By  on August 9, 2017
Kylie and Kris Jenner

Look out, L’Oréal and Lauder — Kylie has you in her sights.Ever since 19-year-old Kylie Jenner launched her now-signature Kylie Lip Kits on Nov. 30, 2015 — when the three shades sold out in seconds — there has been raging speculation about the size of her business, with guesstimates ranging from $50 million up to $300 million being tossed around by those in the financial, beauty and tech spaces.Well, here’s the bad news for more-established beauty players: Jenner’s surpassed the higher figure with ease. Kylie Cosmetics actually has done $420 million in retail sales — in just 18 months — Kris Jenner revealed to WWD last week during an interview in her office at her home in Hidden Hills in Los Angeles. It was the first time the Jenners have disclosed the scale of Kylie’s business, and they provided WWD with documentation.The number is clearly impressive, but when compared to the sales of some other mega-beauty brands, the growth trajectory of Jenner’s business becomes even more significant.For perspective, the Estée Lauder Cos. Inc.-owned Tom Ford Beauty was said to have reached revenues of $500 million after a decade, and the brand is considered to be one of the two fastest growing in Lauder’s portfolio, along with Jo Malone. Bobbi Brown, also part of the Lauder stable, took 25 years to reach the billion-dollar mark in 2016, with L’Oréal’s Lancôme finally hitting the milestone in 2015 after 80 years.The first three products hit kyliecosmetics.com in November 2015, Kris explained, but because there was a three-month lag before the second “drop” in February 2016, they technically don’t count the time between because there was no product to sell (save for a small restock on Christmas Eve 2015). It was in the lag months that Kris and Kylie embarked on their partnership with current manufacturer, Oxnard, Calif.-based Seed Beauty, which is also the parent company of ColourPop. Seed Beauty does not have equity in Kylie Cosmetics.Kylie Lip Kits formally became Kylie Cosmetics in February 2016, with a relaunch of the three original lip kits and three new shades for Valentine’s Day. The initial line in November 2015 was seen as a test and only 5,000 of each $29 matte lipstick and corresponding lip liner were made (or 15,000 units total). Less than three months later, production was boosted to 500,000 units of all six shades. Today, about 300,000 units are produced of each product.Growth shows no signs of slowing down, with Kylie Cosmetics on track to see a 25 percent increase in sales this year. That puts sales projections for 2017 at $386 million, and if that growth trajectory continues, Kylie Cosmetics, wholly conceptualized, founded and helmed by Kylie (with some help from mastermind and mom Kris Jenner) is on track to become beauty’s next billion-dollar baby by 2022.Kylie Jenner, during the same interview sitting across from Kris, is riding high. The reality star turned beauty mogul — who holds the positions of founder, chief executive officer, chief marketing officer, and chief creative officer of her company — has just come off her second biggest-selling day for her brand on her e-commerce site, kyliecosmetics.com.  In honor of the culmination of her teenage years — she turns 20 on Thursday — Jenner released a limited edition “Birthday Collection” on Aug. 1 comprising an eyeshadow palette, loose powder highlighters, sets of mini velvet and matte lipsticks, crystal encrusted lipsticks, glosses, makeup brushes and a metallic pink case with her signature dripping lips motif. She also created two “bundles”: one containing about half of the range for $175, and for the most diehard Kylie Cosmetics fans, the entire range for $325 (the latter is already sold out).And clearly her fans wanted to help her celebrate her birthday. The collection did almost $10 million in sales in one day. One day. The biggest sales day to date was Nov. 21 when kyliecosmetics.com drew in nearly $19 million (or $18,926,657.29 million, to be exact, according to documents) on the day she unveiled her holiday collection.The growth and sales figures show how the youngest of the Kardashian-Jenner clan and her mother are helping to rewrite the rules of the beauty game after less than two years in business. Their model requires no help from specialty retailers or department stores, focus groups, advertising or even a physical manifestation of the brand. The key is digital and social media, where Kylie’s platforms of choice, Instagram or Snapchat, enable a direct dialog with customers and a control over messaging that would be difficult to achieve with a retail partner.“When you talk about advertising and the way businesses and brands are doing their p.r. and their print ads and the stuff they do – it’s so interesting that the telephone, something that we used just solely for communication, is now responsible for 80 percent of almost everything everyone does. Especially in this Millennial generation of kids who look up to my girls and follow every move that they make on their phone...That translates into some of the sales that we have; we can really track where they are coming from,” Kris said.Almost three quarters, or about 70 percent, of the transactions that take place at kyliecosmetics.com come from a mobile device. Overall, Kris added, 65 to 70 percent of sales come from the United States, with places like the U.K. and Australia rapidly contributing to a growing global business.But in light of Kylie’s newfound success as a beauty entrepreneur — and much like her older siblings and parents — the soon to be 20-year-old has had her fair share of controversy. Her sizable lips and speculation over whether they — and other things — were cosmetically enhanced have been among the most hotly discussed topics online for nearly three years (as was her relationship with 27-year-old ex-boyfriend Tyga). Many plastic surgeons and dermatologists have even gone so far as to singlehandedly credit the teen for an uptick in lip injections in their practices, especially among younger patients. And the focus on her pout only intensified when she started a business founded on lipstick.“When she first talked about her minimal cosmetic procedures I saw a new trend of younger women who suddenly felt empowered to unapologetically want to look more beautiful. It’s like Kylie singlehandedly gave a whole generation the ticket to a more enhanced version of themselves,” said L.A.-based Dr. Simon Ourian, who has become an influencer in his own right because of his association with the Kardashian-Jenner bunch.Kim Kardashian has been known to Snapchat from his Beverly Hills office, and in 2015, Kylie publicly referenced Ourian as the cosmetic dermatologist who does her lips, clarifying that he’s not the same doctor she initially visited to fill her lips at age 16. Today, he has nearly 2 million followers on Instagram, up from the 1.5 million he had in March.“I had treated hundreds of celebrities before but very few of them were bold enough to share their secrets with such transparency,” Ourian told WWD. “Her influence was much that what was once a taboo has now become a bragging right. People want to brag about having their lips done. My social media patients put up a selfie with me so that they can say they came to our office.”Kylie first commented on the controversy surrounding her lips and came clean about getting lip fillers in an episode of “Keeping Up With the Kardashians” in May 2015 – a few months before she rolled out her first lip products. Furthermore, she admitted to Complex magazine in its October/November 2016 issue that she “went too far” when she first got fillers at the age of 16 – a result of someone in middle school telling her her lips were “really small.”There is no question that much of the conversation was fueled by her TV presence, which remains integral to Kylie’s businesses, of which there are several. These include the Kendall and Kylie apparel line she founded with 21-year-old sister Kendall Jenner, and as of three days ago, “Life of Kylie,” her own show on E!. The first episode of Kylie’s solo venture, which she both stars in and is an executive producer of, aired Sunday. It will be followed by appearances on a 10-year anniversary “Keeping Up With the Kardashians” special that will air on Sept. 24, and finally, the premiere of season 14 of “Keeping Up With the Kardashians” on Oct. 1.But while all these other ventures are significant on their own, it is Kylie Cosmetics where the budding mogul and her mother see the real potential to create a megabrand. And they realized that from the very beginning.“We found someone from another city, not Los Angeles, that was able to do the kits and it was someone that someone recommended,” Kris said of the very first batch of Kylie Lip Kits.But once that inventory was gone in seconds and the site crashed from the volume of people trying to access it, it was time to go “full blown.” Kris and Kylie – despite naysayers who who didn’t take the at-the-time 18-year-old Kylie seriously – knew the business was real and that it was time to centralize the entire operation.“I got in my car and I literally started driving up and down California and went to several cities that were within three hours of here. I got names of different companies, and I suddenly realized that a really good contact would be Seed Beauty, who we had some contact with in the past...I was so driven because I knew that this one [Kylie] was onto such a great idea,” Kris said.Within three days a deal was made, and the Jenners got to work with Laura Nelson and John Nelson, owners of Seed Beauty. Today, every aspect of production – R&D, manufacturing, production, marketing and fulfillment – occurs under one roof at Seed Beauty. Kylie Cosmetics was up and running with a team of over 500 people working on the brand by February 2016, Kris said.Shortly after the release of Kylie Lip Kits, a host of blog posts and YouTube videos sprung up comparing Kylie’s nearly $30 Lip Kits formulas to ColourPop’s $6 liquid lipsticks. Both lines are manufactured by Seed Beauty, and while they bear similarities from color to texture, Seed confirmed that the formulas are different.It was also around this time – early 2016 – that e-commerce provider Shopify got on board, even going so far as to build software to accommodate the volume of traffic and sales coming to kyliecosmetics.com.The Shopify platform powers every aspect of Kylie Cosmetics’ e-commerce experience, inclusive of the store, checkout and the backend, said Loren Padelford, vice president and manager, Shopify Plus. Kylie’s first drop resulted in her site crashing for four days and to prevent this, Padelford explained that the company had to write a special software that allowed for managing servers in a different way.“Essentially shoppers must wait in a digital line before they can check out, and that prevents the site from crashing when millions of people flood it simultaneously,” said Padelford, who added that kyliecosmetics.com is now equipped to handle sales with millions of requests per minute and millions of customers on the site at one time. Shopify also works with other Kardashian and Jenner e-commerce ventures including Dash, KKW Beauty, Good American and The Kids Supply in a similar capacity.“From our perspective, we have never seen anyone who creates as much hype and throws crazy sales like her. We have over 2,000 influencers on Shopify, and she is bigger than all of them,” said Padelford, who was unable to disclose numbers but called Kylie “one of the biggest flash sellers in the world, with tremendous volume.”Her influence comes through her social media but, in person, Kylie is much like any teenager meeting a stranger – reserved, watchful, and ceding the floor to her mother, Kris, who, as chief financial officer of Kylie Cosmetics, speaks to all things business related with an equal mix of knowhow and charm. But Kylie is as dialed in as one could be on the creative end. Kris described Kylie as being “completely immersed” in certain processes, which span coming up with products to create (and in what shades), as well as conceptualizing elaborate limited-edition kits, with themes and packaging Kylie knows will resonate with her 96.4 million Instagram followers.“What I’ve been into is creating collections; that’s kinda my thing. I like getting in different moods. In the beginning I thought my brand had to be consistent and everything look the same and that was stressing me out,” Kylie said. “And that’s really not my personality. I like to have blue hair one day and blonde the next...and collections are where I kind of get to express myself. I change everything...I love to switch it up and come out with new products.”She cited the holiday collection she created last year and the one she’s currently working on, as well as her entirely pink and glitter packaged Birthday Collection, which she’s been “saving for the past year and a half." Kylie maintained that she wants to “elevate” with each launch, for which there is no set calendar. Instead, she wants to operate on a “Kylie Kadence with a K,” said Kris with a laugh.For now, Kylie is focused on developing products for the face, inclusive of concealers and foundation.“I want to step into that world, which is challenging,” Kylie said of concealers and foundation, admitting that entering that category online is even more challenging than color cosmetics since she has to be able to perfectly reflect the different shades online because customers can’t go into a store to test them out. “It’s going to be hard to buy concealer online. That’s why I kept pushing it back...[But] I’m up for it.”She said her range for face will probably start to roll out at the end of the year, with a fuller assortment to come in 2018.As far as bestsellers go, Kylie said the list changes all the time, but right now, customers are snapping up her eyeshadow palettes. With regards to lipstick, she’s seeing people move away from matte and gravitating toward velvet finishes (although her personal allegiance remains to the matte variety). She acknowledged that matte lipstick was “definitely a trend” that’s not as easy to wear for all ages, and especially older women because of the tendency for the formulas to be drier.This post-Millennial group might not be her largest demographic – the largest swath of her customers are 18 to 34, with the majority in the younger portion of that range – but Kylie said she has consumers of all ages. And she doesn’t distinguish the way she communicates with them.Interestingly, older sister Kim Kardashian West launched her own makeup brand last month, KKW Beauty, which does skew slightly older. At the time, 36-year-old Kardashian West described the line to WWD, which debuted with a contour kit, as one that “maybe gears a little bit more to my age” due to an emphasis on hybrid makeup products that contain skin-care properties.Asked about her sister’s line and whether she thinks one might cannibalize the other, Kylie immediately perked up.“We respect when we launch new things. We make sure there isn’t overlap... but there is room for the both of us in the makeup world. She loves makeup and she tried to launch her own makeup brand with my other older sisters a while ago and didn’t get to the place she wanted to be. We’re both really proud of each other – and our brands are also completely different ...just visually...there’s definitely enough room for the both of us,” Kylie said.“I think in a multibillion-dollar business worldwide there’s enough piece of that pie that it’s extremely competitive, but at the same time it’s amazing how many different things are out there,” Kris added, to which Kylie then interjected: “We also have a little bit of different demographics... She’s like almost 20 years older than me. I feel like my makeup is definitely more young, fun. And it’s just different.”Kylie Cosmetics was born online – and that will remain the primary sales channel – but Kylie is vocal about expansion into physical retail. She’s dabbled in brick-and-mortar by way of two pop-ups – one in L.A. and another in New York – that far exceeded expectations. Five thousand people showed up to the opening of the first pop-up at the Westfield Toping mall last December, with lines that snaked around the parking lot. That gave Kylie and Kris the assurance they needed to do something similar in New York in February.“I do want stores, my own store...I don’t know how we’re going to do it,” Kylie admitted of segueing into retail. "It think it’s time people walk into a store and see Kylie Cosmetics... I do want that but we haven’t figured out exactly how we’re going to do that and what approach were going to take.”Kylie has ambitions of forging a string of brick-and-mortar stores a la Warby Parker, and it’s this path – versus taking the Lauder route and building a house of brands that would theoretically live under a Kylie Cosmetics parents company – that piques her interest in the near term. A permanent retail strategy has yet to come to fruition, but in the meantime, Kylie will open additional pop-ups in other top performing markets like Chicago and Houston.“I just like to see people in person. It’s amazing to give people an interactive experience...it gets them excited,” Kylie said. She also uses pop-ups as a vehicle to exclusively bring back product and shades from previous collections that customers can’t get online.But the big question that looms once any new beauty brand generates buzz and sees rapid growth – from cult skin-care line Drunk Elephant that reportedly did $25 million to $30 million in sales last year to Kylie’s already multi-hundred-million-dollar brand – is whether there are plans to one day sell. And if the answer is yes, then cue to the next question: will the sale be for only part of the company via capital from private equity or an acquisition by a beauty behemoth?Kylie is candid, saying she hasn’t thought that far ahead. Instead, she’s busy gearing up for the next day’s shoot, working on the holiday collection and making sure her complexion range has a smooth rollout. She is having the time of her life bringing the thing she’s most passionate about to life – her enthusiasm comes through whenever she’s talking about anything product-related – and she is “definitely not done yet.”“I want to keep building it and just show people what I can do on my own,” Kylie stated.Kris is already entertaining the idea of a sale, though. Her goal, in the long term, would be to eventually sell, or sell part of, Kylie Cosmetics to have the ability to “explode even more.” Kris knows there is only so far a brand can go without help from and affiliation with a global beauty corporation, and for her, watching Kylie build, grow and eventually sell her business would be “such a life accomplishment for her [Kylie].”At the same time, Kris – who described Kylie as “protective” and “territorial” when it comes to her own line – thinks her daughter will always want to be involved, and for the coming years at least, retain creative control, sale or not.“If one of the big ones came along and was to buy Kylie, I think it would be a very exciting time, but also a time for great growth and it would give Kylie a whole new world to create in. The beauty of what the company that does eventually buy Kylie Cosmetics – the benefit they will reap will be the expansion and doing worldwide retail along with the e-commerce... It certainly would be a very proud moment for me because we’ve worked so hard on it. It’s definitely something we eat, breathe and sleep. We’re living makeup,” Kris said.She added: “So whatever happens, she’s excited to keep doing what she’s doing...She’s 19 years old and she’s just scratching the surface. She’s creating a business for herself that hopefully will last the rest of her life.”

To Read the Full Article
SUBSCRIBE NOW

Tap into our Global Network

Of Industry Leaders and Designers

load comments
blog comments powered by Disqus