Last January, Shiseido announced that it had acquired the American natural cosmetic brand, Bare Escentuals, for 1.7 billion dollars – roughly 3 times its annual turnover ($ 556 million in 2008). The success of the brand is based on a number of factors – some of which are analysed in the NBSE Report 2009:

• The identification of the brand with its current CEO, Leslie Blodgett.
• The brand’s positioning – that of a pioneer in natural makeup – with the launch of bareMinerals in 1995
• Close attention paid to consumers – the brand engages its clients in a real dialogue using various points of contact.
• The choice of a distribution strategy that breaks away from all the codes of the profession:

1. When she took over the brand (which at that time had a range of bath and body products) in 1994, its turnover was significant only during the holiday season. The first break away was to use television as a means of distribution. By appearing on QVC in person, Leslie Blodgett made a twofold impact: She carved a niche for herself on a fast-growing channel (the second time she appeared, her turnover attained $180,000 in 10 minutes, the third time, she sold $400,000 in 20 minutes, and the “one hour” appearances helped her to sell $1.4 million) AND she personalized the brand around her own image. This strategy took shape when QVC offered Bare Escentuals the opportunity for live broadcasts – and thereby made possible a direct contact between the brand, its CEO and its clients.
2. That was the origin of the second break away: The choice of a “community based” distribution.  Leslie Blodgett set up direct distribution channels (such as itinerant stalls in shopping malls / cruise ships / buses …) allowing direct contact between consumers, the brand … and its charismatic CEO.
3. Bare Escentuals was one of the first beauty brands to use the Internet to market refills… and its products – and thereby expand its network of consumers. Other than its own website, the brand is one of the bestsellers on Amazon.com.
4. In 2001 she developed an Infomercial strategy – with a frequency of 250 per week (which now accounts for 1 / 3 of turnover)
5. After having bypassed the usual distribution channels in this way, and once success was guaranteed, Bare Escentuals started selling at Sephora, Ulta, Macy’s, Nordstrom … and also opened boutiques in its own name (121) where it offers the complete collection.

Today Bare Escentuals realizes its turnover from retail (shops + spas + Sephora, Ulta, Macy’s etc. … 60%), through infomercials, internet and television (28%) and the rest from overseas sales (12%). It generates an operating margin of 31.5% – which is from 2 to 3 times more than its competitors. I cannot help but admire this business model: you have to know how to break the codes in order to create, from scratch, the 46th most important cosmetic company in the world (source WWD). As Michael Porter says: “The only way to [achieve] a sustainable competitive advantage [is] by operating at lower cost, by commanding a premium price, or by doing both. Cost and price advantages can be achieved in two ways. One is operational effectiveness – doing the same things your competitors do but doing them better. ….. The other way to achieve advantage is strategic positioning – doing things differently from competitors, in a way that delivers a unique type of value to customers.”