How Beauty Pie, the Startup That Sells Products at Cost, Is Faring One Year Later

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It’s not very often that a beauty company comes along and does something completely different from its competitors. A little over a year ago, though, Beauty Pie did.

Serial entrepreneur Marcia Kilgore, the brains behind Bliss and Soap & Glory, launched Beauty Pie as a “beauty club” inspired by Everlane’s transparency and Netflix’s membership pricing structure. Customers pay $10 per month to buy products at cost, like $2.61 for mascara. The pricing is broken down so you know exactly what you’re paying for. For example, with the mascara, $1.98 goes to the product and packaging, $0.61 to warehousing, and $0.02 to safety and testing. The company makes its money and pays its employees with the monthly membership fee.

Each product also boasts a retail price letting you know, for example, that a $5.38 cleanser would theoretically set you back $32 at retail. (You can purchase items at this price without a membership, and it's also meant to demonstrate the typical mark-up on beauty products.) Beauty Pie sets a monthly price limit on its members, only allowing them to purchase up to $100 (retail, not cost) worth of products.

Photo: Beauty Pie

The company also recently added “upgrade” options, which allow members to buy over the $100 limit. “People love their Swiss skincare, and $100 a month, for women who like to bathe in ceramides and retinol, well, that just wasn’t doing it,” says Kilgore. Members have the ability to upgrade their membership for more allowance, with the max at $30 for a $300 monthly allowance. You can only increase two levels at a time, so if you’re on a $10 per month membership, the upgrade options you will be shown are $15 and $20 per month.

The odd pricing structure was confusing, and it was a steep learning curve for customers trying to figure it all out; Kilgore knew she needed it to be simpler. But technology has been the brand’s biggest challenge since the launch. She hired a new UX (user experience) expert a few months ago to better understand how well people navigated the website.

“Only one out of 11 figured out how to get through the website, and that was someone who reads legal documents for a living,” Kilgore laughs. “Oh god, what a wasted opportunity! Can you imagine if all 11 understood?”

Photo: Beauty Pie

The result is a whole new website interface, which went live in December. It is now much simpler, walking customers through the process as they add items to their cart. A running pop-up shows how much they’re spending and how close to the $100 retail price limit they are, and it offers opportunities to add memberships. “They can just go in and build a basket and see how much taking all the middlemen out saves them,” says Kilgore.

Beauty Pie now offers 280 products in multiple categories, including makeup, skincare, nail polish, and, most recently, candles ($15.01) and makeup brushes ($18.05 for a set of six). The candles launched a few days before Christmas in five different scents and are made by a candlemaker and perfumer in France. Five more scents will launch for spring.

When Beauty Pie launched skincare, the business really took off. It produces its skincare at labs in places like Switzerland and South Korea. It still sells out of certain products, like the popular Fruitizyme Five Minute Facial ($8.37) and the Jeju Overnight Moisture Superinfusion ($10.66). Kilgore shares that for the facial, it was a matter of not having enough packaging tubes, so the company planned to buy “hundreds of thousands” to have on hand so it can keep the product in stock. It also just launched a collection of retinol products that Kilgore anticipates will be popular. Beauty Pie will also start stocking kits for people who may be confused about what products they need for particular skin issues.

Photo: Beauty Pie

Kilgore says she sells about an equal amount of makeup and skincare by volume now, but acknowledges that some improvements are needed to make buying color cosmetics easier online. The company hired and shot models with different skin tones to show how swatches look and plans to upload those images soon. There is also a foundation matching tool that uses the color and name brand formula of what you already use to suggest your new color.

Kilgore declines to discuss sales or exact member numbers, saying only that “we’re growing beautifully through word of mouth and social sharing only and have a roster of loyal members counting in the tens of thousands. We have to control our growth now so that we can get a good handle on inventory... before we put the pedal to the floor.” She says that investors have come calling, but the company isn’t ready yet. “We’ve been barraged, yes. It’s very flattering, but before we take that next step, we have to understand who can actually help us.”

Perhaps the biggest ongoing challenge is that people are still suspicious about the business model or don’t trust products that aren’t brands they know. “People can’t believe it’s such a good deal,” Kilgore says. “I think the beauty industry — myself included — we did an incredible job at selling people things at certain prices!”