As beauty boxes take off in Asia Pacific, researcher raises questions over potential

12-May-2013 - Last updated on 13-May-2013 at 14:14 GMT

Beauty boxes have gained considerable ground in the North America and European markets, but as the trend starts to proliferate in the Asia Pacific region, one expert asks how viable it is in certain markets, particularly Southeast Asia.

Three companies have already made in-roads in the region’s beauty box market – BeautyTreats, Singapore-based VanityTrove and Lolabox - and all three have recently launched into the fast-growing Indonesia market in recent months.

Terrence Lee, of market researcher SGE Insights, believes that, on the back of the company’s report ‘Unwrapping the Beauty Box Industry in Asia Pacific’, there may be questions as to whether or not it is a good idea to roll out this concept into other countries in the region, particularly in Southeast Asia.

Rocket Internet avoids Indonesia market

Lee points to the fact that one of the biggest international players, Rocket Internet, has decided not to roll out its Glossybox concept in Indonesia and other Southeast Asian countries, stating that the company has avoided this move ‘like a plague’.

Lee points to the fact that Rocket Internet is a data driven company, indicating that after doing some number crunching, its strategists have decided that market entry is too great a risk.

This follows the company exiting both the Australia and Taiwan markets after it was decided that both competition and market circumstances did not make a favourable business proposition.

Indonesia's e-commerce platform is not developed

Specific to the Indonesia market, Lee points to the fact that many aspects of the country’s e-commerce platform are simply not developed enough to sustain this type of business.

This problem mainly stems from logistical challenges relating to the fact that Indonesia is a vast country comprising over 17,000 islands, which simply makes delivering the beauty boxes a significant challenge.

He also states that the postal delivery service in the country is both unreliable and one of the most expensive in the region.

Who can afford beauty boxes?

Like a number of other countries in the region, Lee also points to the issue of affordability in the Indonesia market as being another potential stumbling box for establishing a beauty boxes business.

Although the market for cosmetics and personal care products has been growing at well above average market rates in recent years, that growth comes from a very small based and still represents a relatively low per capita spend.

However, Lee does not entirely dismiss the idea that the three companies can succeed in the Indonesia market, pointing to the fact that they are not start-ups and have considerable experience operating in the category, particularly VanityTrove, which has the longest business history.

Likewise, Lee also believes that the undeveloped nature of the Indonesia e-commerce channel could also points to significant growth potential, particularly if new and more reliable solutions are found to overcome logistical issues.