Cosmetic Capital taps into beauty boom

Heather McIlvaine

30th Aug 2018

The beauty industry’s rapid growth in recent years has been a boon to established players like Sephora and Adore Beauty, and new players are looking to grab a slice of the lucrative market for themselves.

Cosmetic Capital is one such newcomer. Launched two years ago by brothers Danny and Jamie Marcuson, the discount beauty site has already generated $6 million in sales and recently shipped its 100,000th order.

The brothers got the idea for the business when Danny’s then-girlfriend (now-wife) got sticker shock one day after restocking her makeup supply at bricks-and-mortar stores.

“We saw how expensive makeup was and thought there was a way to bring a more affordable alternative to market,” he told Internet Retailing.

The brothers opened a discount beauty store on Ebay to test the concept and decided to launch their own e-commerce site with Neto after seeing the strong response.

Cosmetic Capital aims to corner the market on affordable, quality beauty products by partnering with brands that already play in the mass market space and sourcing end-of-season and clearance lines from higher-end brands.

“We tap into a global supply network to source great deals and affiliate closely with brands that offer affordable, quality products,” Danny said.

The retailer is also quick to identify new brands that crop up on social media to bring in-demand products to the Australian market.

“With social media, a brand can become popular overnight, and they become a target for us,” he said.

One-stop-shop

While Cosmetic Capital’s discount differs depending on the brand, it often offers products from L’Oreal, Revlon or Maybelline for 50 to 60 per cent off the recommended retail price.

The retailer’s best deal – and one of its most popular products to this day – is for Essie nail polish. A bottle typically retails for $16.95. Cosmetic Capital sells it for $3.95.

The retailer now offers in excess of 3000 products and plans to double its range within 12 months.

“We’re trying to have so many different brands on the site that you don’t have to look anywhere else,” Danny said.

According to Danny, the key to the startup’s rapid growth has been its focus on fast dispatch, good packaging to ensure orders arrive intact and having a constant stream of new products and offers.

“It may not sound like much, but the best customer service is when there’s no customer service,” he said, meaning that the customer has no reason to complain or be disappointed.

Battling fakes

So far, this approach seems to be working. Cosmetic Capital has thousands of verified 5-star reviews.

Reviews are crucial for online beauty retailers like Cosmetic Capital, since many beauty shoppers are more like fans than customers and spend hours reading product reviews to decide whether an item will suit them.

But they also serve to reassure customers who may be wary of falling for deals that appear “too good to be true”.

Bloomberg recently reported that some American customers got pink eye and other skin ailments after using cheap makeup purchased from the online marketplace Wish.

Customers thought they were getting makeup from brands like Urban Decay and Mac at a bargain, but it appears likely they ended up purchasing fakes sold by overseas distributors.

Danny said some customers have asked whether Cosmetic Capital’s products are authentic because of the low prices.

“Firstly, I should say all our products are 100 per cent authentic, but it’s an absolutely fair question, and one that we’re commonly asked,” he said.

“When we do get questions about authenticity, we direct people to our reviews page. We can’t make them up; they’re hosted by Google, so that’s our barometer for how customers feel about our products.”

Danny said he and his brother have also put processes in place to ensure they don’t end up peddling fakes.

“We try to deal directly with as many brands as possible, or if necessary, an authorised dealer of that brand to ensure we never run into any issue like that,” he said.

“We also understand when something [from a supplier] is ‘too good to be true’, and we would steer clear of anyone offering luxury brands for next to nothing.”