DTC Versus Wholesale: Where Beauty Brands Are Really Selling
In this edition of Beauty Independent’s ongoing series posing questions to beauty entrepreneurs, we ask 25 brand founders and executives: What percentage of your business is direct versus wholesale? Is that the breakdown you want?
Until 2019, we had under 2% DTC sales, but now we have 12% from our entire revenue. We are planning to grow our DTC sales and target about 25% of our revenue in 2021. We do not want to grow too aggressively because we feel that we must prepare ourselves and build our internal team, including our warehouse, to be ready to support our direct customers.
- Kevin Sharp CEO, Trilipiderm
The majority of our business is wholesale/retail at the moment. I whine about it every day. I knew it already, but COVID has shown us how important access to and intimacy with your own customer is. Selling to customers now more than ever is a relationship business, not with Amazon. The relationship is between the product and the customer. And the customer is more clever and careful now than ever about who they are intimate with. We'd love to be >80% DTC and to nurture that relationship ourselves. Oh, and BTW, I really like 100% margin channels, too.
- Laura Stearn CEO and Founder, Just Pure Essentials
2020 was a very challenging year for our retailers and us. For most, business was slow. Many were even closed. So, through the pandemic, we lost most of our retail accounts as they either reduced their body care department offerings or tried flipping current for newer products in hopes of stimulating customer interest.
I would have thought the natural products industry would have had a huge boost with COVID lurking, encouraging the general public into going even more clean and natural in hopes of improving their health, but we really didn’t see that much new growth in natural and organics.
Now, we are about 10% wholesale and 90% direct online through our own website and Amazon shop. As this is now the current trend, we would like to grow our online sales further and add more of our product offerings on Amazon. This being so, there is now less of a concern for us to protect the sales of our retail accounts as we just don’t have that many anymore to compete with our online sales, and online is where most customers are shopping today.
- Natasha Jay Founder, Pump Haircare
Around 85% of my business is direct-to-consumer and 15% is wholesale to salons. When I started this business, I thought the margins and ROI on establishing a wholesale channel wouldn’t stack up, so I didn’t invest in it, but salons started to approach me unsolicited. So, all my 250-plus salon partners have come to me organically. We’re now investing more time and effort to expand that part of the business both domestically and overseas.
- Michelle Ranavat Founder, Ranavat
At the moment, we are 60% direct and 40% wholesale. This number is always evolving, and I think it's great to have a healthy mix of both. We have seen some of our retail partnerships grow significantly, even through the pandemic as the search for skincare and at-home treatments continues to rise. Of course, the DTC channel has been increasingly important, but I still believe in the magic of retail and having a strong base of retail partnerships to drive sales and brand awareness.
- PETER SCHAFRICK Founder, Schaf Skincare
We had just launched with The Detox Market in the U.S. and, a week after returning from sales staff training in NYC and LA in March of 2020, we went into lockdown across most of North America. So, after a very successful launch in the U.S., in-store sales at The Detox Market abruptly fell. Thankfully, however, The Detox Market has a very strong online presence, and sales actually increased over the course of the summer and fall. Our direct sales also increased substantially. So, with sales from The Detox Market and our own direct sales, we had an amazing year that saw our sales more than double.
At the moment, we are looking at a split of around 50/50 wholesale versus direct. It’s really great to have such an amazing, supportive retail partner like The Detox Market, in both Canada and the U.S., to work with. It's a nice ratio for us at the moment, and we anticipate that our sales will eventually skew more toward wholesale once the pandemic is behind us and retailers fully open again. Let’s hope, for everyone’s sake, this happens sooner rather than later.
- Holly Harding Founder, O'o Hawaii
We've had a bit of a change and plan to continue this route for a while. We are now 80% direct/20% wholesale. Given the current climate, with so many things being out of our control, we are able to better manage our business by focusing on direct sales and very specific key retailers.
- Junko Gomi CEO, H2O+
Excluding our amenity business, roughly 80% of our business is direct-to-consumer, with roughly 20% wholesale. This breakdown has been relatively consistent for the last 18 months. This breakdown has been optimal for our business considering the global pandemic and the impact to wholesale. As we recently transitioned to cleaner formulas, our reliance on direct has enabled us to maintain our staff, be nimble and strategize our next step into wholesale.
- Lizzy Pike Founder, Face Halo
We started out as a purely online e-commerce business, [with] the grand plans of “we will build our own platform and that will sustain us." Then, we started ranging in retail brick-and-mortar stores and e-tail online stores. This quickly grew, and we grew with it. We learned fast that our customer didn’t care where they could buy Face Halo, they just wanted to buy it and have it. Percentage-wise, we are now 75% wholesale and 25% direct.
- Drew Todd Co-Founder, Feals
Currently, 100% of our business is direct-to-consumer. By owning every touch point of the customer lifecycle, we’re able to better educate and support the needs of our customers. We discovered early on that when it comes to people’s health, an empathetic human touch goes a long way. Understanding CBD and cannabinoids can initially feel complex and overwhelming and, while the category has seen significant momentum since legalization in December 2018, most of our customers are new to the category or only tried CBD once before.
That’s why customer service comes first. We’re not just selling a product, we’re selling a service. By layering a CBD Hotline on top of our elevated online experience, we make it incredibly easy to talk to a human to build trust and comfort, while optimizing an end-to-end experience for introducing new consumers to the category.
- Andrea Lisbona CEO, Touchland
We started as a digitally native DTC brand for the first six months post-launch followed by a period of B2B expansion via wholesale partnerships. Currently, the breakdown is 40% direct-to-consumer and 60% wholesale. We're very pleased with the equal distribution of these splits as it shows diversification in our demand and availability to customers. We strive to partner with great retailers while simultaneously maintaining a data-driven approach to growth through our direct sales channels. This model helps us make better and faster decisions.
- Ilinca Sipos Founder, Rara Club
We are a direct-to-consumer retailer. Having launched in Los Angeles around the start of the COVID19 pandemic, we really weren't in a place to even consider opening up a brick-and-mortar store and that forced us to create the best possible experience for customers, even if they're not visiting us in person. We elevated our packaging and unboxing experience to make every order exciting to get. We're also able to give better deals as a new business without the overhead of a store. While it's not out of the question for us to move into brick-and-mortar in the future, it's been helpful to cut those costs as a new business.
- Lindsay McCormick Founder, Bite
We are 99% direct. It's really important to us to build and maintain a relationship with our customers, so we're primarily only available on our website. I love being able to have a direct line to our customers; to be able to learn from and communicate with them on a regular basis is super important to me and our brand!
- Andreas Flohr CEO, ATP Cosmetic GmbH, LIVV
Today, 100% of our business is direct-to-consumer. Our vision is to find a balance between the two channels. While our main focus is the retail channel, it is also very important for us to reach thousands of hair professionals worldwide via distribution partners.
- Kát Rudu Founder and CEO, Kát Rudu Beauty
From the beginning, I have concentrated my business on direct-to-consumer. My business is 85% DTC because this is where I saw businesses going from the beginning of when I was starting my brand. Thankfully, it has helped my business due to circumstances in the world since consumers are shopping online now more than ever. I am working on expanding my line to accommodate retailers and to feature a lower price point product for the mass consumer [with] Vidal by Kàt Rudu. I want to provide a clean product for all that is also economical. I believe that everyone should have access to high quality clean ingredients in their skincare regimen.
- MELISSA JOCHIM Founder, High Beauty
Eleven percent of our business is direct. We would like to increase our direct penetration in the market. Our challenges with digital advertising have been an obstacle. However, we do leverage other marketing activities such as sampling to help drive sales directly to our website. We have great retail partners as well. So, even though we are focusing on increasing direct business, our retail partners have helped us educate the consumer and build brand efficacy, which will only support our direct web sales as we grow.
- Valentina Ferrer Owner, KAPOWDER
Overall, the majority of our customers have been international and our wholesale retail partners overseas were our main focus. This year, we are aiming to increase our direct market and open up distribution in the U.S. to offer cheaper shipping rates to customers.
- SELMIN KARATAS Co-Founder and CEO, Kazani
The pandemic changed peoples’ buying habits to online, and we are trying to pivot by having a strong online presence and strong branding awareness. I used to have 95% of my business wholesale and 5% direct. Now, it’s the other way around, 95% of my business is direct and 5% of it is wholesale. I prefer to do direct because we get to have control and, if there are any questions, I can be of direct assistance to consumers.
- PILAR QUINTERO Co-Founder, Care Skincare
Our intention is to keep it a digital, direct-to-consumer brand. That way we can offer our customers more value for their money delivering highly effective formulas at affordable prices that would be otherwise priced much higher in a traditional retail environment.
- CHRISTINAH NICOLAISEN Co-Founder, Eleni & Chris
Almost all of our business is direct. We have found it very valuable when building a new brand as you are close to the end customer for feedback and input in order to make necessary adjustments along the way and have speed to market on product development.
- LOUIS MARTY Co-Founder, Merci Handy
I’m proud to be an omni-channel brand, which allows Merci Handy to express its different personalities on each channel. On our DTC, we have the full experience of Merci Handy with surprises, GIFs and content, while at retail, the brand has completely different exposure based on impulse and color. I’m happy with the breakdown. One month, we can do 80/20 for wholesale and, the next month, we could see 80/20 for DTC. We are agile!
- FEISAL QURESHI Founder, Raincry
Almost all of our business is wholesale to luxury retailers at the moment. We will be starting our salon distribution program that will help diversify our retail matrix. Direct sales is also an area that we will focus on, but the challenges are great to do it properly. It really requires a strong budget and online marketing strategy to get your brand seen and heard. It is important at our stage to focus, pick our channel(s) and become really good at them before adding new channels.
- Eugene He Founder, Ceramiracle
We're only direct here in the States with the rest of the world being wholesale, which forms the 70% bulk of our business today. The percentage changes monthly and is season dependent, but it seems to be right where we want it to be. Ideally, we want it to almost be a 50/50 mix since that way the management of the business is more homogenized.
- Peter Lee CEO, Saranghae
Currently, our business is 100% direct-to-consumer, and this is by design. We're a company that values real time feedback and the direct relationship with our customers. I won't discount the idea of retail, but only if we can somehow control the quality of experience with our customers.
- DANUTA DUDEK Founder, Cotarde
[The] great majority of our sales are direct, which is great as it allows us to communicate with the consumers directly. However, we have plans to actively strengthen the wholesale part moving forward as we want to be available in certain physical places for the convenience of our end consumers.
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