In the moments after birth, newborns are often red, bluish, or even grayish and bruised from their rocky trip down the birth canal. They're wrinkled, perhaps hairy (the fine covering is called lanugo), and even a little slimy (the vernix coating kept baby's skin from coming in contact with the amniotic fluid). Newborn skin is so thin you may be able to see veins underneath.
Over the next week, the lanugo falls out and the vernix rubs off or is absorbed by the skin. Your newborn's skin may peel, crack, or get flaky while it adjusts to the out-of-womb world. Using baby lotion on a child this young is safe as long as it's fragrance-free, to prevent irritation. But products aren't really necessary to clear up these early skin problems -- they'll fade on their own.