MILAN — Never underestimate the power of the “TikTok made me buy it” phenomenon.
When it comes to the unpredictable trends launched by the social platform, there’s more than sheer entertainment, sense of community and a touch of narcissism involved: there’s serious business, too.
TikTok’s increasing influence in driving sales was a recurrent theme in the analysis Cosnova’s cofounder and chief executive officer Christina Oster-Daum offered about the company’s performance in 2021, when the German beauty firm reported net sales of 467 million euros, up 15 percent versus 2020 and — most significantly — up 5 percent compared to 2019.
The online channel was one of the strongest drivers behind the growth. The e-commerce business of the group — which is best known for its Essence and Catrice affordable makeup brands — grew more than 50 percent last year compared to 2020, and by more than 130 percent versus 2019, now accounting for approximately one-tenth out of global sales.
According to the CEO, the U.S. played a big role in the overall performance as the market grew 40 percent boosted by online sales, which accelerated via digital marketing activities and expansion of social media presence. The Essence brand grew double-digit generating record sales at retailers including Ulta and Amazon, for instance, with a little help of products going viral on social media, such as the “Lash Princess False Lash Effect” mascara.
“We had a tremendous year,” said Cosnova’s chief marketing officer Jill Krakowski. “During the pandemic, we saw this massive shift in consumers’ behavior. They were shopping online for cosmetics, even if they couldn’t try it on or experience it in store. It really became acceptable and fun for them. At the same time TikTok exploded, it became where you had to be…and because our brand is a Gen Z brand, and all the Gen Zers were on TikTok, it was this perfect storm of elements coming together. It really propelled the online business,” she said.
Just before the shutdown in March 2020, the Essence “Kiss the Black Sheep” lip balm — standing out for its black bullet that, when applied, results in a different shade of pink according to one’s pH — became a TikTok sensation. “Some girls we didn’t even know did a video and the product sold out everywhere,” Krakowski said. “We were, like, we need to go big into TikTok and figure this out immediately. And then the shutdown happened and we weren’t prepared.”
The executive said that part of the team still managed to get to the office during the first wave of COVID-19 to send out packages and “identify TikTokers, really trying to recreate that magic.”
“I think it really became the most important platform in building relationships with influencers, because not only it’s a great awareness play, but you immediately see the impact on sales when something works,” said Krakowski, while Oster-Daum echoed that TikTok’s conversion into sales is higher than any other social media channel.
It’s also a key tool in intercepting new trends, the CEO said. “Being located in Europe, we know that we are not the trendsetters in the world. Therefore, for us, from the beginning, it was super important not only to rely on everything that is happening in Europe, but to work very closely with the U.S. where trends are faster and emerging quicker than here. The same goes for China,” said Oster-Daum, mentioning that the company also launched Douyin for this market.
Cosnova started very early in building relationships and tapping into the potential of influencers — with the first dedicated event staged in 2009 — setting up presence on Facebook and Instagram. Oster-Daum recalled that even if these moves didn’t strictly imply sales at the beginning, they were pivotal for the overall online strategy.
In sync with its mission to democratize quality makeup, the group continued to enhance its customer-centric approach also with the implementation of the collaborative platform Connected Beauty. This enables “our consumers to really shop wherever they want,” by offering the opportunity to complete a transaction on its brands’ websites or on those of their trade partners without reprocessing the order on separate web pages.
Other digital add-ins of the last few years include loyalty programs and enhanced review programs, through which customers can sign up to receive products and review them. “We know consumers want to hear from others what they think. We stand behind the quality of our product and don’t need to tell consumers that, we let them tell each other. It’s a way to capture new consumers as well,” Krakowski noted.
The launch of a blog boosted the organic traffic to the website by 14 percent, attracting users via tutorials, tips and thoughts of the day. The addition of different payment methods — including Afterpay — and charity giveback initiatives further cemented the relationship with Gen Z shoppers.
Social commerce, live shopping events and augmented reality are on the agenda for the upcoming years as the company constantly looks “at ways to improve the experience and keep consumers on the site as long as possible, because that’s where they’re immersed in our world,” Krakowski said.
The target is to have online sales account for 25 percent out of total sales by 2025. The goal could signal a change of paradigm for a company deeply rooted in brick-and-mortar distribution, but Oster-Daum still strongly believes that physical retail will stay relevant, only shifting to become more experiential.
With Essence being Europe’s number-one cosmetic brand in volume, Cosnova’s top market is still Germany, followed by the U.S. — potentially set to take the lead in two years — and the Netherlands. China is expected to be included in the roster in the near future, too. Last year, sales in China grew 22 percent, while the Middle East and North Africa grew more than 50 percent.
“In general, Asia is a big focus for us because we still have a lot of room to grow. In Africa, we are at a moment strong in the North and South but everything that is in between, we are not there at all, so that will be also a focus for us, along with Latin America,” said Oster-Daum, who aims to turn Essence into the first brand in volume globally.
Based in Sulzback, near Frankfurt, by Oster-Daum and Javier González, Cosnova is celebrating its 20th anniversary this year. Over the past two decades, the family-run business passed from six employees in 2002 to enrolling 650 people worldwide, and from offering 49 Essence products to 517 references today.
Looking forward, Oster-Daum is said to be open to acquisitions in fields that could be strategic and relevant in the future, such as sustainability, personalization, health and wellness and beauty tech.
Product-wise, in addition to Essence and Catrice, the group will continue to focus on diversification of its portfolio through the NextGen Beauty sister company, which acts as incubator to test new categories and develop labels such as Zeena, LaManufacture and L.O.V. As the group has recently launched supplements in Germany, in the makeup segment is increasingly looking to hybrid makeup products that can include skin care benefits.
“It’s a very different world compared than 20 years ago, but I think exciting times are in front of us,” Oster-Daum said. “Then, of course, there’s the metaverse….We’re trying to find out what could be our place also in this new world,” she concluded.