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Introduction: the products are also from 700,000

Introduction:

            Ipsy
is an online makeup subscription delivery service that was founded in 2011 by
YouTube beauty vlogger Michelle Phan, Marcelo Camberos, and Jennifer Jaconetti
Goldfarb. Ipsy charges users $10 per month for a “Glam Bag”. Ipsy’s “Glam Bags”
are made of fabric and specially designed every month so that they can be kept
and reused. The contents of the bag are also premium. Ipsy works with beauty
brands to make sure that customers get a selection of full sized products among
the samples. The selection of the products is based on the consumers data. When
they sign up for a “Glam Bag”, they are asked to take a quiz. Most people who
take the quiz connect their Facebook accounts and the combination of products
are from the hundreds of specific data points that they gave. The contents of
the products are also from 700,000 beauty products that are submitted to Ipsy
for consideration each month.

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            Decades
ago, beauty brands would release new collections of products two or three times
a year, then launched a large, expensive advertising campaigns to convince
consumers that these new shades and looks were in style. But then, beauty
bloggers showed up and changed the game. Instead of looking to brands to set
the agenda about what products they should buy, consumers began looking to
their peers who in turn began creating videos and tutorials on YouTube. This
created a crisis of sorts in the beauty industry but Ipsy benefited from this.
Ipsy early growth success is thanks to Michelle Phan social influence and other
associated vloggers. When it launched in 2012, Michelle Phan was the face of
the brand. Today, Ipsy has made online influencers the centerpiece of its
business model. The company works with over 500 YouTubers and Instagrammers in
the beauty realm and some of whom are paid to discuss participating brands on
their social media channels.

            According
to Forbes article Subscription Businesses are Exploding with Growth, Ipsy is
the leading company in top subscription sites with over 5,185,943 visits in the
month of April 2017 (Forbes, 2017). As of September 2017, Ipsy has more than 3
million subscribers (TechCrunch, 2017). Ipsy also raised $100 million in Series
B funding from the high-profile firms TPG Growth and Sherpa Capital valuing the
company at a reported $800 million last year (FastCompany, 2016). As Ipsy looks
to grow, it’s going to lean heavily on that word of mouth and keep it cost of
customer acquisition low (TechCrunch, 2017). With millions of users paying $10
a month, it has leeway to heavily invest in this new emerging business but it
also has to be careful not to fall into trap of emerging consumer brands that
end up aggressively spending to expand into new markets (TechCrunch, 2017).
Ipsy is investing heavily into building up its already 10,000 person-strong
network of amateur beauty vloggers. These content creators aren’t bound by
contract. They just have to make a few videos a month that are Ipsy related and
the rest is up to them. Together with Ipsy’s in-house stylist, they generate
300 million social media impressions a month for the company (FastCompany,
2016). Ipsy gets exposure and more views of its ad-embedded YouTube content and
in exchange it gives vloggers access to the Open Studio, mentoring, networking,
and publicity opportunities, and special tools Ipsy has to offer (FastCompany,
2016).

            Ipsy’s
plan reflects where cosmetics industry is heading. No longer do women get their
makeup tips at the department store counter or from a celebrity spokesperson
and rather, they head to the Internet and binge-watch DIY videos posted by
people like Michelle Phan. The fact that these new voices of authority are both
diverse and relatable makes them invaluable marketing tools for brands. The
standard of beauty is changing and the one-size-fits-all look no longer exists
in this new generation. I think two major macroeconomics variables that will
affect the firm are consumer confidence and retail sales. 

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