WHY FEW INDIE BEAUTY BRANDS GROW BIG?

Why a few Indie beauty brands grow big but the majority don’t? Is there a method beyond product innovation that could be applied by every Indie beauty brand to increase their probability of success?

I am absolutely delighted and honored to present an in-depth Q&A with two very successful beauty entrepreneurs on their method to grow and scale up.

Ju Rhyu, Co-Founder, Hero Cosmetics,

The next generation of skincare offering only the highest-quality formulas that proactively balance, calm and brighten. Hero wants to put you back in control to help restore your skin – and your confidence. The brand is sold in close to 9,000 stores with an 8-figure sales revenue and growing every day.

Hero’s broader vision is to create products that can be your hero when your skin is in a pinch.

Hero embraces an omni-channel model with current distribution in D2C, Amazon, Anthropologie, Goop, Madewell, Free People, Neiman Marcus, Target, Urban Outfitters, Walgreens, Shen Beauty, Niche Beauty, Liberty London with more retailers coming. Available in the US, UK, and EU.

Ju has worked for some of the world’s biggest companies and brands – Kraft Foods, American Express, Samsung – launching new business and products, executing multi-channel marketing campaigns, and focusing on new consumer experiences that delight.

Monique Hoell, Ceo, HelloBody,

Behind the HelloBody success story is a woman from Germany: Monique Hoell (33). A few years ago, she didn’t have much to do with cosmetics. Today, HelloBody is a natural skincare brand that has led to €65m ($72m) in sales and good profitability in just four years. Born in Backnang, raised in Winnenden in southern Germany, Monique Hoell moved to Chemnitz and Bamberg after graduating from high school, where she studied English, business administration and finally media and communication sciences.

Hoell sniffs first StartUp air in 2011 when she moved to Berlin and works for an agency for personnel marketing with focus on HR Tech. After two years, she founded the personal assistant and artificial intelligence app “Sixtone Business” in 2013 with her co-founder. This project even made it into the startup show “The Lion’s Den”, (german sharktank) but without one of the “lions” investing in the project. Hoell sees the supposed setback as an opportunity and motivation.

In 2016, Hoell took over the then very small and unknown HelloBody project and quickly turned it into a profitable company with sales in the millions. Right from the start, she and her team deliberately focused on direct-to-consumer sales channels such as Social Media and Influencer Marketing. HelloBody was Firstmover with this approach in Europe and used its advantage impressively efficient: The brand currently has 1.5 million followers on social media and about 1.4 Million customers who regularly order new products. In July 2020 HelloBody has been acquired for an undisclosed amount by the DAX-listed german FMCG conglomerate Henkel AG. Led by Monique Hoell, HelloBody has become the fastest growing direct-to-consumer brand in Europe.

Q1: What is the framework you used, or developed over time, for creating and launching an Indie beauty brand that significantly increases the probability of success?

Ju Rhyu, Co-Founder, Hero Cosmetics

1.Start small and prove out product/market fit: I defined it as proof that there was demand for my product. If I were to further define it, I would say demand outstrips resources needed to maintain demand therefore there is proof that you can build a scalable and profitable business.

2.Focus on resource-efficient and cash-flow generating channels: Amazon and wholesale/retail.

3.Go deep with few skus then expand out: It allows you to be more cash-efficient (less money tied up in multiple product types), more resource-efficient (less forecasting across multiple skus, etc) and more time-efficient, ie, more focused and less distracted.

Monique Hoell, Ceo, HelloBody

In my experience and in order to successfully build and scale a consumer brand and business it is crucial to be profoundly interested in what consumers really want. Five years ago young women in Europe wanted conscious skincare. Yet no one really catered to that need. HelloBody started to offer natural skincare to a female millennial target group through a sales channel they were comfortable with – Social Media. HelloBody is an authentic, bold and fun brand. And our success is our proof of concept: Last year in 2019 we have generated €65m ($72m) in profitable sales and we have more than 1.4 million customers throughout Europe and the United States.

Summary

Q2. In your framework, which are the areas of focus that are critical to successfully creating and launching an Indie beauty brand( getting those wrong is a deathblow)? 

Ju Rhyu, Co-Founder, Hero Cosmetics

I personally think all 3 are critical and are all things that we did to be able to bootstrap Hero to an 8-figure business with 8,800 door count.

Monique Hoell, Ceo, HelloBody

First and foremost and in order to be able to create a sustainable business your products need to be top-notch quality. Without this, you will never be able to create loyalty amongst your customers, let alone a hype around your brand.

Additionally, pay attention to the gross margin of your products. You can always argue investing capital for growth. But you will have a very hard time turning an unhealthy gross margin profitable.

Summary

Q3. In your opinion, what are the biggest mistakes/assumptions ambitious Indie beauty brands make( or what do they lack) that prevent them from growing into a recognizable brand (DTC or with prominent national/international distribution) and significant sales? 

Ju Rhyu, Co-Founder, Hero Cosmetics

Q4. What is your message to beauty brand founders and marketers who are struggling to grow their brands?

Ju Rhyu, Co-Founder, Hero Cosmetics

Conclusion

Indie brands continue to disrupt the beauty category because of the low barriers to entry and the rapid evolution of consumer trends towards healthier, personalized solutions along with digital proliferation.

Another, if not the most important, reason is the unmatched understanding of the beauty category and the products that a (woman) consumer has versus those sitting in corporate board rooms.

Indie beauty introduces remarkable innovation to the category every year, yet only a handful of brands scale up.

Ju Rhyu, co-founder of Hero Cosmetics, offers a framework to up the odds of success, starting with finding product-market fit first, focusing on cash flow channels, and winning with few SKUs before going broad. None of these phases are dispensable, in her opinion. You cannot argue with the CEO who steered her brand to 8-figure business revenue and distribution into 9,000 stores approx.

Monique Hoell, the CEO of HelloBody, a brand with $72 million in sales last year and sold to Henkel for an undisclosed amount, recommends starting from figuring out what the consumer really wants, creating a top-notch quality product with a very healthy margin, building a team that complements your strength to help scale-up, and then practicing the fine art of listening intently to understand the core of any issue you face.

While there are always more factors at play than a simplified framework, the difference between brands, that scale up successfully versus those that don’t, does come down to focusing on a validated scale-up process, you can control, along with a powerful brand story.

If you need any clarity on the frameworks or responses, please feel to ask your questions in the comments below, and I will help you get clarity as promptly as possible.