Beauty & Balance

Fast Beauty: New Business Models Cause Industry-wide Shift

There is barely time for planning at nine-month-old fast-beauty start-up Be for Beauty.
The business, which has already attracted major backing from Unilever Ventures (sources said it owns 25 percent), is plotting to launch 25 brands over the next three years. Some, like Base, Bod and Hax, have reached the market. But most aren't even conceptualized yet. And that's the point — for the company to be so fast, and so on trend, they couldn't possibly plan what they're doing very far in advance.
The concept is about more than speed — it marries fast beauty with masstige, and aims to quickly bring quality, affordable, on-trend products to market. Be isn't the first to do that — E.l.f. Cosmetics launched with a similar thesis in 2004 — and there are also ColourPop and Winky Lux, both of which excel in speed to market.
The influx of fast-beauty players is making its mark on the beauty industry.
It's a trend that established beauty companies — including the Estée Lauder Cos. Inc. and Coty Inc. — are taking seriously. Divisions of both, for example, have developed in-house fast-beauty teams that aim to get around traditional long-lead product cycles and get on-trend products to market in months, not years.
At Be, the concept has gone one step further. The company isn't just getting products to market quickly — it's doing it with entire brands.
Before Unilever Ventures invested, Be had three brands and six more that were in development, but beyond that, "deliberately had nothing," said Mark Curry, Be’s cofounder. "We are all about finding what's relevant, finding the white space at the time or what's coming and delivering against it."
The company's business plan focuses on how many brands Be can reasonably launch a year rather than brand-specific revenue projections. The thinking is that one in every nine or 10 brands will be a superhit, a couple will be complete flops (and the team has no problem killing those projects), and the rest will be middle of the road.
"If we had two brands, and one was a hit and one was not, our investor say, 'Stop investing in that one, it isn't working,' and then you almost stop doing what's right for the consumer," said Colette Newberry, Be’s other cofounder. "We have it in our business model that we might have a couple of brands that hit a few million but will never really catch fire — but that's OK because they help build our portfolio."
Be's model also has built-in flexibility that allows it to accelerate speed-to-market of one brand over another based on trends. "We're really fluid for what's right for the consumer," Newberry said. "We can truly be reactive."
Be isn't going fast just go to fast. "The whole business is predicated on believing in the requirement for better products other than more products," said Curry.
To that end, Be focuses on developing products and brands that make consumers' lives easier, more convenient or deliver something new that "they just technically didn't know existed, that they're prepared to invest in," Curry said.
Be's brands focus on specific needs. Bod, for example, makes a line of body products, like 20 Min Detox Bath Prep and Daily Tighten, that target bloating and other body concerns. Hax focuses on trends, selling products like The Cut Crease Kit and The Glitter Lip Kit that contain all the required components a consumer would need to create those looks. Base makes two lip products centered around cold-sore prevention.
Curry and Newberry founded the business in 2017 as a joint venture with JML (which is said to own 30 percent of the company). Both are Boots veterans.
"The world has gotten a hell of a lot smaller," Newberry said. "Consumers want more for less, they want it now and trends move at lightning speed."
Be gets its products to market in 18 weeks, manufacturing with more than a dozen labs globally. Labs are chosen based on what they excel at for manufacturing — cosmetics are made in Italy, for example, while skin care is made in Asia, and naturals in the U.K.
"We are very agnostic about what categories we play in, so we use the manufacturers that are absolutely at the forefront of that technology for that category," Newberry said. "Bringing it in-house would not allow us to have the scope of all the different technologies and all the interesting innovation that's coming through."
"I’ve seen some examples where innovation isn’t actually innovation — it's something you can make and retrofit into something you think is a consumer need," Curry said. "That’s wrong."
How Be goes about it is starting with "why things exist," Curry said. Then, to produce them, it "sources the best product from the people who are best at making it," he said.
Be's process allows them to get hold of innovations or formulas before they are commercialized by big beauty houses, see how they do with consumers, and give the labs back real-time information.
That process has "caught fire" — even with some more traditional manufacturers — Newberry said. Those manufacturers often have research and development teams who work on projects that aren't "commercialized until they have a big boy, or a big enough boy, to come along and say, 'You know what? We'll take that,'" she said. "We can go, 'Why don't we live test that for you and before you commercialize it in a grand way…we can test that in a test phase of product or brand so we can have some live information."
Be's products are sold on the company's site, through Asos and through Urban Outfitters Inc. The company is in talks to land additional distribution. On the side, Be handles the private-label manufacturing for Asos' beauty line (the aim is for private-label services to remain less than 15 percent of the company's overall operation).
That portion of the business is motivated by Be's desire to build relationships with potential retail partners. "The reason why we have simultaneously developed a very different way to service owned labels is because we are dead clear that where we build relationships with people, we’ll build business," Newberry said. "We’ve just really struck a chord with more fast fashion retailers who've wanted to take their core principles and bring them into beauty."
The business plans to have nine brands launched by the end of the year. Industry sources said that would put Be at about $7.5 million in sales. In 2019, Be expects to have 19 brands launched, and in 2020, it expects to get to all 25 — $35 million in sales, and then $110 million in sales, respectively, industry sources said. Be is willing to sell brands off as they go (Unilever, industry sources said, has first dibs to buy individual brands as part of its investment), or kill things that aren't working, quickly. The brand's next line, Lzy (pronounced, "lazy") is set to launch in May.
In many ways, the fast beauty movement mimics fast fashion — it's trend-driven, disruptive and the products are less expensive. But fast beauty has limits, and because of safety and quality assurance protocols, doesn't generally move as fast as fast fashion, sources said. Nevertheless, it's one direction in which the industry seems to be headed, experts agree.
E.l.f. Cosmetics, which brands itself as an affordable luxury proposition, is continually speeding up its time-to-market, even as it becomes a larger and larger company. Four years ago, E.l.f. was launching around 40 products a year, with an average time-to-market of 32 weeks. For 2017, the business launched 120 products with an average time-to-market of 22 weeks.
In the same way that fast-fashion prompted that industry to rethink seasonality, beauty is having to rethink its timelines, according to Wendy Liebmann, chief executive officer of WSL Strategic Research. “One of the issues the beauty industry has is they've got a retail distribution that's also mired in long lead times," she said. "Mass retailers reset planograms once a year. Department stores six to nine months' lead time. If you take that whole operational cycle, this is where you really need to step back — you will lose share of business if you do not address the needs." Retail rigidity is what is prompting many fast-beauty operations to rely primarily on e-commerce distribution, and secondarily on retail.
For Be, fast fashion was top of mind when the business was created.
"We talked about how they managed to really hit trends in a ridiculous fashion, yet beauty somehow doesn’t seem to have caught up," Newberry said. "We’re still in a cycle of the big consumer houses deciding what the trends are, which doesn’t feel right from a consumer who wants to choose what they want."
The same accessibility and affordability that hit the market with the fast-fashion wave is "an escalating need" in beauty, according to Curry. "Our translation of that from the beauty perspective is a very similar concept," he said. The keys are getting insights as early as possible, pushing the envelope to create something new, being transparent and delivering value — as in, not being expensive, he said.
"The value equation really needs to be thought through in terms of how often will you have something new and how often can the target shopper afford to buy the new ," said Liebmann. "It really is a financial equation."
Affordability is also part of Winky Lux's proposition. The fast beauty company sells lipsticks for $14 and eye-shadow palettes that are in the $20 range.
"We’re really more of a fashion company — more of a trends and fun beauty company," said Natalie Mackey, ceo and cofounder. At the brand, most products go from concept to web site in 45 days, while longer-lead products, like the tinted moisturizer, can take about four months, according to Mackey.
In order to make a 45-day cycle a reality, Winky Lux has "dedicated time in lab and dedicated capacity in China," Mackey said. Mackey also noted that the business is primarily staffed by people who came from the manufacturing side of things, instead of employees from other areas of the beauty business. To ensure product quality, Mackey said the company audits its factories and has its own employees in China.
"It's not like China is one factory," Mackey said. "There are hundreds of factories there — there are some that are just horrible, and there are some that are meticulous and amazing."
For Winky Lux, the approach to speed centers around the manufacturer. Mackey said when her business approached the factory, it "approached it in such a way so that speed is the top priority make sure that we can get fast."
"The expectation from the lab is that it will be produced quickly — it doesn't mess up their chain," Mackey said.
Fast beauty — which has caught the attention of established beauty players as well as newcomers — only works sometimes, according to Jordan Rost, Nielsen's vice president of consumer insights.
"Fast is only good if you're meeting consumers' needs," Rost said. "Consumers still really want authentic products. If you're just chasing the next big thing and lose credibility that's not going to resonate. Brands are already dealing with an incredibly crowded shelf."
Rost expects the trend to persist as a counterpoint to the recent push "toward things that are more considered" — like vinyl records. "It's a balance of response to consumer needs," he said.
Established beauty companies are creating strategies to get in on the trend, and creating internal workarounds to move more quickly.
At Estée Lauder Cos.-owned MAC Cosmetics, for example, there is a team dedicated to figuring out how the $4 billion business can move faster. There's a similar team in Coty Inc.'s consumer division, and L'Oréal brands have sped up, too — Kiehl's, for example, was able to recently commercialize sheet masks in nine months.
But for big companies, moving quickly is more of a risk, Liebmann noted. "The bigger you are, the more risk you face of somebody suing you if the quality's not right."
Fast beauty is something MAC, known for its trend-oriented cosmetics, is taking seriously, according to Elizabeth Otero, the brand's senior vice president of global product marketing.
"MAC as a brand is probably most impacted because we were very quick-to-market with trends for many years," said Otero. To keep up with the shifting environment, MAC has launched a Fast Beauty Pilot program that is "really meant to pressure-test some of the challenges…in terms of processes and protocol that we've lived with for decades that has to change," Otero said.
MAC's first project from the program was Red Carpet Lipstick, which launched in March.
The team used the beginning of red-carpet season for color inspiration — then, under the direction of makeup artist Gregory Arlt, brought those colors to market for the Oscars. The launch was primarily online, with a small in-store presence — but the main point was for the team to "iron out what revisions and adaptations need to be made what capabilities needs to build to broaden it," Otero said.
The shift to fast does impact MAC's pipeline planning, Otero said — but the idea of the pilot is to learn which capabilities need to be built into that planning so the brand has fast as an option. It's also something that MAC, which has a broad demographic reach, expects to help it tap into Gen Z, Otero said.
"They were born after MAC," Otero said. "We need moments like in order to tap into them and reinforce the brand.…The sustainability around established brands is really around recruiting new consumers rather than continuing to talk to consumers that are already engaged with you."
For Markwins, the owner of Physicians Formula and Wet 'n' Wild, speed comes from being vertically integrated as well as sourcing select products from third-party partners, according to Evelyn Wang, the company’s senior vice president of marketing.
"With social media and with e-commerce becoming bigger and bigger ways that people consume media and shop, you have to be able to react to the speed at which they're consuming information," Wang said.
The brand's most buzzed-about fast beauty launch is its Rainbow Highlighters, which went from conception to e-commerce — with a whole new formulation — in four months, according to Wang. The company's ability to "flex up" its labor force helps when it comes to changes in manufacturing, she said.
"We have a whole planning department that's planning out the flow of manufacturing and planning out the projects, so there's no need to stop everything for one project," Wang said.
And while Rainbow Highlighter was a hit — it sold 10,000 units its first day — the fast-beauty component of Markwins is part of a larger strategy that includes planning 18 months to three years out, Wang said.
Coty has a similar strategy at its consumer division, according to senior vice president of color cosmetics Mike Price — one team is focused on fast, and another is focused on longer-term innovation.
"Just like you're seeing in fast fashion — as soon as consumers see an influencer using a product, they want to get their hands on it, and they want to get it at an accessible price point, which has led to this real rise in fast, trend-based cosmetics," said Price. "It's rising up to reshape how we think about innovation."
For Coty, playing in fast beauty is less about true invention and more about moving quickly towards on-trend shades, colors and product formats, Price said. To do it, Coty is working with more third-party manufacturers to move quickly.
For some trends — like cobalt eye shadow, for example — the products already exist within the Coty portfolio, and it takes about a week to get the content ready to market to the trend, according to Price. If the product doesn't exist, Coty goes to third-party manufacturers with its request and looks at their offerings to see what it can commercialize, Price said.
The shift has helped Coty bring certain products, like Bourjois Metallic Lip Cream, to market in about six months.
Cover Girl's Holographic Lip Fluid was also commercialized in six months, according to Price. "We went out to our partners and said, 'What do you have that's in holographic that's an existing product' and found something that could give the payoff," Price said.
Coty has a team of five people who are specifically briefed on how to execute fast beauty at the business, Price said. "A lot of the trend-based products may not generate the amount of sales that you'll generate with a big foundation or mascara launch, but it's going to drive buzz around your brand," Price said.
That balance is part of a new challenge in beauty, according to Rost. "The ultimate challenge is, how do you connect micro appeals with larger appeals," he said.
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