Much like the teenagers who rose to extreme TikTok fame, there is no cut and dry explanation for how Olaplex got so famous. What is clear, though, is that everyone from Kim Kardashian to hairdressers to teens in their bedrooms are washing and treating their hair with the premium beauty brand, now publicly traded and valued at $15 billion.
The Santa Barbara, California-based company has also earned itself something of a cult-following on social media, including younger people who generally do not splurge on premium hair care. At around $6.58 per oz for a value size bottle of its Hair Perfector Number 3, Olaplex is more than double the price of Bumble and Bumble’s Gentle Shampoo at $3.18 per oz.
Olaplex holds patents for its hair repair and protection products—not unusual in the hair-care world, though its reputation for effectiveness is. “Sure, you can always put ingredients in your products that are gonna make your hair feel smooth and stuff, but it’s not actually repairing the damage, it’s just putting a bandaid over it,” said 18-year-old influencer, makeup artist, lash technician and full time cosmetology student Katy Crooks. “And Olaplex actually goes in and repairs damage.”
TikTok, quarantine TV shows and COVID have driven people to buy a lot of consumer goods, from “Normal People” inspired chain necklaces to bike shorts. But Olaplex is perhaps the premier example of pandemic-inspired spending and social media buzz pairing up to shake the markets. In Olaplex’s case, that traction generated a multi-billion dollar empire. Experts say the company has transformed the beauty industry through its social media allure and the superior quality of its products. And the company isn’t resting on its laurels: Olaplex has plans to expand into skincare too.
“It’s a strong company with explosive growth and industry leading margins,” said Matthew Kennedy, Senior IPO Market Strategist at Renaissance Capital, a provider of IPO-focused ETFs. “They have a strong customer following, they appear to have a superior product.”
A McKinsey & Company study found that before coronavirus, 85% of beauty purchases occurred in-store. Even millennials and gen Zers did 60% of their beauty shopping in person. But coronavirus sent customers to online shopping like never-before, with TikTok and Instagram recommendations driving sales of beauty products. McKinsey partner Sophia Marchessou says this form of “social selling” is here to stay: “My guess would be that it will be a pretty substantial channel and way of selling, because it goes back to this desire for a personal recommendation, a personal touch and interaction, which consumers are increasingly favoring,” Marchessou said during a podcast episode in July.
Part of Olaplex’s success was delivering that personal touch at a time when hair salons couldn’t because of Covid lockdowns. The brand’s strong social engagement created something of a digital hair salon when the beauty industry was struggling, driving millions of social media users to engage with the company.
“For hair care people used to going to a salon, there was that culture that surrounded it, and so Olaplex has really focused on building that user community within social media to mimic what would’ve existed in a salon,” said Sarah Broyd, a partner at Clarkston Consulting, which specializes in personal care and beauty brands.
The hashtag Olaplex on TikTok is filled with videos of people posting results after using the brand’s products, ranging from men who use its bond smoother on their beards to women who have experimented with the product to help their hair grow. The company has around 69,000 followers on TikTok and 2 million on Instagram, whereas competitor Aveda has 560 on TikTok and 442,000 on Instagram.
According to Digiday, Olaplex is set to double their ad spend year over year to hone in on social media platforms where they can work with influencers and share their product. The company also grew 171 percent, with sales increasing from $99.6 million to $270.2 million between the six month period that ended June 30 2020 to the one that ended June 30 2021.
“The numbers certainly support the company’s claims that they’ve leveraged social media effectively though presumably because they have a superior product, and they’re getting all this free advertising through word of mouth and social media posts,” Kennedy said.
What is more, Olaplex is responsible for significant growth within the high-end beauty market, Broyd said.
“When you look at the growth of premium hair care within the beauty market, even though it’s one of the smallest sectors it’s growth is outpacing the rest of the prestige category,” she said. “And one of the reasons is actually due to Olaplex and the growth it has had within the premium hair care sector.”
Aside from social media, customers are finding out about Olaplex in salons, too. The brand is a favorite among many hair dressers. Briyiana Nealy, a beauty influencer and hair dresser in Waterbury, Connecticut said that she prefers the brand because of its effectiveness on all different types of hair.
“I have a very versatile clientele from hispanic, caucasian, to African American hair type,” she said. “And everyone’s hair type, I use Olaplex on it.”
Nealy also commented on how social media allows brands to connect with a wider, more diverse audience.
“When the audience on social media becomes big, behind the screen you don’t know if someone is black, white, hispanic, and that’s the beauty of it…” she said.
Olaplex did not initially respond to Observer’s request for comment, and declined to comment after the publication of this article. The stock rose around 17 percent following its IPO and is currently trading at $25.86 a share, or around 23 percent above the IPO offer price.
