Warby of Hair Dye: Madison Reed Gets Gussied Up

Somewhere between the grey hairs and the usual upkeep, the $15 billion hair dying industry is getting a makeover. Madison Reed is one of the very few direct-to-consumer hair dying product companies that has done well, after noticing that the industry was ripe for disruption. It’s now raised more than $40 million in venture capital funding.

Featured in Forbes, the company is the product of watching other direct-to-consumer (also known as “Warby of X” businesses) that have done well. The founder and CEO Amy Errett says she watched razor subscription startup Dollar Shave Club land a $1 billion acquisition by Unilever before growing — and continuing to grow — even further. Errett started doing her homework in the personal care industry and found that the hair dye industry needed to be turned on its head.

For more “Warby of X” businesses, check out PYMNTS’ weekly “Warby of X” stories. 

Turns out that more than 85 percent of U.S. women dye their hair, most of them doing this about every eight weeks. But they aren’t all getting their color done at a salon. More than 52 percent take it upon themselves to dye their own hair in their own bathrooms, while 48 percent head to the salon. Shocking to some, common practice for others: The DIY option can cost as little as $6, with the latter costing hundreds.

Madison Reed now offers a direct-to-consumer product that for just $25 per order (about $20 if on a recurring subscription plan), women will receive a box of salon-quality hair dye made by an Italian private label with a special formula perfected by Errett. And as more people have health concerns about certain ingredients, the dyes are free of ammonia, resorcinol, parabens, phthalates, gluten and PPD. Choosing the product is the result of 12 hair- and dye-related questions to determine the customer’s “hair profile,” her preferences and a product match. To date, Madison Reed has collected hair profiles of more than 1.8 million women. The company also recently rolled out Madi, a chatbot called for Facebook Messenger and SMS that works with customers to upload a photo, match hair colors and work through four questions.

For more chatbot news, check out PYMNTS’ weekly Chatbot Tracker. 

Since its founding in 2013, the company has done well specifically thanks  to the subscription model. The dye arrives every six weeks, which amounts to about $160 in revenue per subscriber but more for other options such as having longer hair or adding special shampoo and other accessories. As a result, Madison Reed has seen revenues already grow from $1 million in 2014 to more than $15 million in 2016.

The company also has built its first bricks-and-mortar store, Madison Reed Color Bar, opening its doors on December 15 in New York’s the Flatiron district. Looking ahead to 2017, the company says it has plans to construct more brick-and-mortar stores, as it has also watched Warby Parker and Bonobos do, after also beginning with a subscription service and building from there.

That new plan in the new year is to meet the 48 percent of women who are paying hundreds of dollars for their hair at a salon. Madison Reed has plans to roll out an in-salon option for women to pop in for a 45-minute hair appointment (which can typically take two-plus hours) costing only $45 versus the hundreds of dollars at other salons. Other options include blowouts for $35 (typically much more) and other quick fixes for reduced prices. Locations haven’t yet been released, but Madison Reed seems to be looking at Dallas, Miami, Chicago, Minneapolis and Denver.

Errett told Forbes that omnichannel is critical to the business, as there are limits to simply having a presence online and at the doorstep. To test part of this concept out, Madison Reed placed its root touch-up powder ($30) on QVC and in Sephora stores.

And if you were wondering about the Madison Reed name, Errett says the company is named after her daughter.