As one of the sectors with the greatest growth potential in the world , the beauty and cosmetics market has maintained a rapid growth trend.
According to Accenture 's research data, the global beauty market will reach $ 600 billion in 2023 , and it is expected that the beauty and personal care market will grow steadily at an average rate of 10% in the next three years . It is estimated that by 2025 , the overall revenue of the beauty market will reach $694 billion.
Among them, North America is an important part of the global beauty market , and its market size in 2023 has reached US$61.2 billion .
At present, the main force of beauty products is women aged 18-36 . Under the influence of the appearance economy, the consumer group, mainly white-collar workers, generally likes online shopping, and the frequency of purchasing cosmetics is quite high.
Many beauty brands have seized the business opportunity and have become popular in overseas markets. Among them, the beauty brand Elf has performed outstandingly in North America, with annual sales exceeding US$500 million (approximately RMB 3.615 billion), becoming the number one in North America.
The beauty brand Elf wins by offering affordable products and is rapidly growing in the beauty market !
Elf was founded in 2004 and is a local American beauty brand. Inspired by fast fashion brands such as Zara and H&M , the founder decided to create an affordable beauty brand . Elf stands for eyes, lips, and face. Elf 's brands include elf Cosmetics, elf SKIN, W3LL PEOPLE, Keys Soulcare and Naturium.
(Image source: Elf official website) Elf 's positioning is very clear: affordable + fast-selling. It also adopts a multi- SKU model, with some products even priced as low as $1 .
Elf adopted the online DTC sales model at the beginning of its brand establishment . At that time , it bought the domain name eyeslipsface.com for US$5,000 and officially launched it on June 16, 2004 .
The best-selling products on Elf's official website range in price from US$4 to US$15, including concealer sticks, setting powder, primer, liquid foundation, powder puffs, lip gloss, mascara, etc.
Through online sales channels, Elf can basically receive about 500 orders per week , and the sales of the online platform in the first year are about 1.5 million US dollars.
In 2005, Elf began to expand its offline sales channels and entered large supermarkets such as HEB . With its affordable pricing and excellent quality control, it attracted the attention of many consumers.
As of 2012, Elf expanded its retail channels to Wal-Mart, Kmart, Walgreens, Meijer and Supervalu, breaking the barriers of offline channels. In 2013, Elf opened its first freestanding Studio store in Manhattan and quickly developed several directly-operated stores.
As of 2016, Elf already has 22 offline stores in the United States.
On September 22, 2016, Elf, which was established only three years ago, was officially listed on the New York Stock Exchange in the United States with a share price of US$17 per share, exceeding the original plan of US$14-16 per share.
In the second year of listing, Elf's net profit exceeded the previous year by 5.30 times.
But in 2018, the company's net profit began to plummet, shrinking by more than half.
In order to cope with the market crisis, Elf began to adjust its operating strategy and actively transform. Elf streamlined the company's product line, began to focus on creating star products, and launched a number of affordable cosmetics products with good reputations, such as lipsticks and eyeshadow palettes. In addition, in order to enhance its brand image, Elf actively participated in various types of beauty exhibitions and activities, communicated face-to-face with consumers, and improved their awareness of the Elf brand.
Finally, Elf successfully reversed its downward trend and its net profit began to grow rapidly.
At the same time, the company's stock price increased 26 times, and its stock performance surpassed 1,615 listed companies, ranking first on the New York Stock Exchange (NYSE)!
Elf's market share in the US mass beauty market is second only to L'Oreal and Maybelline. According to the latest "Youth Inventory" report by Piper Sandler, Elf has become the most popular beauty brand among Generation Z in the US.
As the beauty market accelerated, Elf began to actively expand its business lines through acquisitions.
In February 2020, Elf acquired the clean beauty brand W3ll People for US$27 million. After this acquisition, Elf officially transformed into Elf Beauty.
Clean beauty brand W3ll People shares many similarities with Elf. W3ll People aims to be an alternative to high-end clean makeup brands on the market and is sold in channels such as Target and Ulta.com.
After the acquisition, Elf began to improve its product structure, added a skin care line outside the Elf brand, and launched the skin care brand KEYS Skincare.
On August 30, 2023, Elf Beauty announced the acquisition of skin care brand Naturium in a cash and stock transaction of US$355 million. The purpose of this acquisition by Elf Beauty is to expand its skin care business.
It is understood that the skincare brand Naturium was founded in 2019. Naturium's product line covers 15 clean, cruelty-free and fragrance-free skincare products, which are very environmentally friendly. The price is also very affordable, with an average retail price of $18 for skincare products.
In 2023, Naturium's annual revenue has reached $90 million, and its adjusted EBITDA is expected to be $17 million. The brand has strong profitability. After the acquisition is completed, it is expected that Naturium will bring $48 million in revenue to Elf Beauty in 2024, and will also greatly increase the company's skin care product revenue, which is expected to increase from the current 9% to 18%.
How does Elf break through in the popular track?
Elf's success is inseparable from its product advantages.
Since the company was founded in 2004, it has always been characterized by testing products, traffic feedback and responding in a timely manner. Elf's product production channel is very fast. After obtaining approval for the product proposal, the company's team will immediately start developing the product. The average cycle from product conception to product launch is 22 weeks. Some products are even launched faster, taking only 13 weeks from conception to market. The faster product launch efficiency than competitors gives it a first-mover advantage in the beauty industry.
(Image source: Elf official website)
Moreover, Elf's products are famous for their vegan and cruelty-free (i.e. no ingredients from animals and cruel animal testing are allowed) formulas. The products have a delicate texture, a pure plant-based environmentally friendly formula, and are ultra-low allergenic. They are deeply loved by consumers, and the biggest evaluation of them is that they are affordable and easy to use.
On the other hand, the construction of Elf's independent website is also an important reason for the continuous growth of its performance.
According to Elf's internal data, most of the company's annual product sales growth comes from the elfcosmetics.com website, which has approximately 28 million visits per year and ranks first among the popular cosmetics websites in the United States.
Elf relies mainly on its website and search rankings to sell products on a daily basis.
Moreover, in 2018, Elf launched the "Beauty Squad" membership program, which rewards users with points for contributing content, giving feedback, participating in competitions and sharing. Currently, the Beauty Squad loyalty program has 3.7 million members, a year-on-year increase of 25%.
It is worth mentioning that loyalty members are the biggest driver of Elf's digital business, accounting for more than 80% of the brand's DTC website sales.
In general, the success of any brand does not happen overnight. If beauty brands want to stand out in overseas markets, they must maintain keen market insight and flexible adaptability, constantly adjust strategies, innovate products, and improve quality to meet market challenges and opportunities. Beauty parity |
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