Why Founders Think DTC Is Being Underestimated Today And Other Takeaways From Uplink Expo LA 2024

Beauty brand founders are deluged with advice. Go omnichannel, those doling it out insist. Don’t focus on an exit, they posit. But advice without real experience is generally less valuable than the time it took to spew it. Last week at Uplink Expo, the two-day beauty supplier trade show put on Beauty Independent, however, there was plenty of valuable advice from founders with real experience building successful brands. Below, we gather some of the best guidance they shared during panel discussions.

DON’T Underestimate THe VALUE OF DTC 

Katy Cottam, founder of Luna Daily: “No retailer will give you the conversion data, so you need DTC to not just understand who your consumer is, but test the funnel because it’s the only place you get access to that data.” She continues, “It’s the closest access we have to our customers. I will have phone calls with customers every week that we reach out to because we have their mobile numbers and their emails through subscribing to the website, and I can actually chat to them. I can’t chat to a Sephora customer as easily.”

Dan Reich, co-founder of Tula Skincare and DIBS Beauty: “Being in multiple channels—DTC and retail—gives the brand a bigger platform, and it makes the brand cooler. So, for example, if you’re a consumer walking in store, and you see a brand on the shelf, it’s much more credible, it’s serious. You get to see what other brands it’s near and that affects your purchasing decision, the conversations you’re having with your friends online, and the same is true if you see brands online vis-à-vis DTC, and then you’re in store, you’ll have that higher likelihood to have that recall and maybe buy that product in store. So, they’re very complementary. There’s a bit of a flywheel that happens, and they help each other boost each other’s sales.”

Wende Zomnir, co-founder of Caliray and Urban Decay Cosmetics: “There’s something to having some exclusives on your own website, some things that are really special because, once you go to a retailer, they all have loyalty programs and so really your customers often going to shop there to get their points up, get their free gifts, whatever. So, if you have things on your own site for your own DTC, that’s really special, that’s really speaks to the customer or you have your own loyalty program, that could be helpful.”

Jane Carlson, managing editor of Beauty Independent, moderated a panel discussion with Sarah Jahnke, CEO of Homecourt, and Michael Lohrman, president at Epicuren Discovery, at beauty supplier trade show Uplink Expo last week in Los Angeles.

Be Proactive About The Retail Business 

Sarah Jahnke, CEO of Homecourt: “We’re uncovering this independent home store channel that’s really working for us. It’s mostly inbound, which is exciting, too. The bigger legacy retailers, those opportunities will come, but for the moment I’m able to negotiate a much better margin and the investment required for these smaller, independent channels is much more favorable to the company than at a Sephora, for example.”

Greg Starkman, founder and CEO of Innersense Organic Beauty: “Getting on shelf is only a quarter of the battle, staying on shelf is an art. To me, it’s an exciting thing to leave the office and be able to walk into retailers and introduce myself and talk about the brand. That type of engagement pays dividends. We have a team of over 80 ambassadors that are in our stores doing activations.” He adds, “That’s only one piece. I think it’s also about creating very strong marketing campaigns, digital campaigns, sampling campaigns with your retailers because that’s what keeps them engaged and wanting to continue to tell your story.”

Sandra Velasquez, founder of Nopalera: “When we talk to retailers, I’m like, ‘Tell me how this is going to work.’ I know it sounds exciting, everyone has heard of your store, but tell me the operational lift. What is the EDI [electronic eata intercharge] going to cost you? Is it going to cost you more than the sales that are going to come in from that retailer? What does the order processing look like? Does it have to be there the next day? What are the chargebacks? Let me see your portal, does it look like it’s from 1983? Because I don’t know if I want to work with you if it does. There’s a lot of that backend stuff that you don’t know about until you get there.”

Christina Zilber, founder of Jouer Cosmetics: “Let’s say you were to launch a skincare line with five SKUs, you can sit on a retailer’s counter, you can sit on the shelf, but when you have a color brand and you’ve got 170 SKUs, it’s much more difficult for a retailer to buy into that. It’s a lot more money on their end, a lot more consideration for them, and also you have to build this display that’s going to go in the store and so it’s much more expensive and a more difficult hurdle to get into those stores.” She elaborates, “If I could give advice to anyone starting a brand, it would be to start as edited as possible, find your footing, find your customer, hone your story before you start throwing new products in.”

Saint Jane founder Casey Georgeson and Tower 28 founder Amy Liu participated in a panel discussion during Uplink Expo.

Understand The Universe Of Financial Players 

Walter Faulstroh, co-founder of HUM Nutrition: “You have to look at the buyer universe at this point. Where are you? Because the bigger you get, the fewer people there are who can buy you. Where do they have gaps in their product portfolio? Obviously, they don’t want to just bring in another brand that then competes for the same dollar with the existing brand portfolio, so be really strategic about what the exit universe is, but then also make sure you demonstrated success in those channels to this buyer that they can really then take it to the next level. Say it’s the natural channel, for example, be successful there, then they can take that to the next level.”

Daniel Patrick Giles, founder of Perfumehead: “A lot of people think that you only can go to VC money or you can only go to private equity. That is the only route, and I’m going to tell you there is a lot of money out there and a lot of people who love this industry, love this category. Don’t limit yourself to one lane so soon, There are a lot of options, figure out which one’s going to work for you. Especially if you’re looking to do a smaller round, that money is out there.”

Zomnir: “We decided to sell [Urban Decay] and go to a strategic because we had gotten to the No. 1 spot at Sephora, we had gotten to the No. 1 spot at Ulta, and we knew the next place to go was international. We had an office in France, and we had an office in the U.K. and that was taking up a disproportionate amount of our time, and so we knew we needed to partner with someone that had that international capability.”