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Viral “dupes” make ELF the makeup brand of the moment

The pharmaceutical line has grown in popularity as inflation-weary consumers seek cheap, quality makeup.

ELF Cosmetics Brow Lift, $6, and Anastasia Beverly Hills Brow Gel, $23. (Photo illustration by Chelsea Kyle for the Washington Post)

Mikayla Nogueira says it’s impossible to predict if one of her daily makeup videos will go viral – unless it involves ELF

The brand that got its start selling $1 eyeshadow is so revered among the beauty influencer’s 15.2 million TikTok followers that they regularly refer conversations to ELF, regardless of the topic of the day. His positions on brands as prestigious as Patrick Ta or Dior are peppered with comments such as “Look at ELF fooling it” or “I’ll wait for ELF”.

“The fan base and cult following of ELF is so strong,” she says.

The Oakland, Calif.-based company dominates a slice of the beauty industry awarded for imitation: Dupes — short for duplicates — are makeup and skin-care products that are near-replicas of high-end ranges, but at a fraction of the price. Analysts say ELF’s ability to capitalize on social media experimentation, supply chain efficiencies and multi-generational appeal have made it the beauty brand of the moment.

“We have a lot of respect for all our competitors; we think there are some incredible areas of inspiration,” said Tarang Amin, chief executive of ELF Beauty, which saw its net sales rise 76% last quarter and its shares soar more than 160% in 2023 .

Companies such as ELF, Essence and NYX have thrived as beauty influencers – particularly on TikTok and YouTube – have increased their visibility and entrenched inflation has caused many consumers to re-evaluate their spending. At $6, Hello, Good Stuff! Glow Serum Primer has become a popular alternative to a $35 deal from Glow Recipe. Maybelline regularly makes a lip gloss over Urban Decay’s $27 Vice Lip Bond for about half the price, and ELF has an $8 dupe for Dior’s $40 Addict Lip Glow Oil.

Founded in 2004 by Scott-Vincent Borba and his father and son Alan Shamah and Joey Shamah, ELF (an acronym for Eyes, Lips, Face) was initially stunned the industry with its strategy of selling mascara, eye shadow and lip gloss online for $1. The brand quickly found its way into drugstores, supermarkets, Target and Ulta. By the time equity investment firm TPG Growth acquired a majority stake in 2014, the company had reached $100 million in revenue, Amin said. Last year, its sales were five times higher.

The $112 billion beauty industry, which includes skin care, cosmetics, fragrance and hair care, has survived despite consumer spending. generally has softened. It was one of the best performing categories during the five days of launch. From Thanksgiving to Cyber ​​Monday – to the holiday shopping season, according to Phil Rist, executive vice president of strategy at Prosper Insights and Analytics. Sales of mass-market beauty products jumped 8 percent year over year, while prestige brands swelled 14 percent, according to Circana.

“Beauty is a very emotional market, which makes it much more resilient to economic turbulence,” said Delphine Horvath, professor of cosmetics and fragrance marketing at the Fashion Institute of Technology. “As inflation concerns persist…consumers are looking for value for money brands at affordable prices. »

Last summer, Amin was just minutes into a TikTok live stream with ELF clients when they started bombarding him with requests. The main plea: a cheaper version of Drunk Elephant’s viral bronzer drops, a serum that creates a sun-kissed glow under makeup and costs $38.

“We don’t want to pay that much for this,” customers told him. Right after the live stream, he walked over to ELF’s innovation program manager and told the team to get to work.

Dupes are nothing new in retail. Fashion brands such as H&M and Uniqlo, and furniture companies like Ikea and Wayfair have been replicating more expensive, on-trend lines for some time, noted Olivia Tong, an analyst at Raymond James Equity Research. But interest in dupes — particularly in beauty — has increased as consumers look for ways to save money, she said.

Google search data compiled by NielsenIQ over a 12-month period showed that searches for “dupe + skincare” jumped 123.5% year-over-year, while “dupe + makeup » increased by 31%.

“It’s a search for value but also a desire to explore,” Tong said. “With ELF in particular…the cost to try it is sometimes less than the cost of lunch.” »

Inflation can’t taint the brilliant beauty industry

ELF has been one of the most effective brands at capitalizing on this trend, Nogueira said. It has produced dupes that rival the offerings of prestigious lines such as Charlotte Tilbury, Milk Makeup, Dior, Smashbox, Benefit, Laneige, Supergoop, Tarte and Anastasia Beverly Hills.

One of ELF’s early successes was its mineral-infused facial primer, which Amin says was inspired by Smashbox’s Photo Finish. They cost $10 and $42, respectively.

He said ELF developed its Halo Glow contour, blush and highlighter wands in response to Charlotte Tilbury’s Hollywood Contour offerings, which were “constantly out of stock”.

ELF products are clean, vegan, cruelty-free, and made in Fair Trade certified facilities. In some cases, Nogueira said she preferred the dupe to the original. This includes ELF’s $14 version of $49 Flawless Filter from Charlotte Tilbury.

Charlotte Tilbury did not respond to a request for comment.

Counterintuitively, prestige brands are generally indifferent to dupes, said Korinne Wolfmeyer, an analyst covering the beauty and wellness space at Piper Sandler. They view their primary customer as a high-income buyer who isn’t necessarily looking for cheaper alternatives.

“A lot of these players have called the dupes positive because they push innovation … and continue to bring newness to the market,” Wolfmeyer said. “That has worked in their favor because they are also experiencing good growth.”

This also pushes incumbent players to work harder for younger consumers. Baby boomers, Gen X and some millennials are “fairly loyal to their brands,” while Gen Z and Gen Alpha are less loyal, she continued.

In the beginning, ELF relied on its customers to spread the word online. So, building a strong social media presence has been a smooth transition, Amin said.

“Our approach is very much that of a digitally native brand, where we are constantly testing, learning and detecting what works and what doesn’t,” he said.

ELF was one of the first brands to join TikTok and BeReal, and recently announced an interactive experience on Roblox. He is also present on Twitch, the live streaming gaming platform, and has partnered with a popular female gamer.

The brand “really masters disruptive marketing,” said FIT’s Horvath, pointing to its ad campaigns with actress Jennifer Coolidge and product partnerships with brands such as Chipotle, Dunkin’ Donuts and American Eagle “that create buzz, drive engagement and brand awareness. »

But their marketing efforts haven’t been without some mishaps: In 2019, ELF worked with marketing company Movers+Shakers to commission a song for a TikTok campaign. The song “The eyes. Lips. Confront. (elf),” by iLL Wayno, featuring Holla FyeSixWun, went viral. But that partnership has come under scrutiny. Last month, investor Spruce Point Capital Management shorted ELF stock amid revelations that the marketing company’s co-founders were members of NXIVM, a self-help group-turned-cult led by Keith Raniere. ELF made no comment.

Movers+Shakers co-founders Geoffrey Goldberg and Evan Horowitz have denied knowledge of the cult’s abuse and said they left the group after learning about it. Rolling Stone reported, however, that they were still linked to NXIVM members aligned with Raniere, who in 2020 was sentenced to 120 years in prison for sex trafficking.

Unlike many traditional brands that follow a vertical innovation process, in which steps such as marketing, research and development, and product testing occur sequentially, ELF does so simultaneously. This allows it to create new products and follow trends faster than most of its competitors. So consumers “have a little bit of that desirability, which comes with novelty, but at an accessible price point,” said Manola Soler, senior director of Alvarez & Marsal’s consumer and retail group.

While most beauty brands manufacture their products in various regions of Europe, Asia and North America, ELF manufactures its products exclusively in China, where labor and manufacturing costs are lower , and subcontracts its production to third-party suppliers. And because ELF can deliver high-volume units to these facilities, the company can dictate manufacturing processes and embed its own quality control employees at the facilities, Amin said.

“We have a completely different structure than many of our peers, and we’ve been working on this for 20 years, so it’s a pretty big advantage,” he added.

Investing in a social media presence paid off: The brand’s organic popularity online allowed it to save money on advertising, Raymond James’ Tong said.

ELF Beauty – which includes its namesake cosmetics and skincare lines—plant-based makeup brand Well People and Alicia Keys’ Keys Soulcare beauty line—raised their outlook in November after beating Wall Street estimates, forecasting 896 $. million to $906 million in net sales for fiscal 2024, up from $578.8 million recorded one year earlier.

International sales increased 157 percent in the most recent quarter, Amin said, largely driven by expansions in Canada and the United Kingdom. In August, ELF announced the acquisition of skin care brand Naturium for $355 million.

But the key to its success is the price – the average cosmetics cost about $6, Amin said. Its prices have only seen notable increases twice: once in 2019, and then again in March 2022. The brand took the unusual step of announcing on social media that it was raising prices by $1 for two thirds of the products, leaving the cheapest products. unchanged products.

Consumers supported The decision and that decision built confidence, Soler said: “They did a good job of communicating it in a way that seemed transparent. This worked in their favor.

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