Regardless of how well branded your company is or how efficacious the products, at the end of the day it all comes down to distribution. Where is your brand being sold and how are you getting the product into consumers’ hands to generate the revenue necessary to run and build your business? This is a common denominator for both the biggest of brands and the smallest of start-ups. Without a well-thought-out distribution strategy, you won’t have much of a business.
Developing these strategies is certainly not clear-cut. The blurring of distribution channels makes for quite a balancing act, and the cost of doing business in traditional channels is not an inexpensive proposition, especially for small- to medium-size brands. Retailers are getting into the brand game through acquisitions, co-branded or private-label products, or licensing, upsetting the Darwinian equilibrium and making the competition for the consumer’s wallet just a bit more challenging. As if that weren’t enough, Leonard Lauder said in a recent WWD article what we had all been thinking: the progress of retailing in the US is “boring.”
Over the past decade design and style have been democratized, and stores have become homogenized, leaving consumers looking elsewhere for the sense of discovery, energy, and excitement that was once found at retail. So what’s a beauty brand to do? Go where the customer is. And take the most direct route. Don’t rely on the traditional department store, specialty, dot.com, and home-shopping distribution matrix. Diversify and take control of your sales and own consumer engagement. I realize this is easier said than done, but there are three wildly successful companies that should have each and every one of us reevaluating our distribution strategies and marketing budgets regardless of positioning or category.
Julep, The Honest Company, and Glossier “own” the bulk of their distribution through vertically integrated approaches with traditional outlets in the mix, but the traditional outlets are not what’s driving sales. At their core both these businesses have well-distilled positions and real brand DNA, so they have a solid foundation from which to build meaningful consumer engagement and revenue that sticks.
Julep has effectively translated the success of, and the consumer’s desire for, fast fashion through the lens of beauty with speed to market on new launches and a curated sense of discovery. Their “owned” distribution strategy includes boutique nail salons, service memberships, robust online experience and a subscription box, and their version of flash sales.
The Honest Company has tapped into every parent’s desire to provide the best for their child. The power of Jessica Alba’s celebrity doesn’t hurt, but they have also shown up with the goods, products that are spot-on from the design through the clean formulations. Their “owned” distribution strategy includes a continuity program, membership pricing and exclusive deals, and a robust website.
Emily Weiss has successfully leveraged the social following of her Into The Gloss beauty blog into the ultimate millennial beauty brand – Glossier. Becoming the bellwether in the industry for not only what millennials what in terms of products but how they want to engage, and be marketed to and sold a product. Their casual mantra of simplicity and skin first has struck a cord with a fan base so devoted product launches regularly rack up waiting lists in the tens of thousands.
These businesses are doing something right. So what do they have in common?
- They have laser focus on the consumer experience, thinking through every step from product design to transaction experience. Understanding consumer happiness will keep them coming back.
- They are social brands creating opportunities at every turn for consumer engagement with the brand and sharing the brand/product experience.
- They are not trying to be everything to everyone. They know who they are as a brand. And they understand their customers, listen to what they say, and act on it.
- Their customers don’t just like them; they love them. Their commitment to the consumer has created the capital of emotional connection.
- Their business models successfully built direct-to-consumer distribution channels before entering into traditional channels.
While these brands seem to have shifted the distribution paradigm in their favor from a margin and control perspective, the argument could be that it requires a tremendous amount of capital to go down this path. The investment required to execute a similar distribution strategy may be prohibitive for smaller brands, but everyone regardless of size can and should make the consumer the center of what they do each and every day and at every touchpoint of their business.