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Korean e-commerce startup Althea announced today that it has raised an undisclosed second round of seed funding from 500 Startups.

Althea raised its first round of seed funding in May of this year from BonAngels, a Korean early stage VC company.

It is a site that sells Korean makeup and skincare products and was founded in July 2015 by Frank Kang, who previously worked as Head of Global Expansion at Ticket Monster, a ticket and e-commerce startup that Groupon acquired in 2014 for an estimated US$260 million.

Although Kang himself is not the targetted consumer – 95 per cent of Althea users are women, according to the company – he saw a business opportunity when friends from Southeast Asia kept asking him to pick up Korean cosmetics to haul over.

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“It wasn’t just a cost issue – though most products are at least 30 per cent more expensive – but it was also a matter of authenticity. A lot of the stuff out there is fake,” Kang said. “In general, 70 per cent of the products sold on Alibaba are fake!” he claimed.

The current round of funding came by chance. Kang met Khailee Ng, Managing Partner of 500 Startups, at an event.

“I wrote an e-mail to follow-up with him, just a ‘yo how are you, how’s it going’,” said Kang.

Khailee happened to be visiting Korea in the next few days and a short meeting turned into a genuine interest in the product, which led to the second round of funding.

30-day unconditional returns

The biggest challenge, according to Kang, is building trust, and to get that rolling, the company has implemented a policy of unconditional returns within 30 days of the purchase.

Is it worried about finding half-empty cosmetic creams in the mail?

Jumei, a Chinese startup now valued at a couple [of] billion, practised this model. What it noticed was that the actual refund rates didn’t go up dramatically,” he told e27. 

Jumei, China’s leading online retailer of beauty products is now an NYSE-listed company. The O2O startup-turned-giant started out in March 2010 in Beijing, selling branded makeup and skincare products.

Another incentive Althea gives customers is free shipping on orders over US$36.

Finishing touches, future plans

According to Kang, Korean cosmetics export volumes surpassed that of Japan’s last year, becoming the biggest exporter of cosmetics in Asia.

Although, China is a huge market for Korean beauty products, getting through China’s customs is difficult and the government is protective. There is also the issue of competition.

“There are hundreds of Korean companies working to export Korean beauty products to China online. Most are struggling with logistics and competition issues,” he said.

Althea currently ships to Malaysia and Singapore and plans to hit six major countries in Southeast Asia by 2016.

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Image Credit: Althea