TSI Holdings has partnered with Cafe24 to launch a one-stop K-fashion store that syncs payment, inventory, and delivery information in real-time.
The wind is changing in the way Korean fashion is reaching Japan. Japanese fashion giant TSI Holdings partnered with global e-commerce platform Cafe24 to launch its K-fashion DTC store, MORUGI, on November 9th of last year. TSI is a Japanese fashion conglomerate posting annual sales of approximately 1.5 billion dollars (165 billion yen).
MORUGI launched with an unprecedented strategy to distribute K-fashion in Japan. The new distribution process integrated all necessities like payment, inventory, and delivery services directly onto Cafe24’s platform. This eliminated some unnecessary channels in the way of connecting Japanese consumers to some of Korea’s most popular online brands powered by Cafe24.
MORUGI offers Japanese consumers a selection of fashion items in the latest K-style trends while delivering a breezy shopping environment.
The store also provides Korean DTC brands with an overseas sales channel minus the hassle of managing a separate system for customs and inventory.
In all, TSI Holdings has pioneered a new business that conveniently introduces popular Korean brands through MORUGI.
Interview with Yuta Morimoto, General Manager at TSI EC STRATEGY
Q. What is the story behind MORUGI’s creation?
Matahiro Kashiwagi, the President of TSI EC STRATEGY under TSI Holdings, has always been interested in Korean brands. TSI met with Korean DTC brands to discuss possible joint business opportunities. Some were big brands posting up to 10 million yen in annual transaction volumes. So we began to think of ways to sell Korean brands in Japan. In the process of meeting with brand representatives, we noticed that they frequently mentioned Cafe24.
According to a survey by Itochu Fashion System, approximately 50% of Japanese youth in their teens and 20s refer to K-fashion. This number is growing every year. Although older generations tend to take fashion hints from Europe and America, there is a steady upward trend of K-fashion, K-pop, and K-beauty influence in Japan.
We saw potential in pioneering a new fashion market in Japan and launched MORUGI.
Q. What does MORUGI mean?
MORUGI means ‘Don’t you know?’ in Korean. We decided on this name intending to share not only Korean but other global fashion to Japanese consumers.
Q. What is MORUGI’s brand concept and target customers?
The concept of the brand is to introduce as many foreign brands as possible that are new to Japanese consumers. We are going beyond just fashion to share the culture. We are thinking of ways to sign on more brands to MORUGI while making the purchasing process easier.
We are looking at both men and women in their 20s to 40s. We want to offer a broader range of styles. We initially targeted female consumers, but a few recently-added menswear brands are doing very well. Not only men but also women are buying from these brands.
Q. What differentiates MORUGI?
We are planning to increase the number of brands exclusively available on MORUGI. A total of 10 out of the 25 brands are opting to only sell on MORUGI. The other 14 brands are also selling directly to Japanese consumers from Korea through their online DTC stores or going through third parties like local stores. Going forward, we are planning for MORUGI to become a starting point for Korean brands wanting to launch their business in Japan.
We also created a ‘Magazine’ space on the MORUGI site for added content. It primarily covers Korean fashion styling tips, food, tourist attractions, beauty, and more. Some people visit MORUGI because they like Korea, while others don’t know much about the country. We want to offer the latter more than just fashion and provide a range of interesting new information.
Q. How popular is K-fashion in Japan?
Korean brands have distinctly different styles than Japanese fashion brands. Meanwhile, they have the advantage of being relatively less expensive.
K-fashion is enjoying more attention in Japan as demands for K-culture like K-pop and K-beauty continue to rise.
Q. How did you work with Cafe24 to launch MORUGI?
We first envisioned a business model for MORUGI before building the website. Then we met with Cafe24 Japan to jumpstart building a system.
We reviewed the current Korea-Japan trade regulations and the different business practices concerning cross-border e-commerce. We also took note of how Korean businesses run their DTC stores. MORUGI is the first business model of its kind. So we worked together closely to build the optimal website.
Q. How are you planning to operate the business in the future?
Our main goal is to maximize the number of new customers.
To achieve this, we are aiming to expand the number of brands offered to 100 this year. We are also planning to launch a marketing campaign. Our site can benefit from the promotion. We will also roll out offline popup stores to further boost the MORUGI brand.
The 24 brands listed under MORUGI are all distinct. Our challenge is to incorporate such differences into a single website harmoniously.
Furthermore, some people shop at MORUGI without knowing that the brands listed are Korean. So we aim to expand our focus beyond those who are fond of Korea to cater to a diverse customer base and their various needs.