A Fruitful Outlook: Peach & Lily's Formula for Enduring K-Beauty Success

Carla Seipp

Published January 16, 2024

Interviews Skincare Entrepreneurship

Ten-step skincare routines with sheet masks, hydrating essences, and elegant sunscreen formulations; plump, clear complexions achieved through effective, gloriously textured formulas—K-beauty has swept across the skincare aficionado spectrum like nothing else. The K-beauty market is forecast to reach $18.32 billion by 2030 with a CAGR of 9.2%. According to Cult Beauty, the number of mentions for “glass skin” across  Instagram, TikTok, and Google reached 3.3 billion mentions in 2023. A pioneer of the genre in the US market is Alicia Yoon, founder of Peach & Lily and Peach Slices.

Peach & Lily is not only the name of the e-commerce platform Yoon launched in the 2010s, bringing K-beauty brands like Banila Co, May Coop, and Saturday Skin stateside, but also the skincare brand debuted together with its sister brand Peach Slices in 2018. Five years in the business and the powerhouse duo has reached $100 million in net sales. Both brands are distributed DTC and at Ulta; Peach Slices also counts Walmart and CVS Pharmacy as stockists.

“The customer is always the most important, which, for us, translates into the product being the most important thing. We are relentless about creating the most efficacious, innovative products that truly transform and deliver results,” Yoon tells BeautyMatter. “We weren't chasing space in stores. We weren't chasing growth. It was this relentless focus on the product, and, in turn, that led to really high customer loyalty and  accelerated growth.”

How did Yoon turn a bootstrapped business into a multimillion-dollar enterprise? The founder’s answer entails acute business acumen, an instinctual sense of timing, customer-first product development, and a “slow and steady wins the race” approach—packaged in a dewy concoction of determination, passion, and on-the-ground efforts.

In Pursuit of Peaches

Born in Seoul, Yoon came to the US at the tender age of one. While in high school in New York, she encountered a woman who, upon seeing her makeup skills on a night out, advised her to go to beauty school. She trained as an aesthetician in both the US and Korea. It’s here where her interest in skincare first began, although the subject continued as a side hobby for several more years—regular travels between Korea and the US proving as the precursor of Peach & Lily, with Yoon bringing back the latest products from the K-beauty market for friends. Her interest in dermatology had even more personal roots, as she struggled with eczema and sensitive skin all throughout her life, further driving her desire for suitable skincare solutions.

“I started studying skincare because I wanted to figure out my own skin. I have so many notes over the 20+ years of research and studies that I have come across—ingredient patterns that I've seen, keeping track of what's happening in the industry, studies on the skin microbiome, and just having this general genuine passion and curiosity. At that time I was not thinking I'm going to start a skincare business,” she recounts.

But before the beauty industry came her academic pursuits. Yoon studied philosophy at Columbia University, going on to work as an analyst at Goldman Sachs and management consultant at Accenture before pursuing a Master of Business Administration from Harvard Business School, a space which further pushed her passion for entrepreneurship. Her first start-up was focused around Korean fashion, launching Alicia Yoon Showroom in New York in 2009.

Reflecting on how this time shaped her path as an entrepreneur, she notes, “My business background was helpful in having the fluency on the finance part, knowing the supply chain. All that said, I don't think you need a business background to run a business. In fact, a traditional business background could almost be an impediment, because the level of granularity that you need to dig into may not be something that you're accustomed to,” she explains. “If you are really passionate about your vision, if you have the tenacity, if you can be curious and learn, over time, you start to trust yourself and have that resourcefulness that you can bring to the table. It's always important to take a step back and ask: Does that make sense for my business? Does that make sense for our customer base, our brand ID?”

Seeing the growing demand from bloggers for Korean products, Yoon launched the e-commerce site in 2012. “Whatever your background is, it's so important to know every part of your business really, really well. As the founder and CEO, you have to get granular. Success is in the details and how you're executing things, really rolling up your sleeves,” she explains. "You have to have that mindset of ‘no task is too small,’ because if you start missing these details, you become disconnected with what's going on in different parts of your business.” To Yoon, that translated into hand-delivering orders in NYC when the retailer first launched to save on shipping costs (in the early days of the business she only had $7 to her name) and visiting over 100 Ulta locations in four months to meet with customers and sales associates.

“I was not taking a salary. It was really hard and scrappy. But at the same time, the growth of the business and the demand from consumers and the trajectory was very high. Sometimes your cash flow takes a minute to catch up. I was always thinking, the signs are there that we're on the right track,” she recounts.

When it came to the site’s curation process, Yoon searched for the most hype-worthy skincare brands in Japan and Korea to bring back to the US, researching reviews, examining INCI lists, interviewing each brand’s internal team, and trialing products for one to two months, also enlisting testers across various skin types, tones, and ethnicities. Today, the company still scours the market every four to six weeks to discover the latest innovators in the space.

“From 2012 to 2018, we pioneered this Korean beauty movement in the US and brought it for the first time to QVC, Target, Bergdorf Goodman, Barney's, Macy’s, Sephora. Ten to 11 years ago, K-beauty wasn't a term people had heard about. Today, it's a much more mature category in the sense that people are now gravitating towards not this entire category but specific brands within that category. It's become such a mature category so rapidly because the results have spoken for themselves,” Yoon comments.

From E-commerce to In-House Development

Amidst the booming success of the e-commerce platform, its founder was pulled in by a desire to not just sell products but create her own.  The Peach & Lily product line launched with premise of “Actives for All”—creating efficacious formulas containing retinol, vitamin C, or exfoliating acids that are suitable for sensitive skin. That efficacy is the result of Yoon’s extensive dive into the development process. “I didn't have insight or knowledge about labs and suppliers, but I cultivated that network by digging in, going everywhere in Korea to get to know the labs—down to who the best chemists are for the cleanser or serum category and going to suppliers who are located six hours outside of Seoul who said ‘No one ever visits us.’ But I wanted that firsthand knowledge of the innovation scene,” she states. That dedication paid off: upon debut, the range sold out of its Superboot Resurfacing Mask in mere minutes.

Keeping the core development in the Peach & Lily family was essential to Yoon. “Never outsource mission-critical areas of your business. It's so important that those competitive edges are in-house. You can supplement support, but don’t completely outsource that knowledge base,” she advises.

Today bestsellers include the Rescue Party Barrier Comfort Cream and Retinal For All Renewing Serum, but its hero product—the viral Glass Skin Refining Serum (#peachandlilyglasskin has 2.3 million views on TikTok and one bottle of the product sells every two minutes), which is a blend of East Asian mountain yam, niacinamide, peptides, hyaluronic acid, Centella asiatica, peptides and peach extracts,was the result of over two hundred formulas tested by over forty cosmetic chemists with on-skin applications. A third-party consumer study showed that 96% of test subjects saw smoother and softer skin, as well as increased hydration with continuous use. “I saw a big gap in the market. Gentle, soothing hydrating products are in one category. Clinical, concentrated actives are another category. For somebody like myself with severe eczema and very sensitive skin, I don't want to make these trade-offs,” she says. “It has been exciting bringing that vision to life where you can have the best of both worlds.”  

Commenting on navigating TikTok virality, Yoon explains, “It's this inverse relationship: the more viral it goes, the less prepared you're going to be for it. That's just a reality because no company is going to take every single SKU and assume that they're going to go viral and tie up all of your cash flow and surplus inventory. The best thing that we've done is going back to every supplier and minimizing the lead times as much as possible.” She cites examples such as pre-made packaging, ingredients with longer shelf life, and planning in advance of big marketing pushes, adding, “Planning the nuances of that is hard, so the best thing that you can do is think about those broad brushstrokes, but then also in the background have your supply chain ready to go.”

Whereas Peach & Lily focuses on gentle formulas that still pack the efficacy of actives, Peach Slices is a lower-priced but equally solutions-orientated brand, with a focus on rosacea, oily skin, and acne. Beloved SKUs include Acne Spot Dots, Snail Rescue Intensive Wash-Off Jelly Mask, and Redness Relief Azelaic Acid Serum. “I wanted to offer solutions that, if it's for ubiquitous skin issues, they should be in ubiquitous channels, as accessibly priced as possible. But we have customers that mix and match [from both lines]. It’s two completely distinct brands with totally different identities and serving different needs,” Yoon remarks.

While concerns like skin texture and appearance apply to a giant spectrum of potential customers, Yoon has been meticulous when it comes to both brands' retailer presence. A “mile deep and an inch wide” strategy has been one of her keys to success. “You want to make sure you're strategic to a specific retailer, building that customer loyalty and awareness, and driving that productivity. You're going to always have the opportunity to expand into other places, but what you don't want to do is expand everywhere all at once, not do a great job, and then you're losing shelf space. You want to go slow and steady and have a solid foundation,” she explains.

In the same way that Yoon’s strategy is about being slow and steady, the number of product launches per year have ranged from two to six SKUs, with tenfold spent on product development rather than marketing. “Going deep also means you're thinking about the productivity of each product. You're not chasing launch after launch and driving growth because you just have newness,” she adds.

There’s also thought of impact beyond the product: Peach & Lily packaging is 100% recyclable, incorporating  postconsumer-recycled materials. For every order placed, the company plants a tree. Peach & Lily has also been partnering with Restore NYC, a nonprofit that seeks to stop sex trafficking, since 2016, becoming one of the largest financial donors to the initiative in the process.

“The customer is always the most important, which, for us, translates into the product being the most important thing. We are relentless about creating the most efficacious, innovative products that truly transform and deliver results.”

By Alicia Yoon, founder + CEO, Peach & Lily

Frugal but Fruitful

Keeping any beauty brand thriving over the course of several years doesn’t come without its challenges, especially in today’s industry. Over the years, creating a workable contingency plan, finding a backup supplier, and minimizing supply chain lead times have been some of the biggest lessons Yoon has learned, especially given the challenges the pandemic brought to said landscape. “We were all just figuring these things out as they were happening. I feel grateful to have a spectacular executive team, and respectively, the great teams that they're hiring, building, nurturing, and leading,” she recalls.

The founder admits that while her business strategy of profitability-first may not have been aligned with the wider factors at play in the industry at the time, the foresight has served Peach & Lily well. “Five years ago, being profitable was unpopular. It was about growing at all costs. We always had this old-fashioned view, where, as a CPG company, the expectation and orientation was always towards profitability. If you cannot be profitable, it's not a sustainable business. So we were profitable from our earliest years, and a big part of our DNA is to be frugal. Frugal doesn't mean you're not investing or spending on the right initiatives to grow your business, but it's all about keeping in mind cost efficiencies,” she says.

That extends to not only being smart about how in-person activations are staged to minimize spend but also not falling prey to marketing  solely for trend’s sake. “It's so important to think: What is the actual purpose of this marking initiative? What is the KPI we're tracking? You have to be very judicious about where you're seeing the return and how you're analyzing if the revenue was truly incremental,” she notes. “It's not an easy exercise, but if you don't have a handle on that, you don't have a clear view on which things truly drove an extra lift to your revenue. It’s important to do that post mortem analysis, no matter how big you get, because that's the only way you're going to stay profitable. Our growth and strong profitability through that growth is a testament to those elements of our culture working.”

As to which activations have been the biggest successes across the last five years, Yoon states, “We’ve had success across different parts of 360 marketing, but I personally find paid media really fun; there could be so many permutations and with the right creativity and discipline, you can find some key moments that can propel your business forward. I especially love in-person activations as well because it's always great to connect with your community in person.” In November of last year the brand created a “Power of &” campaign featuring five real-life customers of the brand (the company upholds a 20:1 ratio of consumer to influencer events). In addition to the campaign, a Peach Party Bus offering prizes and personalized skin consultations toured LA and NYC. Connecting with its loyal community, and making them feel scene, has helped the brand's follower numbers to continuously grow.

Future Harvests

Following double year-over-year sales growth, with 65% coming from repeat purchases, the company took its first investor in the form of a minority investment from Sandbridge Capital in February 2020, to help assist its international expansion and fund IRL community activities. “The best time to raise money is when you don't need it, because you'll be able to walk away from things that don't work for you. It also affords you the ability to take your time to get to know your investors and make sure your values are aligned,” Yoon says. “Sandbridge Capital has been a tremendous partner because during the pandemic, we wanted to prioritize our team during a time that was hard for everyone, and they were completely on board with that. Another example of alignment is preserving brand equity and not compromising on that.”

For the year ahead, the company is holding virtual beauty master classes, further pushing consumer education, and exploring AR and gamified virtual event options. Peach & Lily will be increasing its shelf space at Ulta Beauty (from 18 inches to three feet of shelf space, to be precise). Some “exciting innovations and launches” are also on the horizon.

“Our mission is to empower people to transform their skin and enabling that mission is the best products and the most accurate digestible information in formats that people want. Our education has always been rigorously vetted, backed up by clinical studies that are high-quality research, talking to different experts, testing, etc. But people might want that in a 15-second TikTok or a long- form blog post with cited sources to nerd out on. They might want that in the form of a consultation. We are all about meeting our customers where they're at,” she concludes. And right now that customer might just be waiting to place their first (or next) Peach & Lily order.

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