The Ledger
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Failed premium drugstore lines from Revlon and L'Oreal enabled e.l.f.'s retail expansion
“Revlon launched a brand called Vital Radiance. Now you probably don't remember, ever heard of it. And L'Oreal launched a brand called Hip to compete with Mac. And the major premise of both those brands was we are going to sell more expensive cosmetics in the d…”
Retailers resisted $1 e.l.f. makeup fearing customers would trade down, says Shamah
“One of our biggest obstacles in the early years was retailers afraid to put our product on shelves. Cause they didn't want to trade the customer down. If they're selling a six dollar lip gloss and I'm selling a dollar lip gloss and they customer buys mine over…”
e.l.f. co-founder Scott Borba developed products while employed by competitors
“Scott was, in, in full disclosure, still working for other cosmetic companies, but working for us on the nights and weekends. He was doing the product development. So, yes, we did use my father's apparel office.”
Retail makeup shelf space was locked up by five conglomerates, says Shamah
“That was the problem in the early days, that you had a few incumbents that owned a bunch of brands and controlled all the space at retail. So you had L'Oreal, which was L'Oreal and Maybelline. You had P and G, which owned cover girl at the time. So there was n…”
Cosmetic formulations are cheap; packaging determines $1 makeup viability, says Shamah
“Basically what we learned really early on is when you break down the cosmetics to formulations and componentry, formulations, yes, you can hit that price point. The real artistry, if you may, is in the componentry, where we couldn't afford metal, we had to go …”
Modern brand building centers on digital attention rather than retail shelf space
“I think when we created the brand in 2002 and three and four, our biggest obstacle was how are we going to get space in a retail environment controlled by four guys? I think today, now it's how are you going to own the most amount of attention from the consume…”
Fitness equipment has slower repurchase velocity and less M&A than beauty
“The fitness business is a good business, but it's not nearly as exciting as the beauty business. Beauty business is trendy. It's quick. There's virality. There's a lot of excitement. There's a lot of M&A deal. Like there's a lot going on. The fitness business …”
Customers accept higher prices if extreme relative value is maintained, says Shamah
“One of my buyers told me a long time ago something that really stuck with me. Price is what you pay, and value is what you get. And as long as we're committed to continuing to offer our customer extreme value, she doesn't want us to be stuck to the one dollar …”
Shamah: e.l.f. Cosmetics targeted 35-cent COGS and 59-cent wholesale price
“So it's about, it was about half of that, because our target goods cost was about 35 cents. I think back to the simplicity angle, everything we sold it for 59 cents, so they could retail it for a dollar.”
L'Oreal offered $225 million to acquire e.l.f. Cosmetics in 2013
“L'Oreal came through with the best offer. They offered us about two hundred and twenty five million dollars for the whole company, and we were very excited at that point, and we were ready to sign, and now this is lock, stock, and barrel.”
e.l.f. received 400 website orders on launch day following Glamour feature
“So all of a sudden, we walked in day one, and we had 400 orders.”
Placing e.l.f. items in Target's trial section was a game changer
“In what they call the trial and travel section, so we were able to put two or three different items there, the same item, different colors, and we had a bin, and that really was ended up being a game changer for us.”
e.l.f. generated $100 per linear foot weekly at its Target launch
“So when Elf first launched in Target, they were forecasted to do 60 dollars per linear foot per store per week. Out of the gate, we were at a hundred dollars per store per week.”
e.l.f. generated approximately $400,000 in sales during its first year
“I want to say about 400,000.”
e.l.f. shipped 192,000 direct-to-consumer orders from China to fulfill 2006 spike
“And it took about six to eight weeks, and I, we shipped a 192,000 orders from China, direct to customers in the U.S., and then that really, you know, that year we were projected to do two million dollars for the year.”
A web developer rejected e.l.f. equity for $5,000 cash in 2004
“I go, how about I give you some equity in my company? He said, I don't think so. I think we really need the 5000 dollars. So we gave him 5000 dollars.”
e.l.f. Cosmetics was valued at approximately $70 million in 2010
“The valuation of the company was probably, it was about seventy million dollars.”
e.l.f. founders received over $15 million in a 2010 minority stake sale
“More than that, but correct.”
e.l.f. reached profitability and $8 million in revenue following a 2006 spike
“After this spike, we did about eight million dollars. We were profitable.”
e.l.f. Cosmetics reached approximately $30 million in sales by the end of 2010
“I remember at the end of 2010, we were doing about thirty million dollars in sales.”
e.l.f.'s initial inventory order cost $150,000 for 600,000 cosmetic pieces
“We, it was a 150,000 dollar order. ... We bought the goods. It was one container. It was about 600,000 pieces.”
Early e.l.f. sales of $125,000 monthly barely broke even, requiring outside capital
“So I'm saying we, even you put all those together, I think we were able to hit maybe a 125,000 dollars a month, but I think it was barely to cover costs. There was no growth. Any new inventory had to be funded by my father's capital.”
Glamour magazine forced e.l.f. to launch an e-commerce website to get featured
“They said, either you're in all Walgreens by next month, highly unlikely, or open a website so that the customer can get you.”