The beauty sector is valued at around $500 billion per year, and the COVID-19 pandemic has resulted in a significant increase in internet sales. A London-based beauty firm is raising a large round of funding today in the hopes of cashing in on the trend with a direct-to-consumer internet storefront selling own-label products.
Beauty Pie, which describes itself as a buyers’ club for high-end beauty and wellness products — any consumer in the UK or US can buy direct, but when they join the buying club for a month (£10/$15) or a year (£59/$59), they get deep discounts per item — has raised $100 million, which it will use to continue expanding into new categories and target users with a wide range of interests.
In an interview, Canadian creator Marcia Kilgore said, “I don’t believe in company models where you spend a lot of money on marketing.” “As a result, we’d like to use the funds to open new warehouses, expand into other countries, and even do some pop-ups. We’re a cross between Sephora and Costco.”
Beauty products are a fairly discretionary buy for many people, and this is especially true for the higher end of the market — high-end and luxury goods. Skincare, cosmetics, hair products, and the rest do not fall into the same category as food as necessary, and if you do require a product, there are always very low-cost alternatives.
Beauty Pie’s business approach is around sourcing and purchasing high-end products from a variety of manufacturers, which it then sells under its private label. This allows Beauty Pie to sell products that compete with the best on the market while also undercutting those high-end brands, similar to how Amazon does it with its private-label initiatives and how it mixes this with its Prime buying club model. According to the report, typical brand mark-ups are 10 times the cost of production.
Even with the initial setbacks it, like others, experienced at the onset of the epidemic, the company’s model has proven to be a success. When COVID-19 began, Beauty Pie lowered its ad budget because it could see supply concerns forming, according to Kilgore, and it did so to regulate how much demand it would receive so that customers would not be disappointed. That quickly picked up, and the company currently offers between 300 and 400 SKUs.
Kilgore’s experience as a first-time founder also helps. She’s also the brains of FitFlop, Soap and Glory, and a slew of other fashion and cosmetics brands. In that sense, the data science that the company employs to run and plan its operations is essentially a concretization of her founders’ intuition and years of experience about what the market wants and is ready to pay for when it comes to beauty items.
In a statement, Rebecca Liu, principal at Insight Partners, said, “With its transformational value chain and membership model, [it] allows members have their pie and eat it too: the greatest products at the best pricing.”
Heading 2: Beauty Pie, an online buyers’ club, has secured a $100 million investment to help it develop its beauty and wellness operations.
