Why buy luxury goods in department stores?

Minjun Son

2021. 11.16

Kim Hee-ae, Kim Woo-bin, Jo In-seong, Kim Hye-soo, Ju Ji-hoon…

It is becoming a hot topic as a large number of famous actors, who are considered to be the best in Korea, appear in advertisements for startup luxury platforms rather than large companies’ brands.

Stars who exert a great influence on the public with their names alone are competing fiercely as the faces of unfamiliar services. How could startup services be able to model these famous stars?

Tens of billions of won invested in luxury platforms are being used for star marketing strategies, leading to competition to dominate the domestic online luxury market.

According to Euromonitor, the size of the online luxury market last year was 1,595.7 billion won, which is about 10.6% of the total market, but if you look at the recent trend led by the MZ generation, the growth is remarkable.

Then, today, let’s take a look at four representative services one by one: Must It, Trenby, Balan, and Catch Fashion.

First-generation luxury platform ‘Must It’

‘Must It’, which launched the first luxury platform service in Korea in 2011, has the most stable revenue model as much as its long history. It is the only one that has been in the black for 10 consecutive years, and the transaction amount is also leading the way at around KRW 250 billion.

The biggest advantage of Must-It is its price and fast delivery. Prices are on average 20-25% cheaper than department stores, and the average delivery time is 1.5 days, which is very short.

Must It is conducting advertising and marketing for the first time, and as a result of using actor Ju Ji-hoon as an exclusive model, in October, the monthly active users (MAU) recorded 4.5 million, the highest among competing services.

The world’s cheapest luxury brand ‘Trenbi’ recommended by AI

Founded in 2017, Trenbi is an artificial intelligence (AI)-based luxury purchase platform. It also operates six overseas branches in the UK, US, Germany, France, Japan, and Italy. Also it was the fastest in attracting investment among domestic luxury platforms. It is characterized by comparing the price information of luxury goods spread around the world and recommending the lowest price to customers through the AI solution ‘Trenbot’ developed by themselves.

Unlike Must-it, Trenbi is a platform that directly brokers transactions rather than an open market. It is a method of brokering and selling genuine products selected through a self-verification process among products such as official websites, stores, and boutiques of brands around the world.

Trenbi, which started as the only tech-based company among luxury platforms, is highly acclaimed for its excellent technical capabilities of the ‘Trenbot’ engine and well-equipped overseas operations.

‘Balaan’ supported by Naver

Launched in 2015, Balaan has become the company that has attracted the most investment among domestic luxury platforms. The accumulated investment amounted to 445 billion won.

Following the introduction of the same-day delivery system ‘Today Balaan’ in January of this year, the ‘lowest price comparison service’ was also introduced in April. As such, Balaan is putting all its effort into diversifying its functions, such as a ‘personal shopper’ that finds products optimized for customers.

‘Catch Fashion’ emphasizing 100% authenticity

‘Catch Fashion’ is one of the latecomers among luxury platforms, but it succeeded in attracting 21 billion won of Series B investment in August, and the accumulated investment is amounted to 38 billion won.

What sets them apart from other platforms is that they sell only official products through 100% official route, that is, in cooperation with luxury brands and official distributors, without parallel imports and purchasing agents.

So far, we have dealt with the characteristics of the four services that are leading the domestic luxury platform market.

The global variable of the spread of COVID-19 has caused upheaval in the luxury retail market, and e-commerce is at the center of it. And the proportion of online sales will grow rapidly. In the luxury market that is changing with this new paradigm, I look forward to seeing whether Must It, Trenbi, Balan, and Catch Fashion can grow into global luxury platforms beyond domestic market.