The domestic cosmetics brand distribution company, SILICON2, is continuing its strong performance owing to the growth of major brands such as 'Chosun Beauty' and 'MediCube.' The securities sector projects that SILICON2's revenue will exceed 1 trillion won this year.
According to the related industry on the 1st, SILICON2 recorded sales of 245.7 billion won and an operating profit of 47.7 billion won in the first quarter of this year. These figures represent increases of 63.4% and 62.1%, respectively, compared to the same period last year.
The brand that recorded the highest sales among SILICON2's distributed brands in the first quarter was Chosun Beauty, accounting for 22% of total sales. Chosun Beauty is a skincare brand that reinterprets traditional medicinal ingredients for modern consumers, gaining higher recognition abroad than domestically. Its flagship product ranked first in the sunscreen category during the 2022 Amazon Black Friday period. Chosun Beauty has been increasing its brand recognition annually since being acquired by Goodai Global in 2019.
The brand that ranked second in sales during the same period was MediCube, which accounted for 10% of the total. MediCube is a medical cosmetic brand established in 2016 and is owned by APR. It has solidified its position as a functional cosmetic brand, receiving approval from the Ministry of Food and Drug Safety for its main products.
SILICON2 began distributing MediCube products in the second quarter of last year. The quarterly sales, which were only 70 million won at that time, surged to 24 billion won in the first quarter of this year.
SILICON2 is distributing Korean cosmetics to more than 150 countries through its platform 'Style Korean.' In this process, it has secured logistics warehouses in key regions to supply products efficiently, with facilities established in Gwangju, Korea, and California and New Jersey in the United States.
In Europe, there are logistics warehouses in Poland, and in Southeast Asia, in Indonesia and Malaysia. This year, it is preparing to expand into the Middle Eastern market by establishing logistics facilities in Dubai, United Arab Emirates. SILICON2 has improved logistics efficiency by being the first specialized cosmetic distribution company to introduce an Automated Guided Vehicle (AGV) system in its warehouses.
Currently, the number of brands distributed by SILICON2 amounts to between 400 and 500. The company adopts an operational method that verifies product potential and demand through B2C (business-to-consumer) transactions before expanding to B2B (business-to-business) transactions. Therefore, even after brands have reached a certain level of growth, it is common for them to continue collaborating with SILICON2 in product distribution. This allows for the minimization of operational risks through the logistics and distribution infrastructure secured by SILICON2.
Due to this business structure, SILICON2 can enhance its negotiation power with brands and manage profitability steadily. Lee Seung-eun, a researcher at Yuanta Securities Korea, noted that "SILICON2 has secured advantageous transaction conditions by obtaining favorable unit prices based on bulk purchases or long-term transaction agreements during supply contracts with brands. Even if there are requests to raise costs due to increases in the recommended retail prices of brands, SILICON2 maintains a structure that reasonably adjusts supply unit prices to minimize margin losses."
According to financial information provider FnGuide, SILICON2 is estimated to record revenues of 1.0629 trillion won and an operating profit of 203.3 billion won this year. This marks increases of 53.7% in revenue and 47.8% in operating profit compared to last year. The revenue was in the 100 billion won range in 2020 and has grown tenfold in five years.
Jo So-jeong, a researcher at Kiwoom Securities, said that "Korean cosmetics brands are now advancing beyond the United States to Europe and the Middle East," adding that "Collaboration with B2B companies like SILICON2, which have a deep understanding of local markets and extensive distribution networks, is becoming increasingly important in this process."