Revlon, the 90-year-old cosmetics giant, has filed for bankruptcy. This is not because women are not buying makeup and beauty products. Rather, they have moved on from Revlon. How? The best way to sell makeup right now is to showcase people who applied or are applying makeup in live shows.
Revlon’s sales lagged over the years and in 2021 fell 22% from its 2017 levels. Shares have fallen more than 80% since the beginning of the year.
With that construct, extremely social media native brands with largely no heritage but in partnerships with influencers and celebrity have become the new category-kings. If you want to look like that queen on TV, buy this makeup. There is no need to waste time checking the Revlon catalog or visiting its website.
Social media has commoditized the brand and distorted the distribution model. One guy in China sells tens of millions of dollars worth of makeup yearly via TikTok making his channel one of the largest “shops” for makeup in China. He even put more efforts. Kim Kardashian built a $1 billion beauty brand when she sold 20% stake to Coty for $200 million. Her marketing & growth model was powered by social media.
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People, the empires of the future will be controlled by those who influence and control demand, and not those at the supply side. With tens of millions of social media followers, Kim influenced many and built that empire without a single factory, sales team, or warehouse; only her social media handles as other core domains were outsourced. Companies like Revlon got disintermediated in the mix; “if you want to win in the 21st century digital economy, you must control or influence demand, not supply.”
This is the video on the Airbnb piece: If you want to win in the 21st century digital economy, you must control or influence demand, not supply. In the industrial age economy, power went to gatekeepers of supply. Today, the empire builders are those that control demand. This is possible because digital supply is unbounded and unconstrained, making it largely not a factor. Digital utilities like Google, Facebook, and Airbnb which control demand become the new gatekeepers.
Comment on FB
Comment: Yes, Prof. Ndubuisi Ekekwe Social Media Influencers are a major driver of sales in the era. Rihanna is literally sitting on gold with her Fenty brand as she’s one big influencer on Social Media. I guess Revlon was too slow to adapt. Those that can sell value will always be more successful than those that produce value and can’t sell it.
Comment #2 : Prof Ndubuisi Ekekwe, my opinion is that Covid’s nose-mask policy was disruptive and plunged the make-up industry into bankruptcy. What’s your thoughts about this perspective?
My Response: Not correct in my opinion. Li Jiaqi, the king of lipstick in China, who sells on live stream does US$1 billion worth sales in some days. He sells more lipsticks on his channel than the entire revenue of Revlon.
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Those who sell caskets usually have contacts with mortuary operators, because that is where the clientele is, largely.
So, if you sell makeup and do not own a shop in the space where the buyers congregate, you have written your funeral oration then.
People only deal with those they see and know, you have to be very visible and loud, for you to be noticed.
Well, I think in cosmetology, it is very important to react to changes in time and correctly understand the needs of your customers and clients.
Well, I think in cosmetology, it is very important to react to changes in time and correctly understand the needs of your customers and clients. Therefore, many cosmetology companies go bankrupt because they lack flexibility and cannot perceive changes. Now even those with extensive experience in this industry are entering beauty schools, as trends have been changing completely for 5 years, and it is necessary to master new skills and techniques of work.