Memebox is a beauty meteor picking up steam.
The start-up that’s capitalized on the Korean beauty craze to grow its brands 670 percent year-over-year has raised $65.95 million in Series C funding from Formation 8, Goodwater Capital and Pejman Mar Ventures. Led by Formation 8, the latest round brings San Francisco-based Memebox’s total funding close to $100 million.
Launched in 2012, Memebox is attempting to differentiate itself from legacy beauty firms by leveraging data to spot and seize upon trends early to drive sales, rapidly bringing products manufactured in Korea to market, and fueling interest via engaging social-media outreach, and celebrity and influencer tie-ins. Over the next 12 months, the company is on track to ring up $150 million in revenues, a 280 percent jump from the same period a year ago.
“Memebox has redefined how beauty companies operate in order to respond to the needs of today’s mobile and product-conscious consumers,” said Brian Koo, founder and chief executive officer of Formation 8. “It represents the future of the digitally powered consumer brand revolution. Businesses like Dollar Shave Club, Warby Parker and Memebox all benefit from the ability to use data and technology that offline incumbents cannot.”
The funding is intended to help Memebox further take advantage of its existing strengths in addition to allowing it to branch out in new directions. Arnold Hur, president of Memebox USA, detailed the money is being put toward building Memebox’s e-commerce capabilities, key partnerships, and its own brands and stores. While 75 percent of its online sales come from its mobile platform, Memebox has extended offline with a store in Seoul currently registering $1,000 in sales per square foot, and to department stores and drugstores in Korea.
Memebox is planning to increase its retail presence both by opening its own stores and through wholesaling to other companies’ stores. Hyungseok Dino Ha, cofounder and ceo of Memebox, explained the company is bridging the digital-physical divide in its retail design by constructing makeup booths and seating areas to encourage conversations between shoppers and in-store beauty authorities. “We’ve proven that we can generate even more sales on mobile or online when customers enjoy their experiences at our off-line stores,” he said.
In the last year, Memebox introduced four beauty brands — Pony Effect; I’m Meme; mask purveyor Bonvivant, and skin-care specialist Nooni — and anticipates it will release two additional brands this year. Hur said Memebox’s color cosmetics lines — Pony Effect is Memebox’s fastest-growing color cosmetics line in the U.S. — are larger than Memebox’s skin-care lines, but he underscored skin-care brands are selling briskly as well.
Production speed, partnerships and trend-right items play pivotal roles in the success of Memebox’s products. Pony Effect is a partnership between Memebox and South Korean beauty influencer Pony. As a measure of the brand’s popularity, Memebox said 20,000 units of Pony Effect’s new eyeshadow were purchased in 45 minutes. Memebox has also partnered with Song Joong-Ki, a South Korean actor and star of the drama “Descendants of the Sun,” and sponsored the Korean television series “Uncontrollably Fond.” Hur revealed Memebox can execute a product from idea to unveiling in as little as two months, compared to 18 months to two years for traditional beauty companies. “What we have done operationally is create a business to take on trends when they start,” he said.
In the U.S., Memebox’s brands account for 25 to 30 percent of the company’s business. “In terms of a revenue split, it’s a natural course that we will earn more from our own brands. We can do retail distribution with our own brands, and we consider ourselves a brand company,” said Hur with the caveat that Memebox’s e-commerce platform welcomes third-party beauty brands, and offers a wide assortment of Korean brands big and small. He stressed, “We have an open platform. The customer is shown whatever the best product is. If it is our product, than it is our product. If it is not our product, we need to make our products better. We love working with great brands, and we want to work with more great brands.”
Memebox has been adept at drawing customers to its platform for its own brands and third-party brands. The company has attracted roughly 70 million Facebook views this year from videos, including ones spotlighting Elizavecca’s Carbonated Bubble Clay Mask, Etude House’s Bubble Tea Sleeping Pack and Pony Effect’s Ultimate Prep Primer. Memebox has in excess of four million social-media followers globally and notably two million followers on the Chinese social-media network Weibo.
Memebox’s advertising approach is quantitatively and qualitatively different from most beauty brands. Hur estimated most beauty brands run two to three online ads at once. In contrast, Memebox has as many as 300 ads at the ready to optimize. And the tone of Memebox’s ads is a break from the polished tone of customary beauty ads. “We stop thinking like a marketing person with a marketing message,” he said. “It’s about thinking like users on Facebook.”