EvePearl, a Cosmetics Company, Weighs Risks of Appearing on ShopNBC - Case Study

The following is an excerpt from an article in:


The New York Times
Thursday, September 27, 2012

EvePearl, a Cosmetics Company, Weighs Risks of Appearing on ShopNBC - Case Study

By JOHN GROSSMANN

EvePearl is a Manhattan makeup studio, boutique and e-commerce business with 10 employees that sells cosmetics containing skin-care nutrients. The products are developed by the company’s namesake and founder, a 46-year-old Emmy-winning TV makeup artist. She created her first foundation and concealer products seven years ago while working for Barbara Walters, Meredith Vieira, and the rest of the hosts on “The View.”

THE CHALLENGE With sales growth slower than desired, Eve Pearl, the founder, is considering pitching her high-end cosmetic products — priced well above department store levels — to a broad audience by appearing on ShopNBC, a 24-hour TV shopping channel in the mode of QVC.

THE BACKGROUND While working on “The View,” Ms. Pearl started selling her brush-on products from her New York apartment. By 2008, she had become Ms. Vieira’s personal makeup specialist. She followed the broadcaster backstage on the sets of “Today” and “Who Wants to Be a Millionaire,” appeared on “Today” herself, and basked in the glow of a ribbon-cutting. She was flanked by morning show stars — Ms. Vieira, Ann Curry, Hoda Kotb and Natalie Morales — at the grand opening of her stylish 700-square-foot Upper East Side boutique.

A YouTube posting of that celebrity-filled debut attracted tens of thousands of viewers and encouraged Ms. Pearl to start posting promotional videos demonstrating her techniques and products. That proved to be a good thing, with Internet orders soon outstripping her boutique business and her wholesale deliveries to makeup professionals. By 2011, Ms. Pearl had more than 100 products — some with prices as high as $98 — and more than $1 million in revenue. Her online sales were accounting for about 90 percent of the revenue.

But the bottom line was not shining as brightly as the five Emmys on display in the boutique. Three years after its opening, she said, the retail shop’s overall business had turned profitable, but just barely. Cash flow was still a concern. Manufacturing many of her products in Asia meant paying for her small orders upfront and then waiting two months for them to be made and an additional month for them to be shipped.

And walk-in traffic at the boutique remained slow. “We tried all the regular avenues used by service businesses,” Ms. Pearl said. “We handed out fliers and went to all the hotels and local businesses and offered them discounts and semi-commission bonuses if they sent people our way, but not much happened.”

Without a much bigger, more effective marketing push, the boutique was sucking cash from the business, causing Ms. Pearl to regret the 10-year lease she had signed ($5,000 a month, not including utilities). Still, the Manhattan address provided cachet in an image-driven industry.

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