Introduction: the products are also from 700,000

Introduction:            Ipsyis an online makeup subscription delivery service that was founded in 2011 byYouTube beauty vlogger Michelle Phan, Marcelo Camberos, and Jennifer JaconettiGoldfarb. Ipsy charges users $10 per month for a “Glam Bag”.

Ipsy’s “Glam Bags”are made of fabric and specially designed every month so that they can be keptand reused. The contents of the bag are also premium. Ipsy works with beautybrands to make sure that customers get a selection of full sized products amongthe samples. The selection of the products is based on the consumers data. Whenthey sign up for a “Glam Bag”, they are asked to take a quiz.

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Most people whotake the quiz connect their Facebook accounts and the combination of productsare from the hundreds of specific data points that they gave. The contents ofthe products are also from 700,000 beauty products that are submitted to Ipsyfor consideration each month.             Decadesago, beauty brands would release new collections of products two or three timesa year, then launched a large, expensive advertising campaigns to convinceconsumers that these new shades and looks were in style. But then, beautybloggers showed up and changed the game. Instead of looking to brands to setthe agenda about what products they should buy, consumers began looking totheir peers who in turn began creating videos and tutorials on YouTube. Thiscreated a crisis of sorts in the beauty industry but Ipsy benefited from this.Ipsy early growth success is thanks to Michelle Phan social influence and otherassociated vloggers. When it launched in 2012, Michelle Phan was the face ofthe brand.

Today, Ipsy has made online influencers the centerpiece of itsbusiness model. The company works with over 500 YouTubers and Instagrammers inthe beauty realm and some of whom are paid to discuss participating brands ontheir social media channels.             Accordingto Forbes article Subscription Businesses are Exploding with Growth, Ipsy isthe leading company in top subscription sites with over 5,185,943 visits in themonth of April 2017 (Forbes, 2017). As of September 2017, Ipsy has more than 3million subscribers (TechCrunch, 2017). Ipsy also raised $100 million in SeriesB funding from the high-profile firms TPG Growth and Sherpa Capital valuing thecompany at a reported $800 million last year (FastCompany, 2016). As Ipsy looksto grow, it’s going to lean heavily on that word of mouth and keep it cost ofcustomer acquisition low (TechCrunch, 2017). With millions of users paying $10a month, it has leeway to heavily invest in this new emerging business but italso has to be careful not to fall into trap of emerging consumer brands thatend up aggressively spending to expand into new markets (TechCrunch, 2017).Ipsy is investing heavily into building up its already 10,000 person-strongnetwork of amateur beauty vloggers.

These content creators aren’t bound bycontract. They just have to make a few videos a month that are Ipsy related andthe rest is up to them. Together with Ipsy’s in-house stylist, they generate300 million social media impressions a month for the company (FastCompany,2016). Ipsy gets exposure and more views of its ad-embedded YouTube content andin exchange it gives vloggers access to the Open Studio, mentoring, networking,and publicity opportunities, and special tools Ipsy has to offer (FastCompany,2016).             Ipsy’splan reflects where cosmetics industry is heading. No longer do women get theirmakeup tips at the department store counter or from a celebrity spokespersonand rather, they head to the Internet and binge-watch DIY videos posted bypeople like Michelle Phan.

The fact that these new voices of authority are bothdiverse and relatable makes them invaluable marketing tools for brands. Thestandard of beauty is changing and the one-size-fits-all look no longer existsin this new generation. I think two major macroeconomics variables that willaffect the firm are consumer confidence and retail sales. 

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