Ipsy's business-model diversification continues.
The company is set to launch its first brand, Complex Culture, on Nov. 15. The line has eight vegan, cruelty-free makeup brushes with names that aim to take confusion out of the process, like "angled foundation," "precision concealer" and "allover shadow." They have biodegradable handles and syn-tech bristles. The line also includes two makeup bags.
"It's something almost silly in a sense, that a lot of brush companies assume that you know what to do with brushes and so we would be sending our members brushes and they would be like, 'What do I do with this?' 'What should I use it for?' 'What shouldn't I use it for?'" said Ipsy chief executive officer Marcelo Camberos. "There are a lot of people who are really confused…something as simple as putting what the brush is for on the handle, we found would really change the experience."
Complex Culture is the first brand out of Ipsy Labs, a new unit that Ipsy is using to find white spaces and build its own brands.
The debut of Complex Culture follows Ipsy's move into shopping, which happened in 2017. The company originally started out by selling monthly Glam Bags full of beauty products from brands such as Glossier and Too Faced to subscribers, moved into shopping and themed collaborations, and is now doing its own lines.
It is now leveraging the data from existing parts of the business — including its more than 160 million product reviews — to inform the decisions made at Ipsy Labs, according to Camberos, who started the business with influencer Michelle Phan in 2011.
"We have a plethora of data so specific for each member, and then tying that with all the reviews we can see where there's white space and where there's a need that's not able to be met through third-party brands," Camberos said. "When we see a clear need through all the data that we have, that is not being met very well or where we need to be able to move more quickly in order to personalize better, that's where we see Ipsy Labs and the brand we're creating fitting in."
Ipsy Labs has been an idea for more than a year, Camberos said, and the company had thought about doing its own brands and done different iterations before landing on Complex Culture, he said. "This is the first time we've dedicated really significant resources to it," he said. Next year, the team will be at more than 60 people.
This is not Ipsy first foray into product production — it previously released products in collaboration with Betty Boop, influencer Gigi Gorgeous and Tetris, the block video game. Both those projects and owned brands fall under Ipsy Labs, Camberos said.
The idea for owned brands is to meet unmet consumer needs — anything from demographic needs to ingredient needs — and make products that third-party brands aren't.
"We are going to be launching new brands next year. The idea is for these brands to really mean something, to have an emotional connection with our members and to be rooted in data and community needs. We're not just trying to throw a bunch of brands and see what sticks, we want to be thoughtful about it." More products in Complex Culture are coming next year, he said. In terms of future brands, anything in beauty is on the table, he said.
The whole effort is geared towards increased personalization, he said.
"If somebody really wants an eye shadow, and we're able to send them a specific eye shadow in the specific shade that they're looking for because we're manufacturing the product, so we can source much more specifically to each member, that's really the opportunity," he said. "You don't need all five to be delivering on that level of personalization…even if it's one product out of five, it'll make a huge difference in the experience of each member."
Ipsy has 3 million members, and sends out about 15 million products per month. Having one out of the five products a member gets each month be an Ipsy Lab product is something Camberos called "a reasonable goal," but he noted Ipsy didn't have targets like that. "We haven't set out and set a goal and said, 'It's got to be 20 percent.'"
The possibility, he acknowledged, is big. "It's going to be a big part of the business because Ipsy is big," Camberos said.
The company, which has been backed by private equity firm TPG since 2015, has reached $500 million in run-rate revenue. But despite the size, Ipsy's goals haven't changed, Camberos said. Ipsy still stands for inspiring self-expression, and as the industry broadly has become more inclusive, "this is emboldened to go even deeper into the community and deeper into personalization. In the next couple of years, that's where you'll see us," he said.
Asked about the financial future of the company, and the possibility of going public, Camberos said he could not comment, but added: "I will say that what I can comment is we're in it for the long term. So that's how we're managing the business — as if it is, because that's our intention — a business that'll be around for the next 100 years. We're not in a particular rush, and even our private equity backers, they are very patient and they want us to make the right choices over the next five, 10 years, in order to grow the company. The category's huge, there's a lot of opportunity. We have no intention of selling the business, and whether we go public or not, it'll be when the time is right."
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Ipsy's business-model diversification continues.