Co-Medical: Unveiling the secrets behind Japan's rising cosmetics empire

Recently, the cosmetics industry has been dominated by Korean brands thanks to their marketing capabilities, cost efficiency, and complex multi-step routines. However, in contrast, Japanese brands are focusing on a “less is more” approach and developing products that incorporate better ingredients. What are the advantages of J-Beauty brands, and how do these Japanese products compare to regional competitors?

I think our strengths come down to our consistency in ideas. To give you an example, we have an all-in-one cream that is quite affordable and very easy to use. We are trying to provide products that have significant value for our customers. I believe the key comes down to sticking to the essence of what a company does best and delivering products to customers that meet their needs.

The advantage that Japanese companies have is that they are always thinking about what the customers want and then tailoring their products to meet those needs. I think the Korean style tends to look more towards future trends, and of course, there will be Japanese customers that follow those trends. Although this trend approach does work for a time, what we see is that inevitably consumers go back to the brands and products they trust.

Rather than focusing purely on marketing, what we try to do, and what a lot of other Japanese companies try to do as well, is to create true fans of our brands. Fans show loyalty because of the trust that is established and therefore will buy products from that brand again and again.

You mentioned not focusing on trends; however, in the next 15 years, one in three people in Japan will be expected to exceed the age of 60. Obviously, there are some significant issues that come because of this demographic change, including a shrinking domestic market, a smaller labor force, and skill inheritance problems. Having said that, it isn’t all doom and gloom, and there are some opportunities for companies like yours to take advantage of this older demographic, which oftentimes has better financial means than the younger generation of cosmetic buyers. For Co-Medical in particular, what are some of the challenges and opportunities of this demographic shift?

What you mentioned is a very good point, and this is something that we are definitely thinking about right now. We are wholesaling to the Shonan Cosmetic Surgery Group, the number one cosmetic surgery group in Japan. This group has established a new segment called the Yell series that consists of various technologies targeting people over the age of 40 years old. This essentially is a specific beauty clinic for middle-aged people.

Given the observable decline in population, our strategic focus has shifted towards catering to individuals aged 40 years and older. In response to changing market dynamics, we've embarked on a marketing initiative tailored to engaging this demographic more effectively. Recognizing the evolving needs and preferences of our consumers, we have developed a specialized nighttime brassiere. This product, once a popular choice among youth, has been reimagined to appeal to a more mature audience. Our commitment to innovation and adaptation is reflected in this strategic pivot away from the younger demographic, acknowledging the necessity to diversify our approach considering Japan's decreasing population. Consequently, we are also extending our reach to international markets, ensuring our brand resonates with a broader audience and sustains its growth amidst these demographic shifts.

Founded in 2014, Co-medical offers a complete spectrum of products, from skin care to health supplements, designed to enhance and empower both outer and inner beauty.

Co-medical is a relatively young company and operates in a highly competitive sector. What have been some of the challenges you’ve faced in this highly competitive industry since your inception back in 2015?

If you want specific examples, I can think of no better one than the nighttime brassiere I mentioned just now. At one point, we had the top market share in nighttime lingerie, and at that time, we did a lot of marketing. We relied heavily on marketing, and as a result, our sales went down to one-fifth of what they should have been. That was a very harsh lesson, and we learned that we shouldn’t rely on marketing as much as we did. The key we learned was trust, and if customers use our products and understand the quality, then they will stay loyal.

In comparison with lingerie, cosmetics weren't nearly as challenging. When it comes to cosmetics, the trouble comes from the government in the form of laws and regulations. Additionally, there are very specific laws regarding how we can label our products, and we must be very careful to abide by these laws to the letter.

From the outset, our mission was to address consumer needs overlooked by mainstream brands, with a particular focus on concerns related to nipple color—a topic many women find important yet underserved. Recognizing the sensitivity and complexity of this issue, which had previously been approached with limited success and credibility by others in the market, we chose a different path. By forging a partnership with a reputable medical institution, we introduced a solution that not only meets but exceeds expectations. Our product, now celebrated for its efficacy, is marketed as an innovative acne scar and stain remover. This evolution underscores our commitment to delivering genuine, effective solutions for our consumers, leveraging scientific research and professional collaboration to bring about real change.

Your firm has a wide range of products. Which do you believe has the most growth potential from a business perspective?

Our eyelash serum has the most growth potential. In Japan, LDK, the beauty magazine, stands out for its commitment to unbiased and fair evaluations of cosmetics, eschewing advertisements to maintain its impartiality. Our eyelash serum has been distinguished as the best eyelash serum (for the December 2021 edition) award from LDK, the Beauty, a testament to its excellence and effectiveness. This accolade is particularly significant as it positions our serum to be the leading product in its category for the fiscal year 2022-2023.

Our extensive presence in the Japanese market is another pillar of our success. With approximately 20,000 leading drugstores selling cosmetics across the country, our eyelash serum is available in 15,000 of them. This widespread availability ensures that customers have easy access to our award-winning product, further solidifying our position in the market and reinforcing our brand's commitment to quality and excellence in beauty solutions.

Why do you believe it has become so successful?

Our strategy hinges on three core principles: differentiation, segmentation, and specialization, setting us apart in a market where similar products often overlook these aspects. Our standout approach begins with competitive pricing; while others price their products around JPY 5,000, ours is set at an accessible JPY 1,980. Despite the lower price point, the strength of the Shonan Cosmetics Group's brand instills confidence in our quality. Unlike competitors, our eyelash serum is formulated without ingredients that could stain the skin, showcasing our commitment to a high-performing, safe product—a testament to our robust R&D capabilities.

This pricing strategy serves as an introduction to our brand, leading consumers to our premium Long Lash the Rich Serum, priced at JPY 4,980, generating substantial profit under the Shonan Beauty branding. Distribution across 15,000 nationwide drugstores not only broadens our reach but also acts as free advertising for Shonan Beauty Clinics, cultivating brand recognition and loyalty. By leveraging our products as marketing tools rather than relying on traditional celebrity endorsements, we offer unparalleled value at an unbeatable price, underscoring our innovative approach to beauty solutions.

Shonan Beauty Eyelash Serum

The CO Moist Goddess Placenta Drink acts as your flagship product. Not only has this drink gained prominence as your top-selling item, but it has also captured the attention of individuals seeking both enhancement and improvement of their health. Could you provide some insights into the specific creation and processing methods used to incorporate placenta into the CO Moist Goddess Placenta Drink? How is it superior to similar products in the market?

The placenta, revered since ancient times for its rejuvenating properties, has been recognized for its safety and absence of negative side effects. This nutrient-rich substance, essential to the development of life, embodies the essence of youth and vitality. Our exclusive formula, which remains a closely guarded secret, stands out by not merely adding trendy ingredients like honey or vitamin C but by thoughtfully harmonizing with the placenta's natural benefits. Designed specifically for those aged 40 and above, our product offers a distinct advantage by enhancing the placenta's inherent qualities with complementary healthy components.

Launched a decade ago, our placenta-based products continue to see rising sales, a testament to their effectiveness. Just one bottle is enough to showcase its difference, promoting reduced fatigue and improved skin hydration. Recommended at one bottle daily, it boasts a 90% user retention rate—highlighting its compelling benefits and user satisfaction.

Recognized by the national government for its efficacy in treating certain diseases and menopause symptoms, the Shonan Beauty Clinic further endorses its value by offering the CO Moist Goddess Placenta Drink post-plastic surgery, enhancing patient recovery. This innovative approach not only signifies a breakthrough in beauty and wellness but also underscores our commitment to delivering unparalleled quality and results.

In the past, men haven’t really been users of cosmetics, but that is changing, and these days men's skincare routines and products are a vital part of many lives. Co-medical has a range of men’s skincare under the brand name ANDO. With that in mind, how do you see the evolution of men’s grooming and skincare routines impacting the ANDO brand and the Co-medical men’s skincare line?

ANDO is dedicated to pursuing the simplicity that men seek in both usability and design, offering products that are meticulously refined to protect the skin from everyday stress. In particular, the ANDO All-in-One Gel is noteworthy for its versatility; it can serve as a complete skincare solution in a single bottle or be used as a booster, aligning with the evolving skincare practices of male users. This addition to the narrative underscores that ANDO's offerings are in tune with the growing interest among men in skincare, addressing a gap in mentions of specific products or brands in the general trend of the male cosmetics market.

The men's cosmetics market, while currently modest in size, is experiencing a noticeable uptick in male patronage at beauty clinics, largely driven by concerns over hair loss. For many men, the journey into personal care begins with daily essentials like shampoo, often transitioning to specialized hair-growth formulas as hair loss becomes a concern.

As skincare awareness grows, men typically gravitate towards convenient all-in-one solutions, favoring simplicity and gradual adoption over complex routines. However, witnessing tangible benefits often piques their interest, leading them deeper into the realm of tailored beauty products. This step-by-step approach reflects a growing openness among men to explore and invest in personal grooming solutions.

ANDO

In interviews with many key players in various industries, the idea of partnerships and collaborations often comes up. Many firms look towards creating partnerships as a gateway to overseas regions. What role do partnerships play in your business model, and are you currently looking for any new partnerships in overseas markets?

While we have not extensively explored collaborations in the international cosmetics sector, we've established significant joint ventures in Asia. Our partnership with OLENS, South Korea's leading contact lens brand, and another venture in Hainan Island, China, exemplify our strategic expansion and commitment to global market engagement.

Your Shonan Beauty Clinic products are being showcased in Los Angeles in beauty clinics there. With that in mind, could you elaborate more on your strategic approach to market expansion in the future? Are there any specific countries or regions that you are targeting?

While we're pausing cosmetic advancements in South Korea, believing the timing isn't right, our focus shifts towards China with our contact lens joint venture poised for international expansion. Additionally, both India and China are on our radar as promising markets for our cosmetics line.

Imagine that we come back in five years and have this interview all over again. What goals or dreams do you hope to achieve by the time we come back for that new interview?

As the company president, my goal is to enrich lives, bringing joy to consumers, employees, and stakeholders alike. I aim to inspire pride and smiles, ensuring that when someone looks in the mirror, they feel a sense of achievement. This commitment to happiness is a timeless philosophy I expect to uphold for years to come.