The Truth About Kylie Jenner’s $800m Cosmetics Empire

Kylie Jenner’s cosmetics empire was recently featured on the cover of Forbes magazine – America’s most prolific business monthly.

Whilst much contention was raised about the claims that her wealth was “self-made” (which it wasn’t), the bigger question was how this actually happened – and the numbers behind it.

Jenner’s “Kylie Cosmetics” business has raked in an estimated $660m in sales during its 3 year lifespan, with $330m in 2017 alone.

Whilst the business is private, and thus its numbers are not publicly available, even if these estimates were 50% off, the figures would be staggering.

What’s more – the “company” only has 7 full time employees. Everything from packaging to PR is outsourced, and the only way that Jenner gets customers is by leveraging her 110m Instagram followers.

This article examines how it was done.

Social Midas

The core of Jenner’s success has been the 110m followers on Instagram.

The company doesn’t advertise outside of the platform, doesn’t have any shops or stockists and generally just peddles its products directly to its community.

Whilst this sounds like a marketer’s wet dream, the most important element was Jenner’s lips.

In 2017, precisely 2 years after registering the trademark for her brand, tabloids around the world started running reports on the size of them; with the help of fillers, she’d managed to almost quadruple their size.

The point here is not so much about what she looks like, but how she capitalized on the interest… she’d inadvertently uncovered one of the biggest “trends” of the modern West – women lusting over youthful, full lips.

To this end, putting $250k of her modelling money into 15,000 lip kits, she set up a page to sell them online. Almost instantaneously, they sold out.

Whilst this was a great step, the next process was Jenner’s omnipotent mother – Kris Kardashian – bringing in Shopify in February 2016 in order to make the business a fully fledged ecommerce operation.

A few months later, the company started selling with six shades of lip kit – all of which sold out very soon after launch.

Exponential Growth

Whilst the store did well immediately, what spurred continued interest was its maintained growth.

Rather than being a small blip – where girls go and buy the latest product because it’s on-trend – the business kept producing buyers at an alarming rate.

This could be handled thanks to the way in which it had been set up. It’s a quintessential “dropship” operation; all of the product development & sourcing was out-sourced to a company called Spatz cosmetics, who’re estimated to have made ~$180m from the venture.

This figure represents the COGS (Cost of Goods Sold) of the business; a little-known number which will help us actually determine the true value of what’s been developed.

You see, when it comes to money, 99.9% of people are generally wrong. This isn’t me being disrespectful; they’re just not experienced / level-headed enough to actually consider the facts from the hype.

Jenner’s “business” isn’t a real business. It’s a marketing company which trades in attention.

Like all things “Kardashian”, that attention comes from multiple sources – but is ALL directed towards the family. The matriarch (Kris) then turns this attention into money.

Unfortunately, a lot of people have conflated Jenner’s attention with the value of her business. They are mutually exclusive, and in the investment world, has lead the “price” of Jenner’s pull to be “overvalued” (people think it’s worth more than it actually is).

As mentioned, she doesn’t have a “business” because all the product creation is outsourced. She has a website that sells outsourced lip gloss etc.

This means that if you’re actually looking at what’s really going on, you have to be able to consider what the business actually is, and – ultimately – whether it can be sustained (no).

Worth / Value

When it comes to valuations of companies – the most important thing to consider is that almost the entire populace of the world is wrong about which ones will win in the long run.

And although I’m no sage on the topic, I’ve been around long enough to know which companies will sink and swim.

In the case of Jenner’s, I see a flash in the pan.

It has very little – if any – competitive advantage, and is primarily built around a persona which is false.

It’s my opinion that most of the current purchases (and yes, they are HUGE in volume) are predominantly impulse purchases.

Curious teenagers, and even mid-twenties women, are buying the products because of the promise of a richer, fuller pout. But without costly filler injections, this is just a dream.

My own estimation is that Jenner is probably worth ~$20m. Her “business” is worth about 1/5 of its profit (which is likely nearer to $100m than the $800 revenue reported by Forbes), and thus the whole thing just stinks of a marketing gimmick.

Further to this – actual metrics of the various products being sold by Jenner seem to indicate a slowing growth curve – just 7% in 2017 after a meteoric first year surge.

This is not to put shade onto her success. But to label her a “self made” success story is incorrect, as well as inflating the numbers in sales. With at least 50% of the revenue going to Spatz (who also work for L’Oreal), it’s my opinion that they are the real winners out of it all.

A Software Package for Business Change – Odoo ERP

Enterprise Resource Planning (ERP) is defined as an “information system package that integrates information and information based processes within and across functional areas in an organization”

Earlier applications were aimed at particular customers with restricted functionality and isolated from other applications. Whereas Odoo ERP is a business tool that sums up all the applications required by an organization and connects to other organizations. Today, ERP have added new functions such as product data management, electronic commerce, supply chain management and warehouse management.

Therefore, OdooERP makes the business competent.

The implementation of Odoo Enterprise Resource Planning to a project involves:

Project Planning

Business & Operational analysis including Gap analysis

Business Process Reengineering

Installation and configuration

Project team training

Business Requirement mapping

Module configuration

System interfaces

Data conversion

Custom Documentation

End user training

Acceptance testing

Post implementation/Audit support

There are a number of OdooERP systems available in the market which makes it difficult to choose the right one for a business. Odoo ERP selection is a difficult yet important task. There are a few guidelines to be followed while selecting the ERP:

Set up the need for Odoo ERP/CRM software.

Take the right ERP selection team.

Buy a customized ERP software.

Assess Odoo- ERP implementation Partner.

While selecting the Odoo ERP, you should go for a simple and refined one. Such solutions are easier to implement as well as for the employees to use.

Common mistakes when you go for building s/w are:

Including too many features.

Developing on multiple platforms in the initial stage.

Not focusing on the user experience.

No flexibility.

Lack in monetization planning.

Ignoring the importance of marketing.

Not using analytics services.

Avoiding mistakes will much likely help erp developers to succeed in their business; keeping the users engaged will improve the revenue of income. No doubt, the execution of the idea is equally important. Efforts are to be channelized in the right direction will help the developers to build applications that users love and achieve desired results.

ERP/CRM will help you to develop your customer base and keep them informed. You will be able to include offers on discounts and other information, which makes your customers realize that you consider them unique and specifically a customer that you want a relationship with rather than just treat them as a number. Through these softwares for business, you are able to communicate in a much extensive way as compared to emails, which might remain unread.

Planning Products for Multiple Sales So You Can Promote Them In Your Emails

Interesting fact: It’s a lot easier to sell a second product to an existing customer than it is to find a new one. Keeping that in mind, it only makes sense then to plan out a product funnel that allows people to make multiple purchases from you. Instead of focusing all your time and energy in going out and finding new potential customers, you can instead focus on creating new products and serving your existing customer base.

I’m not saying you can stop looking for new customers. That’s always a smart business practice. I’m simply saying that if you create a series of related products that you can sell to your existing customer base, you can make quite a bit more profit from every single customer.

There are a few different ways to think about this. Let’s run through them and you can pick whatever strategy you think will work best for you, your business, and your customer base when it comes to planning future products.

Step By Step Product Funnel

With this product planning strategy, you help your customers or students do one thing with the first product. For the next one you then think about what they need to do next. For example, let’s say you start with product about writing your first kindle book. Your next product could teach them how to create a cover and upload it to Amazon. The one after that may be all about marketing a kindle book etc.

You see how this works. Each product builds on the next and it makes perfect sense for your customers to work through the first, then buy the second, and third, and so forth. Each product is designed to help the take the next step until they reach their final goal.

Creating Related Products On Similar Topics

If a step by step product funnel doesn’t make sense for your market, you can create products on closely related topics. For example, if you’ve been teaching someone how to blog, you could then create products on email marketing, and info product creation. As with the previous example, it makes it easy to mail your existing customer list with offers like this.

Creating Consumable Products Or Membership Sites For Frequent Sales

Last but not least, think about products or services you can create that your customers would buy again and again. Let’s say you’re a writer and you’re offering ghost writing service. You could create an offer to write 10 articles on any topic for a set fee. You could then keep marketing that offer month after month and your clients will buy anytime they need a new set of articles.

Membership sites are another great option for multiple sales. Maybe there’s a new topic you can teach each month, or some templates and cheat sheets you can create for your members.

Take a look at all three strategies for creating more products that you can sell to your customer base. Feel free to mix and match as you see fit. Then get to work creating marketing new products on a regular basis.

Product Creation – How to Fund Your Next Product Before It Is Created

Product creation can be a risky, time consuming endeavor. Often times, people will have an idea; spend large sums of money on a logo and website; spend months creating a product and end up selling little to nothing. What if I told you that it doesn’t need to be this way? By the end of this article, you are going to find out how to fund your next product before it is created and make a tidy profit to boot.

First of all, communicate with your customers and let them know that you have an intention of create a free product for them. Pose them a few questions in the form of a survey to answer. This is survey is meant to help you identify what product they would like you to create, what is their biggest fear or frustration within the niche you are operating in and what is their ideal outcome.

When you have received sufficient data from the survey, go through that and find a common trend among their answers. Once you have done that, verify this with your customers by writing an email or blog post. As a call to action, let them know that to confirm that you haven’t identified correctly what they want, respond by letting you know. Also, tell them that if it is not what they want to let you know what they would rather have.

If they have given you the green light, go ahead and create the free product. If not, go through what they have told you and adjust accordingly to their feedback. You free product should be something that doesn’t take you more than 2 to 3 days to produce. The goal is not to build a full-fledged product but to give a simple solution to their need. A report containing some of your top tips for addressing their core need would do nicely. Put in your best advice and distribute that to everyone.

By now you will have conditioned your customers to interact with you so next, you wait for the feedback to roll in. Among the feedback, you will probably get people asking for clarification on some points and you will know which points really resonated with them. Look out for responses that indicate your customers would pay for more information on a certain area. You should of course respond to all feedback accordingly.

Analyze the data you received from your customers and come up with an idea for a product you think they will pay for. After that, announce to your customers that based on the feedback you have received, you have decided to do something more. Let them know you are about to create a new product and that you will let them buy it at half price.

If you do this right, then chances are you are going to sell more than enough to fund the creation of your next product. Why? Because you have built up anticipation and your customers now have ownership of the product. This is called the art of preselling your products and if you would like to know exactly how to apply this in your business, you should check out the link in my resource box.