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Gloss.com Sitting Pretty After Fast-Paced Year

By Chet Dembeck
Nov 4, 1999 12:00 AM PT

Online cosmetics Web site gloss.com's 35-year-old co-founder Sarah Kugelman has been moving at warp speed for months.

Gloss.com Sitting Pretty After Fast-Paced Year

In March, the cosmetics model that Kugelman had envisioned in her mind for four years became a reality -- thanks to $4.75 million (US$) in seed money from Silicon Valley venture capital firms Bessemer Venture Partners and Matrix Partners.

Then, in August, the San Francisco, California-based startup secured an additional $20 million in a second round of financing from a group of heavyweight investors that included Intel, JK&B Capital and MediaOne Ventures.

Suddenly, despite the fact that Kugelman had moved with the quickly-changing cosmetic and beauty marketplace for 15 years, the e-commerce arena gave her a new perspective on the word "speed."

"It's the pace that you have to do things," Kugelman told the E-Commerce Times. "You have to make decisions so quickly."

New CEO, New CTO

In the latest fast-paced development, gloss.com announced the appointment yesterday of Barbara S. Hyder as the upscale beauty e-tailer's new chief executive officer. A former international region president for Mary Kay Cosmetics -- a billion-dollar beauty care company -- Hyder will focus upon building the company's infrastructure. She will also be responsible for building and maintaining a loyal customer base and putting together a long-term global strategy.

"Her successful career attests to her unwavering attention to brand building, customer service, organizational development and margin improvement - which is what made her a natural fit for our e-commerce business," Kugelman said.

The company also announced the appointment of Doug Dalton as its chief technology officer. Dalton will be responsible for gloss.com's technology development, deployment, and the day-to-day operation of the site.

Not Always This Way

Nonetheless, gloss.com was not always on such a fast track. Less than a year ago, few venture firms were interested in talking about marketing cosmetics online.

Kugleman attributes the sudden change of heart, in part, to a recent report by Jupiter Communications that projected that the online health care market -- which includes personal care products -- would reach $1.7 billion by 2003.

Even now, not everybody is sold on the concept of beauty products being hawked via the Internet.

Obstacles To Overcome

Some analysts feel that cosmetic e-tailers will be at a distinct disadvantage due to the reluctance of many beauty manufacturers to supply them with product, fearing that they will alienate their brick-and-mortar customers.

However, so far, gloss.com has been able to clear this hurdle.

"We have an assortment of 100 top brands, including Calvin Klein," Kugelman explained.

Meanwhile, gloss.com also faces some formidable online competitors, such as Eve.com and Beautyscene.com.

Good Content Attracts Customers

Kugelman believes that the content on gloss.com's Web site will soon separate it from the rest of the pack. In fact, the company has hired Dorothy Schefer, former beauty editor and director of Mirabella, as its new editor-in chief.

"We believe that 60 percent of our business will come from replenishment," Kugelman said. "But 40 percent will be emotional sales that are content-driven."

Additionally, earlier this month, gloss.com entered into a multi-million dollar agreement with iVillage.com to be the exclusive e-tailer of upscale beauty products on iVillage.com's home page.

Virtual Makeover

All the same, according to Kugelman, the best is yet to come.

By mid-November, visitors to gloss.com will be able to get a virtual makeover. By either scanning or downloading a digital photograph of themselves, women will then be able to virtually apply dozens of different beauty products to their images.

This feature will give shoppers the opportunity to discover which combination of products works best for them, before having to make a purchase.

Meanwhile, those women who don't wish to transmit a photo can match their skin type with those available on gloss.com's site to complete a more generic virtual makeover.

"I think it will be incredibly successful," Kugelman said.


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How do you feel about Black Friday/Cyber Monday this year?
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