Luxury Lipstick for $2, it is possible!
Posted On Jun 14, 2017
By Ruchel Louis Coetzee
It is said that the key to embracing disruption is to change early. For Canadian beauty maven, Marcia Kilgore, it goes beyond embracing disruption. Kilgore creates them at every turn of her enterprising endeavors. In fact, the founder of Bliss Spa is poised to own the global beauty space with her new venture, Beauty Pie, which she launched December 2016 in the U.K. ahead of its USA debut. Beauty Pie is a membership-based online brand that offers consumers prestige-quality beauty products at thoroughly transparent factory prices. The lipstick that costs $30 in a fashionable store would cost a member $2.39. Yes, you read that right. Beauty Pie delivers that similarly formulated lipstick sans additional marketing, distribution, and other third party mark ups. The lipstick is directly from factory to Beauty Pie member. Membership costs $10 per month with a three-month minimum, and entitles you to $100 of monthly credit in full retail dollars that roll over if left unused. This model however may be changing soon, as Kilgore realizes that some members are wanting to buy more than $100 worth of products per month so she is thinking of switching over to something similar to the model the telephone companies use where the consumers are able to buy extra minute packages per month.
Kilgore began to disrupt the beauty space in 1996 when she opened up her first Bliss Spa in New York’s Soho neighborhood. Back then beauty spas were either cramped side notes at hair salons or Age of Aquarius day spas visited by ladies who lunch. Overnight, her Bliss Spa became the hip place to be to experience her unique blend of skincare expertise and whimsical products such as ‘foot patrol’ lotion and ‘drench & quench’ face cream. With a glowing article in Vogue magazine and a steady stream of celebrities including Madonna and Oprah Winfrey, it was not long before she caught the eye of LVMH, who, three years later, bought a majority stake in her company for $30 million. Kilgore’s second venture, Soap and Glory, had similar success which she sold to British beauty company Boots in 2014. But it is her latest undertaking that is promising to cause a tsunami in the billion dollar beauty industry. Here is an excerpt of my one-on- one chat with the irrepressible Marcia Kilgore.
You have said that when you have an idea the first question you ask to test its strength is ‘so what’. For Beauty Pie how did you answer that question?
That’s an easy one actually because with Beauty Pie, it’s a combination of many events. I’ve done many different brands in the beauty industry, so what I really loved, was talking to customers all day, answering the phones and really understanding what they wanted. I would work fifteen hour days but I would leave and be so energized, and I realized that I love that. I don’t love being behind a desk or sending emails. I was on a board a long time ago for Dove and I remember being with this great woman named Nancy who said, ‘listen to the women…the women will tell you what to do.’ And you realize that women have opinions. They will tell you the right thing to do if you just involve the women.
How did you get to the idea of Beauty Pie?
After I sold Soap and Glory it was actually very freeing. Our biggest retailers were Boots (Alliance Boots), Sephora and Mac, but Boots was our biggest customer. It was a different experience to work in a huge organization like that, so when I sold it to Boots, for a few moments I thought, ‘Who am I? I’m not so inclined with that business?’ Then I remembered going to one of the big suppliers in Italy, where they show you all the new lipstick, and eye shadows. They’re the best makeup supplier in the world with Korea being a close runner up. The way the industry works in cosmetics is, it’s very rare that someone will go and create their own lipsticks. Makeup buyers go to these suppliers, the suppliers show them: ‘here’s our luxury formula, it costs “X”, here’s our medium formula it costs “Y”, here’s our cheapest one, with the math, it costs, you know “Z”, which one do you want?’ They give you samples, you pick, you go away, you try them all of course, you test them, you wear them, you see how the color wears, is it moisturizing, is it not moisturizing? Do you want a matte formula and so on? And then you choose your packaging, you stamp you brand on it – that’s how it works. The people doing most of the work are the suppliers and nobody knows that. So, what you realize is, God, they are doing all of the work and then the markup…
Yeah, it’s totally horrendous. It’s obsolete. So my little picture, Beauty Pie, was formed by realizing that the suppliers are really doing all the work and everybody’s makeup is the same. I went to a speech once where somebody said, ‘Women no longer care about the brands,’… or I think the slide said ‘there are fifty million girls out there who believe that their personal brand is more important than your brand.’ And this is true. Girls care about their Instagram page more than anybody else. Like cosmetics from Kylie, they care more about their personal brand that they’re expressing to the world. Why should they be paying a fifteen times markup on a cosmetic item that you know, comes out of the factory at two dollars and gets sold for thirty, when you know they are out there to only promote their own brand?
So who do you think is your ideal demographic?
When we first launched Beauty Pie in December, the first people who started putting reviews up were forty to fifty-five. I was not expecting it. We thought “Oh this is so the internet generation, but actually, our very first really loyal customers who really got it, were forty to fifty-five. And do you want to know something else that is hilarious?
So our guy, who is in charge of customer service or acquisition said to me, ‘alright, these reviews – they’re not real are they? You know we’ve got to be careful if we’re going to be reviewing our own product.’ And I said, ‘We’re not – what makes you think that anyone here is reviewing our own product?’ And he replied, ‘well there are no grammatical errors. The verbiage` and the phrasing was so good that we must’ve been planting these reviews.’ I said, ‘I certainly haven’t been doing them.’ You know when you do something that’s sort of disruptive like Beauty Pie, everyone is going to be out to get you but I would not be stupid enough to be writing my own reviews. He was just sort of shocked because, it was such an educated consumer group leaving the reviews.
Talking about disruption, what about the established beauty companies you are disrupting?
Well, that’s their problem. I mean, no but come on…Beauty Pie is an incredible product and the price is amazing, it’s better for customers today. They don’t want to spend huge amounts – that’s why retail is struggling because it’s sort of all the same. Someone else asked me: ‘Isn’t selling cosmetics like selling a dream?’ And I said, ‘Yeah, I am selling a dream. The dream is, being able to buy a Swiss formulated fully-loaded anti-aging face cream for ten dollars!”
A Swiss formulated anti-aging face cream for $10? How is that remotely possible?
There are laboratories in different countries that make formulations and they present you with their newest collections of skincare every six months. You try them and you might change the fragrance a little bit or you might add a little bit more vitamin C so that you’re ingredient list isn’t exactly the same as somebody else’s, but most of us go to these suppliers and buy their cream. I have two, fantastic Swiss labs, who I have worked with for the last twenty years. Over the last ten years, because most of my brands have been quite affordable, I haven’t been able to afford their products because you have to always factor in the markup and when you have a retailer, you’ve got to take 60% off the price of the product. And then you have to back out your rent, the people you staff, your electricity, your advertising, your marketing, so your cost of goods has to be 10% of whatever your retail price is, in order to make money. And then, as a company you’ll probably start to make money once you start selling about ten million dollars of the stuff. Most companies will sell you stuff for one hundred dollars when they are paying ten. Now tell me, is this a good deal for the customer?
So then you need to think, how can we do this differently? One of my suppliers invited me to an event, even though I didn’t have a company to buy anything at that time, and I remember coming home from there and thinking ‘Wow!’ I have $4500 of makeup in my suitcase, for free, thinking, ‘I am so lucky, because I get all this stuff for free.’ If I ever had to buy it, that would be a bummer. Then I thought, wait a second, how can we do it so that every woman could join the club?
And this was how Beauty Pie was born?
The beautiful thing about Beauty Pie is that I have a team of six girls and myself and between us who have been doing product development for probably a hundred years. We know the good stuff and we know what’s kind of average and what’s great. We have no motivation to choose something that isn’t great, because we aren’t trying to squeeze our margin. Normally you would look at, an anti-aging cream, that looks like the good price point would be about eighty dollars, ok? That’s where you’re going to sell your volume. At eighty dollars that means forty-eight has to go to the retailer and then what you would normally do as a brand is bring your product in as cheap as possible, so that you can make as much between the cost of goods and the forty-eight.
At Beauty Pie, we just pick the best one. We don’t care because the customer buys the product at the factory cost anyway. Also, she doesn’t want to compromise, she’ll pay two more dollars to get the very best one, because it’s not getting marked up thirty times. Some skincare is marked up so ridiculously. We’re in the process of possibly updating our pricing structure because with skincare, people want to buy more than the $100 (retail cost) shopping allowance a month. So really, that super healthy anti-aging cream that you would pay three hundred bucks, no question and because it’s not very Beauty Pie to make people wait for three months to buy a cream we just said, “Ok let’s just say we mark that cream a hundred.” Who cares, it’s a really fair price, you absolutely pay more than that, so if this stays at a hundred, so pay the ten pounds membership and then pay ten pounds for the cream. So basically you’re paying about twenty cents on the dollar for all this stuff that you would normally pay a dollar, including your membership.
So how have sales been?
Oh my god, we’ve got thousands of members! People are really happy with the product. We’ll have the odd person who says, ‘I had to pay six pounds in shipping.’ Well, we don’t cover any more than the factory cost and yes when you’re only paying ten pounds for your product, six pounds seems like a lot. But actually, if you were paying a hundred for this product you wouldn’t even look at the six pounds. So we do have a few people who don’t understand you’re saving ninety pounds so six pounds isn’t a lot to pay for shipping. Actually, we don’t even upcharge for the shipping! It’s what they charge us for shipping, packing, all that stuff. Hang on! I forgot what the question was!
My question was about sales.
I know what I was going to tell you. So in terms of sales, what we’ve realized is we’re limiting people by having a shopping allowance. When we launched skincare, a whole bunch of people bought two or three items and they’d been saving their shopping allowance for a few months in order to buy all the items. I thought, ok wait, this doesn’t work. We thought she’s just bought a hundred pound anti-aging cream for ten bucks and she wants to spend eighty pounds on her incredible Swiss eye cream and she doesn’t want to wait for the next month. Now what we’re thinking of doing is converting over to how cell phones work with rollover minutes. We’re testing it now to see if people understand the concept.
You know, that’s a better idea.
So you buy a number of shopping allowance dollars per year and if you surpass that, then you can just buy a pop-up package to buy more allowance. Which basically is ten cents on the dollar so that you can buy whatever you want. If we have enough people paying that ten percent, then we can continue to get incredible stuff from all over the world like we are. I just love finding the best stuff, giving it a fun name that tells you what it does and bringing it to you in a beautiful little package. And I could do that over and over again and never get bored. I want to do something that is just great for the women. It is what I do best, without any kind of posing because I’m not a poser. I don’t want to pretend something is more than it is. It’s like here’s what we paid for it, it’s the best, we have no reason not to get you the best one, and we hope you love it.
Where do you see makeup and skincare ten years from now?
The textures are getting better and they now have wearable technology and smart molecules that only activate when they’re around oil, so if you have something for oily skin, it doesn’t dry out. Most of the good labs find all of these ingredients by working with the ingredient suppliers and then they present you all their stuff and you just think ‘wow’ -how much better could it get?’ Yesterday my team and I sat and tried all of these new lipsticks. How many great matte lipsticks can you have at one time and it was very hard to choose between Supplier A, Supplier A+, Supplier A-! They were all amazing.
Have you seen an upswing on the men’s side when it comes to skincare and makeup?
Definitely! They’re vocal on Instagram. There’s a lot of male bloggers blogging about skincare and I think it’s in Ireland or Scotland, I just saw someone buy about seven skincare items. He must have been saving for skincare, shopping around for forever. There are a lot of men wearing makeup and they don’t necessarily feel comfortable going into a store so, they probably say ‘God I love this, and I don’t have to go into a store and be embarrassed.’
When faced with two important things to do at once you refer to it as your ‘death bed test’ meaning which one would you had wished you did. And how do you manage that work-life balance with two young boys at home?
For the deathbed test, I thought to myself when I first had the idea for Beauty Pie, ‘Oh my God what a great idea.’ Then I thought, ‘Oh my God people are going to hate it.’ Then I thought, ‘Oh my God, I’m going to hate myself if I don’t do it.’ And then I remembered it all coming down to ‘God that’s a really huge project but that is a big project.’ Not only the product development side of it because, you think it’s easy to do product development, it’s not. Everything goes wrong, the jar is incompatible with something, the lid you ordered doesn’t screw on, it has a big gap and you have to find a new lid. There’s never anything that’s like smooth sailing from A to B. But then I just thought, “On my deathbed will I think, ‘God I wish I would’ve done that.’ And the answer is yes! I couldn’t ignore it because it’s too big an idea and I’ll think about it every day. It might take a year or two of real exhaustion, pain, and never having a free minute, but I do go home a six o’ clock and spend at least three to four hours with my kids. We pray, we eat dinner, we read books, and then at ten o’ clock I may go back onto my computer but I make sure that I do shut down for those hours, and give them my attention. Probably more than somebody who isn’t as mindful about it or sits in front of a television because when you only have a certain number of hours you really make sure you get to see them.
How is Beauty Pie making a difference in this global beauty market?
I think we’re making a huge difference for the customer and we’re also very mindful about the packaging that we use. In fact on Monday, I’m meeting with the packaging supplier in Malta who had managed to do a compact in 100% recycled black plastic. This is a first. We pressured them to do it because we buy a compact from them and they didn’t have it in PCR Black and now they’re making it for us which means we’re taking that much more out of landfills which is extraordinary. We’re also very mindful about how intricate our packaging is, because anytime you glue extra layers on, it’s all just landfill. So we’re choosing simple packaging that can be recycled. I just can’t fake. Life is too short.
Is there anything you would have redone in your life?
I think your ability to really be who you are and appreciate what you have, is because of the mistakes that you’ve made. And if you took those away, you could not realize what is good. So, I think it’s an impossible question because everything that you’ve missed or done wrong or regretted forms part of who you are which makes you then, so grateful and maybe makes you approach things in a new way that profoundly affects the positive aspect of your life. Hopefully you learn from those mistakes. And when you’re tempted to make that same mistake again, you remember wait, the last time I did that, I felt terrible. One of the things I’ll remember is ok, maybe I lost my patience with someone, jumped to a conclusion, felt terrible about it, had immediately gone back and apologized and then felt a lot better. Now, I’ll say, let me wait forty-eight hours, make sure I have enough information before I even discuss this because it might really change something.
How did you come up with the name Beauty Pie?
I remember thinking of ‘cutie pie’ and then I thought, ‘wait a second, women need to get a bigger piece of the beauty pie.’
And it makes sense. You know you deserve a better piece of the beauty pie, ten percent is not enough.