monthly subscriptions. VanityTrove’s confirmed that it has plateaued at 5,000 monthly subscribers, although it does see triple the boxes shipped out on months where it has special tie-ups with brands.

Gan believes the beauty box phenomenon has already peaked in Asia. “The problem is limited availability of beauty samples. The demand is there, but the supply is not.”

Ultimately, it boils down to the fact that the marketing budgets of cosmetics companies in Asia aren’t that great. While the global cosmetics industry is valued at US$280 billion, Asia only takes up about a quarter of that. Further, most of that money is concentrated in China, Japan, and South Korea.

Weaning off beauty boxes

Second coming