Entrepreneur

5 Reasons Why We're Not Too Surprised Nature Republic Finally Called It Quits In M'sia

The news of Nature Republic’s sudden shutdown might have taken some beauty scene aficionados in Malaysia by surprise.

After all, their Aloe Vera gel and Snail products have quite a reputation among skincare users here.

Not only are Nature Republic shutting down all of their 11 stores, their online shop has ceased operations at least since the 19th of June, the same day as their closure announcement.

This is a screenshot of what the website looked like on the 20th of June.

The “Close Down” image on their website was last edited on the 19th of June but now, the website requests for authentication credentials when you try to access it.

After calling their offices to verify the news, we found out from a representative that yes, Nature Republic has pulled out from the arrangement with the Malaysian distributor.

We’re not the first country Nature Republic has split with either. In November last year, Nature Republic announced that they were ending operations in Taiwan.

The exact details of the Malaysian pullout are still conjecture, but to be honest, we’re not too surprised. If you’ve been looking out for the signs, Nature Republic leaving our shores was a long time coming.

1. People are buying Nature Republic—but NOT on the “official” channels

If you’ve ever voiced a desire to purchase any Nature Republic product, it’s very likely you’d be told, “It’s cheaper if you buy it online”.

Unfortunately, “online” doesn’t usually translate to the now defunct “official” e-commerce website.

Statement posted by Nature Republic Malaysia in April.

Taken at face value, there seems to be nothing wrong with the statement Nature Republic posted on their Facebook page earlier this year.

It’s true. Nature Republic knock-offs run rampant on e-commerce sites and bazaars.

But the caption for that photo paints a different picture.

Screenshot of said post on Facebook

It’s odd for the online statement to call out the specific e-commerce sites (particularly Hermo, a website that has a good reputation for buying and reselling authentic K-beauty products from Korea itself).

So it’s possible that these websites were brought up because this was where Nature Republic lost business to.

That being said, the post is technically not wrong.

If none of the listed sites were authorised by Nature Republic in Korea as resellers, by lumping them all in the same category, Nature Republic Malaysia protects itself from being liable for any issues that arise if people still insist on buying these products online.

2. The rise of counterfeit products

We briefly mentioned this in the previous point, but the popularity of Nature Republic’s aloe vera gel might have ultimately led to its downfall.

The fact that there are blog posts out there to help you distinguish between “fake”and “real” gels is very telling. An average user might have heard of the popularity of the gel, then seen it for cheap somewhere else. Why wouldn’t they decide to buy it?

Then there were cases of severe allergic reactions due to using counterfeit products, which might have scared users off from even the authentic products.

3. Lack of stock availability

I can’t say for sure if this is the case in stores other than Klang Valley that I’ve visited, but when I walk into a Nature Republic store to look for a very specific item, I’m usually told that the item is sold-out.

To compare this to Innisfree for a second (another brand that I do have personal experience with), it’s rare for Innisfree to run out of products, despite how crowded their stores usually are.

The math is simple. When you can’t buy something in their store, you resort to going online or looking elsewhere. And again, this loops back to point #1 and #2.

Or, since you’re already in a mall, you’d probably just walk over to the next Korean beauty store to get an equivalent product. Which leads us to…

4. Too much competition from other Korean brands

Image Credit: Macaron on blogger

Just off the top of my head, we have Etude House, HolikaXHolika, Elianto and Innisfree. This doesn’t include the brands that are only available online but are still sold in Malaysia.

Even though Nature Republic was one of the first of K-beauty companies to enter Malaysia and make a name for itself, the market now is heavily saturated.

Most malls have at least two or three other brands jostling for attention.

In terms of promotions and attractiveness, they all became almost generic. Promoted by Korean celebrities, discounts for members and often, key star products that everyone returns to buy.

Nature Republic might have just lost out when it comes to attracting enough of the clientele they needed.

5. Controversy in the parent company in Korea

Image Credit: Screencap from Yonhap News

This was the reason quoted by the Nature Republic closure post, and it’s a really big one.

Last year, Nature Republic found itself mired in controversy related to their founder and CEO, Jung Woon-ho.

He has been imprisoned for gambling overseas with embezzled money from the company, and was alleged to have been caught lobbying for a lighter sentence, also accused of violence in prison.

Since then, Nature Republic has been facing dramatically reduced earnings.

Recording 1.8 billion won in operating loss in the first half of this year, it went from a profitable company to reporting losses.

The company has since been urged to sell their majority stocks previously owned by Woon-ho. So it is possible that they’ve pulled out of Malaysia to reconfigure and restrategise.

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In the end, this is all about business. And they’re not the first company to suddenly pull out of Malaysia either in the recent days (here’s looking at you, True Fitness).

But what Nature Republic’s pullout from Malaysia shows that even in an age where your type of business should have flourished here in Malaysia, a combination of a saturated market, poor management from the top, and perhaps, being slow to react to problems could cause an 8-year-old brand to drop.

 

 

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