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about 12 months ago

IT Cosmetics Featured In WWD

Credit: Vicki M. Young./WWD © Fairchild Publishing, LLC


To her audience, she is every woman—and highly relatable. But don’t let the smile fool you. By combining that common touch with an iron-clad determination and a business acumen honed at Columbia Business School, Lima has propelled It Cosmetics to be one of the fastest-growing beauty companies in the world. Industry sources say the eight-year-old brand is primed to do over $400 million in retail sales in 2016, a 30 percent increase from last year’s $300 million.
 
Lima got her big break on QVC in 2010, and to this day, the brand appears on the shopping network about 250 times per year (besides Lima, two other staffers routinely appear on TV to sell It to millions of customers). The brand is even headquartered in Jersey City, New Jersey, because it’s only a two-hour drive from QVC, and being based in New York City would tack on another hour each way to the commute, Lima explains.
 
“Our mission is for women to look in the mirror and see what’s right. How many [brands] really do that?” Lima says. It’s also not many founders who will willingly remove all of their makeup on live TV to reveal their skin—flaws and all, an action that has endeared Lima to her audience and helped her build it exponentially.
 
“What we’re doing is bigger than myself. I used to feel—especially as someone with rosacea—a certain way when it came to beauty,” Lima says. “Now I don’t. What drives me is knowing that we’re changing the way women look in the mirror.”
 
Lima says that her skin started to change in her late 20s while she was a news anchor and journalist in Washington and Portland, Ore., (she won five Edward R. Murrow journalism awards for writing and reporting). She lost her eyebrows and developed rosacea, and soon found she was spending her salary on makeup and beauty products so she could cover these issues on camera. Lima became obsessed with finding a formula that was full-coverage enough to cover her skin that didn’t “look horrible on camera.”
 
The inability to find such product became her entre´e into the beauty business and It Cosmetics was born in her apartment with her husband, Paulo. Within two years, she made her first appearance on QVC.
 
“At that point, you have one chance, 10 minutes and if you do well, wonderful—and if not, you won’t come back,” Lima says of her first appearance on QVC when she went on air with Bye Bye Under Eye. “I showed my bare face—rosacea and hyperpigmentation and all. That had never been done before. Women want to see, “Does this really work?” They deal with acne and want to know if it will cover it…[so] I showed my bare face. It was a big risk.”
 
As they say, no risk, no reward. About 6,000 units of the product sold out completely within 10 minutes. That was just the beginning. Today, It Cosmetics is sold in every single Ulta Beauty store—which will be 974 nationwide by year’s end—and starting this September, 100 Sephora doors in top-performing markets from New York to Los Angeles will carry nine exclusive skin-care stock- keeping units.
 
It Cosmetics would never have experienced such enormous and speedy growth if not for Lima’s involvement in getting the brand out there, according to industry analysts—from hundreds of on-air appearances to in-store events. Factor in the concurrent emergence of social media and millions of satisfied consumers expressing their gratitude to the brand (Lima calls them It Girls) on various digital platforms and the result is a dedicated customer base with loyalty levels not seen since Leslie Blodgett launched the now legendary BareMinerals on QVC.
 
“[Lima’s] got a very loyal following and a very large customer base—she has one of our largest,” says Ellen Lennon, director of merchandising for beauty at QVC. “She really resonates with them. They love her moments of truth on air when she removes her makeup and shows her own skin concerns and puts out there the challenges she’s had in her life and the struggles she’s had to find the right makeup for her skin.”
 
That said, if customers received the product and found it wasn’t doing what they expected it to, there’s no way they would have kept buying it at the level they continue to, Lennon says, noting that It Cosmetics notched up over one million QVC customers in the last year alone. It has sold millions of items in the six years since originally debuting on QVC in 2010 when Bye Bye Under Eye sold about 6,000 units in just under 11 minutes (more than 1.7 million units have been sold to date). Lima’s Celebration Foundation has sold more than two million units to date and remains the second best-selling product from the collection after Your Skin But Better CC+ Cream with SPF 50+, which Lennon said is the “most productive item in terms of dollars per minute.” Last Year It Cosmetics won nine QVC Customer Choice Beauty Awards.
 
In addition to QVC, Lima has tapped into infomercials to drive sales. Powerhouse producer Guthy-Renker took a minority stake in It Cosmetics in 2013 and a show selling exclusive products—a Bye Bye Foundation Kit that comes with either five or seven products retailing for $39.95 or $49.95, respectively— started airing in full national rollout over a year ago. A second show is in the works to air during the first quarter of next year.
 
While he declined to give a sales figure, Boris Shimanovsky, chief creative officer at Guthy-Renker, says reactions to the infomercial were strong from the get-go, noting that Lima’s connection to viewers is paramount. Shimanovsky explains that Lima is not perfect; she’s a “real person” who has “real skin issues” and consumers relate to this. “Her story is very unique in the way she tells it, but it’s not unique to the people watching her on TV,” he says.
 
“We present the problem that other people are seeing with their skin in a way that people can relate to and we show them a solution,” Shimanovsky adds. “We knew we had a hit on our hands, and we had to catch up with inventory levels. We’re prepared to be very bullish with buying media. Now that we have inventory, we’re moving very aggressively.”
 
Private-equity firm TSG Equity Partners also made a minority investment in It in 2012. Blythe Jack, managing director at TSG, declines to disclose specifics but the firm has a “significant minority stake” in the brand.
 
“First and foremost, they have incredibly effective products and they transform how you look. It sounds simple but it’s harder to actually execute on that concept,” Jack says.
 
But it was another factor that led TSG to take a “very big risk” in investing in the company at such an early stage (it was only sold on QVC and the shopping channel in Canada at the time).
 
The convergence of skin care and cosmetics—whether it’s color-infused skin care or vice versa, according to Jack—is where beauty is heading, citing an industry trend towards the convergence of the two. It Cosmetics has been a pioneer in the space, she says.
 
While the brand’s TV business remains significant, sources report that retail eclipsed TV a year-and-a-half ago, fueled by sales at Ulta and international Sephora doors.
 
“Women are telling people and their friends, sisters and daughters are coming in [to stores]. That’s huge,” Lima says. “We’re hero-product driven; we don’t do trend and we try to launch things when we believe they will be game-changing in their innovation—but more importantly, life-changing in the hands of real women.”
 
Lima’s persona aside, her approach to building a line of “hero products” versus becoming a color brand, has accelerated the trajectory of the company. Retailers call her thoughtful in product development, eschewing trends and the temptation to continually release new launches in favor of releasing targeted products with a skin-care angle.
 
Those hero products include Your Skin But Better CC+ Cream with SPF 50+, $38; Bye Bye Under Eye Antiaging Concealer, $24; Bye Bye Pores Silk HD Antiaging Micro-Powder, $24; Brow Power Universal Eyebrow Pencil, $24, and Superhero Mascara, $24.
 
“It has resisted the temptation of following a trend that is of-the-moment. [Jamie is] very focused on fewer, bigger, better launches and only launching a few big stockkeeping units a year when so many brands go down a different path that’s often messier—on the front end and the back end,” says Tara Simon, senior vice president of merchandising, prestige color, specialty brands, skin care, fragrance and trend development at Ulta Beauty.
 
Simon says there is only one other brand that has a linear boutique the size of It Cosmetics’ in Ulta—Urban Decay—noting that It “never behaved like a normal, typical brand.” What she means: The line entered 306 Ulta stores in September of 2013 and performed so well that the collection was added to the balance of the chain six months later, an unusually fast rollout plan.
 
Additionally, Ulta expanded It’s original six feet of in-store space to nine feet, something Simon says, “We almost never do.” Almost a year-and-a-half later, this space doubled in August 2014, with the release of It Brushes for Ulta in all Ulta Beauty stores.
 
Meanwhile, the Bye Bye products have become their own franchise, and a new Bye Bye Under Eye Illumination and Bye Bye Makeup melting cleansing balm will be among the exclusive skus to debut at Sephora come September. Lima says the sulfate-free “pure skin-care makeup remover” does double duty, and can be used with or without water to remove all traces of makeup and soften skin.
 
When asked about venturing into skin care in a more significant way, though, Lima’s caution around the category becomes evident.
 
She says even though it’s been and remains the most popular request for the past seven years, the brand had yet to launch a single skin-care sku until five months ago: Confidence in a Cream.
 
“You can launch a full skin-care [line] in five seconds with 3,000 skus, but we built this brand on hero products that are problem solution. We have built a lot of trust,” Lima says.
 
She calls the $48 “super hydrating, skin-transforming, moisturizing cream” worth the wait, citing clinical studies that revealed the following: 100 percent of participants said skin was more hydrated and 81 percent said pores appeared smaller and fine lines and wrinkles appeared less noticeable.
 
“We’re now on the skin-care radar,” she says.
 
For William Susman, managing director at Threadstone Advisors, It Cosmetics is a brand built on “instant results.” Millennials are the demographic driving the company, he says, and they want to look and feel great right now.
 
While he posits that venturing into corrective skin care would be the next logical place to go, it could be “curious for the company’s future,” as they have been so successful at providing their customers with short-term beauty solutions. Susman says the brand should stick to who they are, because “If it ain’t broke, don’t fix it.”
 
“One of the challenges for a company like this is that while Jamie has built a very large team—and an accomplished one—I do think the business starts with her and ends with her. Therefore, the next generation of It [Cosmetics] will need to adjust for her role,” Susman says, who notes that future ownership has endless possibilities.
 
“With private-equity involvement, at some point something will happen, but today there’s no urgency for any action,” he says.
 
International expansion presents another area of opportunity. Currently, the vast majority of business comes from the U.S.— but this is changing. It Cosmetics launched in Sephora in Australia 18 months ago and has been sold via The Shopping Channel in Canada for seven years. On April 15, It aired on QVC in the U.K. and became the most successful launch in QVC U.K.’s history; in September, the brand’s full color line of 125 skus will debut in Southeast Asia Sephora doors in Thailand, Malaysia and Singapore.
 
Still, Lima remains firmly focused on her strategy. Developing and bringing to market hero products is what she wants to be best at. And the irony of trying to secure distribution in the early days even as she grows globally isn’t lost on the entrepreneur. “Someone once told me winning in cosmetics is a game of perfect execution,” Lima says. “That has always stuck with me. Now we have so many retailers approaching us, but we’re expanding thoughtfully because I don’t want to do it unless we can execute perfectly.”