In a world where $1 pizza now costs more than a buck, Miss A is working to ensure its $1 cosmetics business doesn’t meet the same fate.
While the Dallas-based company sells a slew of products from home organizers to underwear, it’s best known for its dollar cosmetics and beauty tools, which beauty YouTubers first put on the map after it was founded in 2013 by husband-and-wife duo Jean and Kenneth Baik.
It debuted as an e-comm site to test the concept and opened its first stores in Texas malls in 2016. Now, after garnering a boost from a new audience on TikTok and sales of between $25 million and $50 million over the past two years (and which grew 10% YoY in 2021), Jean Baik told Retail Brew that Miss A operates 15 locations throughout Dallas-Fort Worth and Houston, with ~300 employees across its headquarters, warehouse, and stores.
- It just expanded outside the Lone Star State for the first time with a store in Albuquerque, New Mexico, she said. This summer, it’ll add locations in Austin and San Antonio, plus Arkansas and Oklahoma.
Keeping prices low—even below the typical drugstore threshold—hasn’t been an easy road, Baik, also the company’s chief merchandising officer, told us, especially as competitors like Elf Cosmetics haven’t been able to maintain that $1 price point.
“The beauty industry, we thought, was very saturated, and we wanted to find that blue-ocean market. And we thought that this $1 concept was very niche. Everybody can’t do it because the margins are tight. In the beginning, people were like, ‘How do you even sell these products for $1?’”
Fit the bill
While Miss A began by selling brands like L.A. Colors and Elf, it debuted its own beauty brand, AOA Studio, a few years in, and has since expanded to include skin-care line AOA Skin and accessories line Official Key Items.
- Still, beauty makes up around 90% of its online sales and about 60% of its in-store sales, Baik said.
Baik said the company wanted to duck below the typical $3–$10 range for drugstore beauty products to avoid that crowded market. And Elf’s decision to raise prices above $1 products gave Miss A “more of an opportunity” to stick it out.
But, uh, how do they sell everything for $1? (Especially since Baik said Miss A is profitable, and it hasn’t taken any outside funding.)
She said Miss A works with some 200+ factories internationally—some that partner with giants like Sephora and L’Oréal, and other smaller companies, and the company often iterates on these manufacturers’ formulas to fit its needs.
- Miss A doesn’t sell through distributors or wholesalers, nor does it spend much $$ on marketing, Baik noted. It leverages its 325k Instagram followers and 105k TikTok followers, many of whom make user-generated content, to advertise.
- Plus, the company saves money on packaging, she said, like using a cheaper squeeze bottle vs. a heavier glass bottle for foundation.
Baik admitted some products—like sunglasses, scarves, or bath bombs—make little to no profit and act as “bait” to draw in consumers, while most of its beauty-product margins are higher, around ~50%.
“The typical business model, and how much expense a company has to spend, just really limits them within that—it’s really hard to do it,” Baik said. “We struggle with a lot of things just to make sure that our prices stay within this range. It’s just the way that you have to just plan your whole business model.”
Face value: While even Elf has raised prices due to inflation, Baik said Miss A has yet to pass along cost increases to consumers, even though their margins have been affected by ~15%. (For products priced at $1.55 and $1.88, part of the proceeds are donated to charity, she noted.)
- It’s been trying to combat higher manufacturing costs with higher order volumes and using bundles to save $$ on packaging, according to Baik.
- Miss A has also introduced a higher-priced beauty line, AOA Pro, which has a $3–$10 price point.
“We’ve been really just on our toes, pivoting when we can, looking for ways to reduce costs,” Baik said.
New arrivals: Those pivots aren’t slowing down expansion. Miss A introduces 10–15 new products a day and cycles through products, except for best sellers, every few months, Baik said. In-store shoppers see “a fresh wall of brand-new stuff” every few weeks. It’s all about the trendy products that stay “ahead of the industry” (and won’t break the bank).
“We want the customer to keep returning to us,” Baik said. “There’s a lot of beauty brands where they launch a collection twice a year or three times a year, and it’s hard to retain customers because there’s nothing else to buy…It’s kind of like, ‘Do your retail therapy here without feeling bad about it.’”
Source: Retail Brew