Julep: Going After Big Beauty With Crowdsourced Products

Julep is taping into the social nature of the beauty market to crowdsource new product design so consumers have the products they want to buy in a much faster timeline than traditional big beauty brands.

The Innovation

Julep is a growing, multi-channel beauty brand that has utilized crowdsourcing combined with social media and big data to design new products. The brand has created a website and product creation experience that is incredibly interactive and engaging. The company’s Beauty Lab (previously called Idea Lab) asks their customers to test and vote on everything from product formulas and color inspiration to shade names.[1] See community here: http://www.julep.com/beautylab It taps into the YouTube and Instagram culture of amateur “beauty gurus” who spend countless hours creating “how-to” content and sharing beauty looks.

Creating & Capturing Value

As Julep CEO Jane Park says, “Idea Lab is trying to do two things — speed up product development and time-to-market, and get a preliminary sense of customer interest to manufacture from the get-go.”[2] Here Park succinctly captures how Julep creates value in the beauty marketplace – it produces the exact products that customers want, in a quicker time than possible manner from bigger beauty players (Julep claims it releases new products 10x faster than traditional beauty companies,  and having worked in the industry previously I can tell you it usually takes a minimum of 18 months to bring a new product into market). Since cosmetics are very trend-based, this fast time-to-market creates tremendous value amongst the target customer. On top of this, Julep is not wasting money and time on traditional market research (as in the Nivea case) and has a better understanding of demand, leading to less excess inventory.

The company captures this value, as many other crowdsourced products do – by associating the ideas the consumers are coming up with exclusively with the Julep brand. On top of this, Julep has a sophisticated supply chain process that Park refuses to share details on, as she says it’s part of her company’s “secret sauce”.[3] Julep uses the crowdsourced method to involve customers more deeply in the brand, which allows a smaller company to compete against larger players.

Managing The Crowd

Julep’s Beauty Lab is a self-signup section if the brand’s website, where the company asks its “Mavens” to do everything from test new products, share shade inspiration through social media and name shades. Incentivizing their core consumer is not hard, beauty junkies inherently want to be on the forefront of new products and gain personal satisfaction from being part of the design process. Plus – they know they are creating products that they will want to buy. For example, in Julep’s latest Lip Mousse product launch, over 80,000 signed up to test the latest creation. See screenshots below for examples from the Lip Mousse crowdsourcing process:

Growth Potential & Future Challenges

Since its founding Julep has raised $56MM from investors who want to tap into the crowdsourcing trend. The company has used the money to accelerate the production of new products, the company launches more than 300 new products skus per year. As well, the company has introduced brick-and-mortar boutique “parlors” that offer beauty services along with Julep products.[3]

If you look at Julep’s website now, you will see that the majority of its products are not crowdsourced and the Beauty Lab is not featured as prominently on its site as it used to. On top of this Julep has started a Birchbox-esq “Beauty Box” subscription service. As a result, one of the biggest challenges Julep could be facing is a lack of focus among many ideas. Beauty is one of the most competitive industries out there and Julep risk losing its identity as it moves away from its crowdsourcing edge. Part of this could be the result of becoming too big – as we have seen, it is easier and perhaps more efficient to product design internally than to crowdsource every new product. We will see if in the future Julep has reached the right balance.

[1] http://www.julep.com/beautylab

[2] http://venturebeat.com/2014/01/28/cosmetics-startup-julep-whizzes-by-rivals-with-its-crowdsourced-approach-to-making-products/

[3] http://blogs.wsj.com/venturecapital/2014/04/14/julep-beauty-raises-30m-to-give-big-beauty-a-makeover-with-crowdsourcing/

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3 thoughts on “Julep: Going After Big Beauty With Crowdsourced Products

  1. Had never heard of this before, it’s a neat idea. I’m wondering if 3D make up printing gets going, which people are trying to do, will this model be less exciting? Meaning, will people who are enthusiastic enough be happy to spend time submitting photos for a product to may or may not be developed when they could just create the same kind of color of their own? Obviously, this is more complex in some beauty segments than others, where the pigment is just one aspect of what the consumer is looking for, but it made me think of that trend!

  2. Interesting post! Do you see Julep’s crowdsourcing edge to be sustainable? For example, what’s to stop a giant like Sephora, which already has massive scale and has implemented a lot of innovative ideas, from adopting some of the same types of crowdsourcing tactics to develop their own Sephora line?

  3. Thanks for sharing! I am curious if you think that crowdsourcing gives Julep a real competitive edge beyond the ultra-engaged makeup enthusiasts. Are these people the only ones who care/buy the product? How can Julep compete with Sephora, which already has a massive selection, top trusted brands, and a very sticky rewards program? Crowdsourcing is an interesting idea for this space, but I just wonder if it truly leads to different and/or sustainable value capture.

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