IPSY: The Truth About Michelle Phan's Beauty Subscription Company

These days, it's easier than ever to snag all your favorite products right from the comfort of your couch. Since the first subscription box launched in 2004, the business has boomed to a $2.6 billion dollar industry, according to Fast Company. From razors to dog treats and everything in between, there's no limit to the personalized items we can receive right at our doorsteps in Instagram-friendly packages! That said, all subscription boxes are definitely not created equal. Per Fast Company, one of the winners to emerge from the subscription wars is Ipsy. 

Founded in 2011 by beauty influencer Michelle Phan, Ipsy is the largest beauty subscription box with the third-highest number of subscribers (3 million, as of this writing). According to Investopedia, Ipsy's claim to fame lies in its curated "Glam Bags," as well as its vast array of expert makeup how-tos, customer reviews, and featured celebrity content. But how did Michelle Phan go from making humble makeup videos on YouTube to founding the biggest beauty subscription box service out there? Here is the unvarnished truth about Ipsy.

In 2011, Michelle Phan sought to expand her reach on YouTube with a Glam Bag subscription program, according to Investopedia. The website quickly racked up more than 500,000 users, triggering tech problems due to the high volume of visitors. Phan responded to the obvious need by launching Ipsy as an official LLC in 2012. With a name rooted in the Latin word "ipse," meaning "self," the burgeoning company established a mission to "encourage the exploration, growth and beauty for each individual subscribing to the site," Investopedia reported. 

Ipsy's Glam Bags remain a cornerstone of the brand. For $10 a month, subscribers can receive a rotating mix of full-sized beauty products and deluxe samples, customized through algorithms to suit their specific needs. Despite the low cost of each bag, Ipsy still manages to profit by shipping millions out monthly. Ipsy CEO Marcelo Camberos also told Fast Company that many beauty brands clamor for the chance to gain exposure through Ipsy's massive customer base — they're only too happy to provide the brand with plenty of free beauty samples!

Ipsy's "Glam Bags" are far from its only revenue-generating front. As one of the original OGs of YouTube, Michelle Phan understood firsthand the power that influencers hold when it comes to forming authentic and lasting connections with fans. To launch Ipsy, the beauty guru therefore built up her business model around a network of fellow influencers, packing the platform with interactive videos where women could learn about makeup and beauty trends. Plus, the site gives its vloggers and content creators access "to a state-of-the-art,10,000-square-foot studio space in Santa Monica, California where they can produce videos, which they can then beam out to their followers elsewhere on the web," Inc. reports.

"The videos are done in a very authentic way, where it doesn't feel like a commercial," Phan told Entrepreneur in 2015. "A lot of these people are up 'n' coming YouTubers. It's a great way to incubate your brand." Unlike competitors (for example Birchbox), whose growth came courtesy of social media buzz, Ipsy's subscribers are primarily a result of Phan's reach and connections.

Ipsy collaborates with major influencers, but it also boasts some big-time star power too. In September 2020, the service tapped reality star and Good American co-founder Khloé Kardashian to empower users to embrace their innate beauty, according to Allure. Chief brand officer Jenna Habayeb told the outlet that the entrepreneurial celeb "embodies self-expression in a very real and tangible way." She added, "She is a true style chameleon and takes a bold approach to beauty that is playful, experimental, adventurous." Not only that, but Kardashian resonates with Ipsy's target audience. "Our core demo has spoken about how they really like her and how she fits the brand in any of the research and surveys that we've done," Habayeb told Glossy. 

To further appeal to millennial and Gen Z users, Ipsy brought Kardashian together with TikTok star Addison Rae, who co-founded Item Beauty in 2020. Per Allure, the duo squared off in a "Make Off" challenge to see who could successfully apply makeup while wearing miniature rubber hands. By voting for either #TeamKoko or #TeamAddison on Ipsy IGTV, participants were eligible to win membership goodies and free products from both Good American and Item Beauty. See what we mean about interactive? Looks like Ipsy knows how to appeal to its socially-savvy base!

In October 2020, Ipsy made moves by buying rival BoxyCharm Inc., a pairing that "will create a combined business with more than 4.3 million subscribers and $1 billion in revenue this year," the company told Bloomberg. The merger is intended to help both brands navigate an unpredictable market.

On the heels of the deal, Ipsy made good on its plans to leverage rapid innovation with the November 2020 launch of Refreshments, a personal care subscription service with a mission of making hygiene feel more "fun." The line, which is still in its beta phase, features six personal hygiene products, including makeup wipes, razors, and body wash, per Glossy. Marcelo Camberos classified it as a "huge sales driver," telling the outlet that it would be Ipsy's main focus for the next six to nine months after launch. Fans can snap up the affordably-priced collection beginning December 2020.

And in the meantime — even if you're not a beauty enthusiast — keep an eye on Ipsy. From its breadth of influencer collabs to personalized content and big-name mergers, Michelle Phan's subscription service seems to be on the up and up.