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The Deciem Effect: Inside the Beauty Brand Factory

Deciem, Be for Beauty and Memebox are rewriting the rules for building a beauty company today, amassing portfolios of in-house brands that are radically transparent, fast and cheap.
The Ordinary store | Source: Courtesy
  • Rachel Strugatz

WILTSHIRE, United Kingdom — Monita Rajpal, a 44-year-old journalist and blogger, loved her Skinceuticals Vitamin C-based serum, but at $136 per ounce, the cost was too high. Then she discovered two brands, The Ordinary and The Inkey List, that were selling products containing the same ingredients at a fraction of the price.

“To have control over exactly what I put on my skin and not spend an arm and a leg is a revelation,” said Rajpal. She now “religiously” uses two serums made by The Inkey List, spending about $22 between them – less than one sixth of the price of the serum from the L’Oréal-owned SkinCeuticals.

She has plenty of options to choose from. The Inkey List is sold by Be for Beauty, a UK-based beauty firm that has been launching brands every few months since 2017. It competes with Toronto’s Deciem, founded by the late Brandon Truaxe in 2013, which has a stable of nine brands and plans for a tenth. K-beauty-inspired Memebox, based in San Francisco, has started six brands since 2015.

All three companies follow roughly the same playbook: launch multiple lines fast and cheap, relying on sleek packaging, digital marketing and low prices to win customers. Transparency about the ingredients they use and how they set prices is a key factor in their popularity, particularly with young consumers.

“We’re agnostic on categories – we always start at yes,” said Mark Curry, who co-founded Be for Beauty with Colette Newbury. “Others ... either pick skin or makeup. [But] look at us – we did body first, then we did lip, then cosmetics and then went into skin.”

These "brand factories" are rewriting the rules for beauty companies. Some of the industry's biggest players, including Revlon, Coty and L'Oreal, now operate incubators meant to develop new brands faster. They're also investing in their new competition: Estée Lauder took a 28 percent stake in Deciem in 2017, and Unilever put $2 million into Be for Beauty in 2018.

"We invested in Deciem because it is an innovative, vertically integrated company, with R&D, manufacturing, distribution and brand development and commercialization capabilities. It’s an incredibly unique model, as the much-buzzed about brand portfolio encompasses roughly ten operating brands," said a spokeswoman for Lauder. The draw is that these lines, from The Ordinary to the pricier Niod for "hyper educated" skincare enthusiasts,  appeal to a "broad spectrum" of consumers that span all ages, geographies and backgrounds.

L’Oreal declined to comment. Unilever didn’t respond when reached for comment.

They still frequently play catch-up: Deciem’s latest brand might race from idea to store shelves in three months, compared to 12 to 18 months at a larger company.

We're agnostic on categories – we always start at yes.

The company’s name comes from the Latin word for 10, the number of brands Truaxe intended to launch. From the beginning, Deciem’s approach was to create multiple lines at once, reducing the fallout for the company should one of them flop.

"By having this many brands it allows us to take risks," said Nicola Kilner, Deciem's chief executive. Kilner, who was previously co-chief executive with Truaxe, assumed the role as Deciem's sole chief executive when Truaxe was removed from his role in the company by an Ontario Superior Court judge last October. Truaxe died in January and the cause of death was not disclosed.

The company hit it big in 2016 with The Ordinary, the skincare label best known for products named after their primary ingredient, most retailing for under $10. The brand accounts for 79 percent of Deciem’s overall business, which is on track to hit $330 million in revenues for the fiscal year ending in July, according to a person familiar with the matter.

Kilner explained how they do it so quickly: once Deciem decides on a concept (often a result of customer input, team brainstorming or a new ingredient coming to market), production starts almost immediately. Design and web teams prepare packaging and product pages so the item can go on sale the moment it passes quality testing.

The results can be unpredictable. The Ordinary “was launched as more of a marketing and talking point,” but proved to be the breakout hit, Kilner said. Deciem is chasing wealthier consumers with more recent offerings, including Niod, which features formulas selling for $50 to $60 a bottle.

Be for Beauty, which also manufactures Asos’ in-house brand, scored its biggest hit with The Inkey List, which launched last summer and follows a similarly blunt, ingredients-first formula to The Ordinary. The brand is on track to do over $40 million in sales this year, according to a person familiar with the matter. The company’s products are only sold in Europe, though The Inkey List will go on sale later this year in the US, Curry said. A fifth label, LZY, a unisex collection of skincare products, will launch this spring.

Deciem used social media to drum up early sales for The Ordinary. In the US, Memebox relies on its retail partners, Ulta and Sephora. The company’s Kaja brand was developed with Sephora and benefited from the retailer’s marketing machine when it launched last year. Retailers are often eager to stock a brand factory’s latest lines because they bring into stores younger, customers who mainly shop online.

Memebox started as a retailer but began launching its own products in 2015. Many are sold only in Asia, but two lines launched in the US since 2017, Kaja and I Dew Care. The company monitors emerging trends closely so it can quickly roll out new products just as demand is ramping up, said Dino Ha, co-founder and chief executive of Memebox.

“We had data that said around 86 percent of US consumers never tried a clay mask at the time and there was a 1000% percent increase in search volume for clay masks on Google in early 2017,” said Ha. “We were able to immediately identify what we had to build – and of course Korean beauty is all masking.”

Memebox raised $35 million in a Series D funding round last month from investors including Goodwater Capital and Johnson & Johnson, which led the round.

“We back companies that have some kind of disruptive technology innovation that are taking on giants in traditionally institutionalized industries, whether its health care or financial services or beauty – a hundreds of billions of dollars industry that hasn’t seen innovation in decades,” said Eric J. Kim, co-founder and managing partner of Goodwater Capital, an early investor in Memebox.

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