When clean haircare brand Innersense Organic Beauty co-founder Greg Starkman finally agreed (after several requests) to take Carbon Beauty CEO & co-founder Dan Sudman’s call back in 2017, he remembers he was driving from Boston to Cape Cod, and he expected to be on the phone for less than 30 minutes. “I was really resistant to Amazon and I had no intention of exploring it as a business channel,” Starkman stated. He co-founded Innersense with his wife Joanne in 2005, when the couple—who were both hairdressers at the time—saw a need in the marketplace for clean professional haircare.
Sudman immediately recognized the value of Innersense back in 2017 and pursued Starkman until he agreed to a call. “The success of Innersense is largely based on performance,” Sudman explained. “Historically, it was a huge tradeoff [in haircare] to use a natural product over conventional. I don’t think most clients were willing to make that compromise when it came to their hair. The Innersense formulas are truly unparalleled, they deliver on performance while being fully committed to quality natural ingredients.”
After being on the phone with Sudman for more than an hour, Starkman realized that Sudman was making him an offer he couldn’t refuse. “Dan really presented the data in a logical way. It was clear he understood Amazon and that he was positioning Carbon to be the clean beauty authority. I remember saying to myself that I wouldn’t be a very smart businessman if I didn’t move on this.”
Starkman’s intuition paid off. In 2017 when Carbon—which is now poised to be one of the largest natural beauty retailers on Amazon with more than 75 exclusive clean beauty brand partnerships—took over the Innersense Amazon presence, it was generating approximately $50K–$60K in revenue per year. In the first full year of the Carbon Beauty x Innersense alliance in 2018, the partnership generated over $1MM in revenue. Carbon is projecting their Amazon sales for Innersense to grow to over $5MM per year in 2021.
So, what exactly did Sudman say to Starkman on that call in 2017 to make him completely change his mind? “I can’t remember the exact conversation, but back then most founders had similar concerns,” Sudman said. “It was always a very uncomfortable conversation and for good reason. If you brought up Amazon to a founder, they would instinctively think you are one of the shady retailers wreaking havoc on the platform.”
Sudman said Amazon used to be seen as being a zero-sum game—race to the bottom—price-slashing left and right. “Brands like Innersense were worried that being on Amazon would negatively affect their image.” Sudman said brands were also concerned about the “massive headaches” and “infrastructure changes” that come with selling on Amazon, and that being sold on the behemoth platform would cannibalize their other channels.
It was Sudman’s job to outline to founders like Starkman how Carbon could solve these problems and introduce their brands to a “significant and unique” customer population. “Even the most anti-Amazon die-hard brands can’t deny that Amazon Prime offers a huge convenience factor to a massive and largely distinct clientele,” Sudman said.
Starkman was hesitant to sell on Amazon because he was afraid he would get pushback from his other channel partners—retail, hair salons, and his own DTC business. “We have a robust DTC business and we were scared that if we sold on Amazon we would see a great deal of cannibalization,” Starkman said. “And we were concerned our retail and salon partners would protest.”
Instead of cannibalization and angering his retail and salon partners, Starkman found that selling his products through Carbon boosted his own DTC business 230% in the last three years, and his retail and salon partners have continued to see double-digit growth. “Just like Dan said years ago, ‘a rising tide lifts all boats.’ Our business is on an enormous trajectory.” Carbon has seen 90% year-over-year growth with their Innersense partnership.
“You really can’t be a successful brand without being in that [Amazon] ecosystem,” said Starkman. “And this has really been magnified in the last 12 months.”
Sudman said that Carbon Beauty signed more partners in the second half of last year than they had in any equivalent period in their seven-year history. “With COVID significantly disrupting the retail landscape, it forced many brands, particularly luxury brands, to reassess their online retail strategy,” he said. “It’s becoming increasingly difficult for brands to hold these antiquated views of Amazon, but at the same time they often lack the expertise to effectively scale their brand on the platform. Anyone can launch a brand on Amazon, but to successfully scale it on the platform while navigating Amazon’s growing costs and complexities is an entirely separate challenge.”
Starkman thinks brands need to be realistic when it comes to making the Amazon jump. ‘There are a lot of purists [brand founders] who denounce Amazon because they are trying to create a brand vibe that basically says ‘We’re not going to be sold on Amazon.’ If you have 30 employees and payroll, you may want to rethink that strategy.”
