Founded by a U researcher and makeup novice, Sigma Beauty has tapped into the social media craze to create a multimillion-dollar business.
Sigma Beauty is an online makeup retailer based in New Brighton. It was founded by Simone Xavier. Her husband Rene Filho serves as CEO. Rene Filho, left and Simone Xavier held packages of their beauty products in a storage area filled with similar products soon to be shipped to online customers
Simone Oliveira boasts a Ph.D. in infectious diseases and became a top veterinary researcher at the University of Minnesota. But then one day, Oliveira decided that instead of eradicating bacteria in pigs, she would rather help women look more beautiful.
Wait. What was that again?
"People were really surprised," said Oliveira without a trace of irony.
What started out as a entrepreneurial hobby has grown into Sigma Beauty, a fast-growing, Internet makeup products business. Driven by word of mouth in cyberspace, the New Brighton-based start-up said it will generate $13 million in sales this year compared with $1.5 million in 2009. The company also has launched an innovative affiliate program, where bloggers and social media users can earn a commissions for promoting Sigma products. As a result, Sigma estimates sales are expected to reach $20 million in 2012.
What makes Sigma's success so unlikely is that neither Oliveira nor husband Rene Xavier Filho knew anything about makeup when they founded the company two years ago. Originally a company that exported American goods to Brazil, Sigma decided to focus on makeup after Oliveira witnessed how online cosmetic tutorials from self-made style experts boosted sales of brushes and other beauty products.
Just as YouTube has made celebrities out of ordinary people, social media have catapulted Sigma onto the international makeup scene. Aided by positive word of mouth from bloggers, Sigma today ships brushes, eye shadow palettes and polishing tools to 150 countries around the world.
If anything, Sigma has good timing. Total prestige makeup dollar sales in U.S. department stores in the first half of 2011 have already surpassed the first half of 2008, according to market research the NPD Group Inc., which suggests the industry is finally recovering from the recession. The United States has the largest domestic market for cosmetics and personal care products, estimated to be at least $5 billion.
Natives of Brazil, Oliveira and Filho initially founded Sigma as a way to efficiently ship American products to Brazil, where U.S. goods are much more expensive. Friends and family "would ask us to bring in so much stuff," Oliveira said. "We were just tired of taking stuff to Brazil."
One day, Oliveira saw a YouTube channel in which a woman demonstrated how to apply makeup.
"She had this effect on me," Oliveira recalled. "She was a very good teacher. I felt compelled to buy the products."
Social media have dramatically democratized the once elite makeup and fashion world, said Jacqui Stafford, a New York-based personal style expert and author who appears regularly on NBC's "Today" show.
Instead of going to department store makeup counters, where employees push hard to sell products, or watching fashion shows where models wear clothing most people won't wear, today's shoppers are turning to social media to find objective advice from people they can relate to, Stafford said.
Oliveira and Filho, a longtime entrepreneur, started to design brushes and send products to bloggers. Soon, Internet makeup gurus like Tiffany Denny, a self-taught makeup artist from Atlanta who boasts a popular YouTube channel called MakeupByTiffanyD, gave high marks to Sigma's products. Sales took off.
Using her skills as a university researcher, Oliveira honed her craft as a creator of innovative makeup products.
"I guess I had the reputation of being creative" in academia, she said. "I always took risks. I was always paying attention to trends, even it was infectious diseases."
Sigma recently debuted a synthetic brush collection for high-definition applications and its patented Dry'N Shape brush case, which Sigma says can dry brushes in four to six hours. "New product launches is what drives our sales," said Sigma General Manager Tara Vogelgesang.
Sigma also recently launched a high-tech equivalent of the Avon Lady door-to-door saleswoman. Sigma pays a 10 percent commission per sale to affiliates who generate sales through Sigma banner ads and links they pasted to their blogs, Facebook pages, Twitter accounts and YouTube channels.
The program, which has attracted 13,000 affiliates around the world (though only 600 people make significant sales) has been a big success, generating an extra $300,000 in revenue a month.
Sigma hopes to further expand overseas, which accounts for 60 percent of its total revenue. The company already works with 40 to 50 foreign wholesalers. Sigma also recently started a program to recruit multilingual people to serve as "ambassadors" to foreign markets.
"I had a very successful university career," Oliveira said. "I didn't think [Sigma] would get this big."
Thomas Lee • 612-673-4113