It’s certainly no secret that one of the hottest and fastest growing corners in retail presently is the beauty sector. 

In 2018, the beauty space was valued at approximately $508 billion. Less than six years on, that figure has grown to $579 billion — a 14% uptick in growth.  

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But consumer taste is fickle, and pleasing a growing audience year-over-year can be like catching lightning in a bottle. 

To that end, one of the most competitive spaces in beauty is the shelf space (or lack thereof) at a handful of big retailers. Premium beauty brands vie for that coveted placement in LVMH  (LVMHF) -owned Sephora and Ulta  (ULTA) , while budget-friendly brands try to capture eyeballs at big stores like Target  (TGT)  and Amazon  (AMZN) .

And while luxury beauty has beckoned both shoppers and investors lately — LVMH reported blowout end of year earnings in late January — the long-term bet might be on more affordable brands.   

E.l.f. Beauty solving a big problem

Since the toughest problem to solve for in the beauty industry is a customer’s changing taste, it can be really hard to nail down that staying power unless you’re a large conglomerate that owns many brands, like a L’oreal or Coty  (COTY) . 

But E.l.f. Beauty, which has been around since the early 2000s, has somehow found a way to reinvent itself without being bought out by one of the big cosmetic brands. It’s a social media stalwart, for one. It has nearly 30 million likes on TikTok and is regularly a topic of conversation thanks to its viral products. Since E.l.f. offers mostly low price point products, it churns out a lot of them, and customers have less qualms buying up more to test them out. 

Its Halo Glow Liquid Filter face product, for example, retails for $14 and has over 221 million views on TikTok. In fact, E.l.f. has an entire “Viral” section displaying its biggest hits on social media via its direct-to-consumer website, which accounts for approximately half its sales. 

And it’s paying off. E.l.f. reported an 85% increase in year-over-year sales for Q3 2023. But that’s not an isolated incident. It saw a 49% YoY increase in sales one year ago during the same holiday shopping period. 

And the company has ambitions to take it even higher. 

“We can continue this momentum,” E.l.f. CEO Tarang Amin said. “As much growth as we’ve seen, I feel we can double our market share in color cosmetics over the next few years. We have an even bigger opportunity in skincare and then international … we grew 119% [during the quarter] and we’re still in the early days of international expansion.” 

Part of E.l.f.’s strategy has been its low price points which don’t compromise quality — something consumers have come to expect. It’s also beloved because it often “dupes,” more expensive favorites. The aforementioned Halo Glow Liquid Filter is supposedly a dupe for Charlotte Tilbury’s Hollywood Flawless Filter, which retails for just under $50 a bottle. Both give wearers a lit-from-within glow and is beloved by those who prefer a minimal makeup look. Both also have an average 4.5 star rating from thousands of reviews. 

But E.l.f. sees itself as more than a company that follows other creators’ leads. 

“We’re much more than a dupe brand because we always put our own twist on it,” Amin said, adding the company is set to expand not simply because it makes price-conscious products but because it learns how to iterate quickly and creatively. 

“The vast majority of our marketing is still going to be digitally oriented,” he continued. “The big difference between us and some of the more traditional players is we’re constantly expanding our reach into these different platforms, most of which are digital, and different audiences.”