Online cosmetics retailer Beautyjungle.com closed on Wednesday due to cash flow problems.
Following its high profile launch last year, including a 24-page spread in the February edition of Vogue, there was much optimism that Beautyjungle would survive where other pure-plays had failed. The site offered a broader portfolio of brands, from prestige to mass-market, than many competitors. In September, after a $20 million second round of investment, the company made the innovative decision to enter B2B eCommerce, a move that set it apart from its competitors. But concerns surrounding the overall business model were raised in October: the company announced that it was looking to be taken over and cut its staff by 60%. On Wednesday, it finally closed down, also closing its B2B subsidiary Beautywall.
The online retailing of cosmetics and toiletries is proving one of the hardest businesses to make successful. Consolidation has been a key area of activity in the past six months, with larger pure-plays and manufacturers seeking strategic alliances. Recent examples include: Sephora’s acquisition of Eve.com, Drugstore.com’s acquisition of Beauty.com and Estee Lauder’s of Gloss.com. The restrictions placed on the sale of many premium brands have been a significant hindrance for many pure-plays as they have been unable to generate high value sales; more commodity-based products such as soap and bath additives are bulky and more expensive to distribute.
In light of this, Beautyjungle sought to widen its offering by developing the B2B beauty supply niche, establishing Beautywall in partnership with the Chain Drug Marketing Association. The aim was to bring together independent drugstores and manufacturers such as Revlon and Proctor and Gamble. Somewhat ironically, Beautyjungle would also advise and provide the technical infrastructure for new start-ups to launch their own B2C sites. Although the company claimed first-mover advantage in both these areas, the initiatives came too late to save it.
