The Challenges Indie Brands Face Moving From Direct-To-Consumer To Retail Distribution

In this edition of Beauty Independent’s ongoing series posing questions to beauty entrepreneurs, we ask 12 brand founders and executives: When did you make the leap from direct-to-consumer distribution to the retail channel, and what were hurdles you faced in the process?

SHAYAN SADROLASHRAFI Co-Founder, Wakse

We were lucky to have retailer interest fairly soon after launching our own website. We knew that, in order to build our own brand recognition, we needed to partner with a few major retailers to build a Wakse community. Our biggest hurdle was learning the vendor set up process, which can seem daunting for some of the really big retailers. It’s very time consuming, and it’s easy to become discouraged, but the benefits are well worth the effort!

Jasmin El Kordi CEO, Bluelene

Our first jump into retail was the online retailer Amazon. In fact, we planned our brand's launch on Amazon to get the widest reach possible in the quickest amount of time. The advantage of this retail platform is access to an incredible network of customers, an agile way to meter your advertising dollars, and very measurable conversion metrics. We invested in targeted marketing with sponsored ads that reached customers ready to purchase a skincare product and built a great following that way. 

On the downside, you don't get to build a relationship with a larger corporate retailer the way you would with boutique retailers. We learned that sales volumes are unpredictable, advertising costs fluctuate wildly and, if you run out of product, as we did when our campaign hit velocity, you have a long way to climb back in the algorithm Amazon uses to display your product. After lessons learned the hard way, we now treat Amazon as one of our channels rather than building our future business on it.

David Rodrigues CEO and Founder, Elysian Cosmetics

We broke into our first retailer fairly quickly following our debut at Indie Beauty Expo NYC in 2017. [Indie Beauty Expo is operated by Beauty Independent parent company Indie Beauty Media Group.] The chain wasn’t a huge department store and only had seven locations that were all pretty accessible for us to get to, so it made the experience of transitioning our business into retail an easier process. 

Getting the retailer’s employees on board with selling a new brand they’d never tried before was probably the biggest hurdle we faced. It’s always important to remember that gratis goes a hell of a long way in terms of making retail staff feel appreciated and supported in their roles. On top of our full-sized gratis program, we partnered with the retailer to schedule regular trainings (especially when any turnover has occurred), demos, and in-store branded events and that eventually got our product to become a top three SKU for the chain. 

From my experience, becoming a brand partner with a retailer comes very easy once you become invested in their business, not just yours. Yes, it's important to ensure your products are moving at a regular pace and not staying stagnant on shelves, but, if you’re the kind of partner who goes into one of your retailer’s stores and only cares about the brand you founded, chances are you won’t be very successful. It’s so important to go in bringing all you have to offer to the retailer to form a lasting and unbreakable bond.

MAX OBERLOHER CEO, Niche Beauty Lab

In our case, it was the exact opposite. Following the principle of "if everyone does one thing, do the opposite," we started our business by building strong business relationships with offline retailers. We knew that, in the beauty industry, the offline channels still play an important role, and this motivated us to stick with our idea of pursuing relationships with brick-and-mortar stores. Today, we sell our products in more than 40 countries and recently started to sell DTC through our own online shop.

In order to learn what it actually means to sell online, we studied very hard and connected with many peers, also from other industries. However, our main challenge was to find the right people with the right mindset for our team. Nowadays, everybody is an "online marketing guru," so it might surprise you, but we found it very hard to build a great marketing team that fits our approach of doing business differently.

Andrea Lisbona CEO and Founder, Touchland

We launched our DTC in December 2018 and started our retail experience in July 2019, seven months after launch. As an experiential brand, we were very excited to be in retail so customers could really experience our formula and scent variety in-person. It’s a completely different process, but we truly believe that as a brand we are stronger by combining our DTC and retail exposure.

JULISSA PRADO Founder and CEO, Rizos Curls

We launched into large retail earlier this year.  On Jan. 26, we launched into 123 Target stores across the country. For a company that is barely two years old, this was an amazing feat for us. The hardest thing about launching into a retailer I think is trusting the baby you’ve created in someone else’s hands.

The customer experience is so important and it is scary not to be able to control that experience.  That’s why it is incredibly important to partner with a retailer that you trust.  For us, that was key.  We met with several retailers and ultimately Target was where we felt they really understood what we stood for as a brand and it was a store experience that would resonate with our customers.  

In terms of breaking into large retail and preparing for the process, I could go on and on and write essays, but ultimately it is about building your brand so that you have a strong customer connection and point of differentiation, addressing a clear need in the market, and have all of your logistics in place.  Ultimately, be yourself, be authentic, don’t try to be anyone else, and have all of your business infrastructure in order.

Allison Grossman Co-Founder, The Seaweed Bath Co.

We actually started out in regional and local retail stores almost at the same time we launched our DTC business. This dual track allowed us to hone our product line and processes from the beginning to appeal to both retailer and online consumer needs and gave us a more well-rounded product line.

CC Sofronas Co-Founder, Pacific Shaving Co.

Pacific Shaving Company, which started in 2002, was DTC for the first few years before we decided to include retail in our revenue channels. There were, and still are, significant differences when selling through retail. One difference is that retail charges slotting fees per SKU. These fees can be cost prohibitive, and some careful calculations need to be made to ensure this commitment is occurring at the right time and with the right product.  

Additionally, retail will require the vendor to contribute co-op marketing dollars. Both the slotting fees and the marketing dollars are expenses that are not incurred at the DTC channel. On top of these new expenses, the margins are smaller.  You’re spending more to make less. Of course, the flip side is the increased distribution, which helps balance it all out. Another hurdle is that the retail shelf space is increasingly crowded. A majority of the decision-making is done at the retail shelf, so it’s important to ensure your packaging draws attention from the customer. Otherwise, it will get lost in a sea of product.

Robyn McLean Co-Founder, Hello Cup

We actually started out thinking that we would only sell DTC. However, not long after we launched there was a notable increase (finally!) in conversations around periods as well as an increased desire from many to live a more sustainable life. One Hello Cup is the equivalent of 2000 tampons. So, when it comes to period sustainability they are bloody brilliant, as we say. As a result of those things as well as our brand recognition and reputation, retailers started knocking on our door and haven’t stopped. 

It’s been very organic rather than a concrete decision that we needed to move into retail. Our aim is to convert as many people we can to menstrual cup life, so the more readily available they are, the better. As demand grew, we hired our lovely sales manager Niki, who now looks after our retailers and ensures they have everything they need. 

One of the challenges for us in moving into retail has been to ensure our retailers are armed with the right information to be able to assist customers with any queries they might have about things such as sizing. It’s much easier to ensure a flow of information when you are DTC, but the value of having retailers is huge, and we are so lucky that our retailers are just as passionate about Hello Cup as we are.

MELISSA BOEREMA Vice President of Operations, InstaNatural

We have not made the leap into retail yet. However, we have taken steps to prepare as much as possible so that we can be ready when that time comes. For example, we launched a consumer survey to help us identify what shoppers find most important on pack and presented visual concepts to pick from. There was an overwhelmingly clear winner. So, from there, we introduced the refined packaging into existing distribution. 

In addition, we have onboarded to an ERP solution and decreased the size of case counts for top SKUs as well as worked with our warehouse and fulfillment center on processes to mitigate any risk of damage for our products in transit. We know there will always be hurdles you don’t expect, but at least there are some things we will be prepared for.

Kát Rudu Founder and CEO, Kát Rudu Beauty

I have recently started to explore the retail route as I have contacts from high-caliber beauty stores reaching out to me directly to carry my products. I have only chosen lifestyle boutiques so far that sell similar brands that I also respect and have a personal relationship with.

The challenging part about working with retailers is getting invoices paid on time and being on their product timeline. Other challenges for retailers and why I haven’t done it sooner is because I was not able to fulfill the orders. This is why I chose at the time to not go forward with these larger stores because the quantity was too big for my indie brand at that time. 

YANGHEE PAIK CEO and Co-Founder, Rael

Although we started as a digitally native brand, we decided to expand to mass retailers at a pretty early stage of our company. Asking consumers to switch to organic feminine care from conventional products is one thing, but then asking them to only buy them from our DTC site or digitally was another big barrier to add. Given that our vision was to make our brand and products accessible to all women and making organic and natural feminine care mainstream someday, we wanted to be where women were already shopping their feminine care products. 

One challenge we faced, though, was our packaging. While we had beautiful packaging in the white color back then, it was very much catered to digital product pages and consumption. In order to succeed at the brick-and-mortar retail, we felt the need to upgrade our packaging to stand out better on the offline shelves by giving more color pops. Also, we needed to spend time vetting all the copy and messaging to make sure we’re 100% compliant with the regulation. Operationally, it was very challenging to transition to this new packaging, but we’re very happy with where we landed and believe it definitely helped us soft land in a new retail environment such as Target.

If you have a question you’d like Beauty Independent to ask beauty entrepreneurs, please send it to [email protected].