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How E.L.F. cosmetics is selling makeup.

BeautyHow E.L.F. cosmetics is selling makeup.

The E.L.F. is a makeup brand of the moment because of its popularity as inflation-weary consumers look for cheap, quality makeup. Add to your saved stories

Mikayla Nogueira says she doesn't know if one of her makeup videos will go viral. The brand that got its start hawking $1 eye shadows is so revered among the beauty influencer's 15.2 million TikTok followers that they routinely steer conversations back to E.L.F. Her takes on Patrick Ta and Dior are filled with comments like "Watch E.L.F. dupe it" or "I'll wait for E.L.F."

She says that the E.L.F. fan base is very strong. Dupes are makeup and skin care products that are near-copies of higher-end lines but at a fraction of the price. E.L.F.'s ability to exploit social media experimentation, supply-chain efficiency and multigenerational appeal have made it the beauty brand of the moment. Tarang Amin, chief executive of E.L.F. Beauty, which saw its net sales surge 76 percent last quarter and its shares soar more than 160 percent in 2023, said that they think there is incredible areas of inspiration. Companies such as E.L.F. and NYX have flourished as beauty influencers, and as inflation made many consumers reconsider their spending, they raised their profiles. A $35 offering by Glow Recipe has been replaced by a Glow Serum Primer that is half the price. Scott-Vincent Borba, Alan Shamah and Joey Shamah founded the company in 2004. The brand's strategy of selling makeup for $1 online stunned the industry, but it soon found its way into drugstores and supermarkets. The company had sales five times that of last year. Even though consumer spending has softened, the $112 billion beauty industry has not. Phil Rist, the executive vice president of strategy at Prosper Insights and Analytics, said that it was one of the best performing categories over the five day start to the holiday shopping season. Mass market beauty sales increased by 8 percent, while prestige brands increased by 14 percent. Delphine Horvath, a cosmetics and fragrance marketing professor at the Fashion Institute of Technology, said that beauty is more resilient to economic turmoil because it is an emotional market.

Dupes are in charge.

The E.L.F. customers started to ask him questions when he was minutes into a TikTok live stream. Customers don't want to pay $38 for a cheaper version of Drunk Elephant's bronzing drops. He told the team to get to work after the live stream. According to an analyst with Raymond James Equity Research, furniture companies and fashion brands have been replicating pricier lines for some time. She said that the interest in dupes has increased as consumers look for ways to stretch their dollars. The data shows searches for "dupe + skin care" increased by 123.5 percent while searches for "dupe + makeup" increased by 31 percent. The cost of trying it is often less than lunch.

Nogueira said that E.L.F. was one of the most effective brands at exploiting the trend. It has created dupes that are just as good as those from Charlotte Tilbury, Milk Makeup, Dior, Smashbox, Benefit, Laneige and Supergoop. The Mineral Infused Face primer retails for $10 and $42. Charlotte Tilbury's Hollywood Contour offerings were out of stock and the company developed its own products.

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E.L.F. products are manufactured in fair trade certified facilities. Charlotte Tilbury did not respond to a request for comment. The analyst said that prestige brands are unbothered by dupes because they see their core customer as a high-income shopper. The dupes have been called out by players as positive because they push innovation and bring newness to the market.

Older consumers are more loyal to legacy brands than younger consumers.

E.L.F. used to rely on customers to spread the word online. He said that their approach was very much like a digitally native brand, where they were constantly testing and learning. It is one of the first brands to join TikTok and BeReal, and recently announced an interactive experience on Roblox. The song was a part of the TikTok campaign. E.L.F.'s partnership with iLL Wayno has come under scrutiny. E.L.F. had no comment after it was revealed that the marketing firm's co-founders were members of a cult. Goldberg and Horowitz left the group after learning about the cult's abuse, but Goldberg denied having knowledge of it. Rolling Stone has reported that they are still connected with members of the group that was sentenced to 120 years in prison for sex trafficking.

E.L.F. does it concurrently, which allows it to create new products faster than other brands. Manola Soler is a senior director in the consumer and retail group at Alvarez & Marsal. E.L.F. makes its products only in China, where labor and manufacturing costs are lower, and contracts out its production to third-party suppliers. The company can control manufacturing processes and have its own quality control employees at the facilities. He said that they were set up completely different than a lot of their peers and had been working on it for 20 years. The organic popularity of the brand online has saved it money on advertising, according to E.L.F. Beauty, which includes its namesake cosmetics and skin care lines, the plant-based makeup brand Well People and Alicia Keys's beauty line Keys Soulcare, raised its outlook in November after beating Wall Street estimates. E.L.F. plans to acquire skin-care brand Naturium for $355 million. The brand announced on social media that it was increasing prices by $1 for two-thirds of the products, leaving the lowest priced products unchanged. Consumers supported the decision, and the move built trust, because they did a good job of communicating it in a transparent way.

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