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Michelle Phan’s Ipsy Is Dominating the Beauty Box World

It’s growing faster than the competition.

Phan wears a starry dress.
Michelle Phan speaks at the Forbes 30 Under 30 Summit.
Photo: Gilbert Carrasquillo/Getty Images

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Michelle Phan might be busy relaunching her Em cosmetics line after buying it back from L’Oréal following a disastrous start, but one of her other business ventures is already winning big. Ipsy, Phan’s beauty box service, represented a whopping 62 percent of all beauty box subscription sales last year, according to new research from the digital commerce tracking firm Slice Intelligence.

Subscriptions to Ipsy, which sends its users five products a month for $10, also jumped 11 percent between 2015 and 2016, making it the fastest growing service. Phan, best known to the world as the reigning queen of YouTube beauty tutorials, launched Ipsy in 2011, just a year after Birchbox, its best-known competitor, went live. After raising $100 million in funding in 2015, Ipsy was valued at $500 million.

As Birchbox has focused more on retailing full-sized products and opening brick-and-mortar stores, including one in Paris this month, Slice found that its rate of subscriptions fell by 7 percent in 2016. Sephora and Target’s beauty boxes showed even lower pickup rates.

One part of Ipsy’s pixie dust is its focus on customization, enabled by a comprehensive quiz you take when you’re signing up for the service, for which you answer a battery of questions about the brands you’re most interested in trying, the products you love best already, and your skin concerns. (Birchbox, meanwhile, just started beta testing a version of its product that gives subscribers more control over customization.) And it wisely partnered with popular beauty vloggers like LaMadelynn and Madison Miller — known as its “Creators” — to help get its name out.

Ipsy’s success doesn’t only benefit Phan and her team, though. According to Slice, subscribers wound up spending 19 percent more on beauty products overall in the six months after their first box arrived.