Everywhere you look there’s a new celebrity-backed brand.
From SKIMS by Kim Kardashian to Casamigos Tequila by George Clooney to JLO by Jennifer Lopez, social media influencers and Hollywood stars are increasingly opting to launch their own direct-to-consumer (D2C) businesses instead of simply licensing their names to get a bigger piece of the pie.
The move has been fueled by what we saw in the early 2010s, with the explosion of D2C brands Allbirds, Glossier and Warby Parker dominating a newfound space and essentially creating a new type of playbook: the D2C playbook.
Much like other startups, numerous brands strive to be acquired by larger companies for substantial payouts. One such instance occurred in 2021 when Coty sealed a deal with KKW Beauty, owned by Kim Kardashian, for a 20% stake worth $200 million. Before that, in 2019, Coty acquired a majority stake in Kylie Cosmetics for $600 million.
But not every venture has always proven to be fruitful.
Take beauty brands like Item Beauty and Selfless by Hyram, two brands founded by TikTok stars Addison Rae, who exploded on TikTok during the pandemic, and Hyram Yarbro, that haven’t been so successful.
In January, Sephora made a decision that may have appeared bold at first glance. The beauty retailer discontinued Item Beauty and Selfless by Hyram, despite being founded and promoted by two influencers with a combined following of almost 10 million users. However, Sephora’s move was prudent, and it serves as an important lesson for other brands and retailers.
Addison made a shrewd move by launching her clean and science-backed D2C cosmetic brand, Item Beauty, in 2020 right when she rose to fame on the social media platform, capitalizing on the momentum and popularity. She positioned her brand as a healthier alternative to traditional cosmetics. In August 2021, Addison signed an exclusive partnership with Sephora, marking a significant milestone for her brand.
Similarly, Hyram Yarbro, a popular beauty vlogger, ventured into the skincare industry by launching his brand, Selfless, directly with Sephora in June 2021. Yarbro positioned his products as gentler and safer than other skincare lines. This approach resonated with consumers who are increasingly concerned about the harmful effects of harsh chemicals on their skin.
Sephora pulled the plug on both beauty labels this year.
Addison’s failure to promote her own product line was evident when she posted about Item Beauty for the last time on her personal Instagram feed Sept. 29, 2022. The lack of effort led to a decline in consumer interest, resulting in a drop in the brand’s social media following. On the other hand, Selfless faced backlash in September 2020 for diminishing black voices in the beauty space, causing the brand to go inactive on Twitter.
However, while Sephora did not sever ties with both brands due to these reasons, the retailer did make the decision to discontinue both brands after observing mixed results over the years. Despite having a combined social media following of over half a million, Item Beauty and Selfless saw a decline in followers starting in November 2021. Item Beauty witnessed a drop in its number of Instagram followers from 355,000 to 333,000, while Selfless saw a decrease in its following from 196,000 to 169,000 during the same period.
Many of the brands partnering with Sephora, especially those owned and operated by influencers, need to pay more attention to the power of securing shelf space and the importance of brand-building efforts. Jeffrey Ten, president of Global Indie Brand Development, pointed out that Sephora is a retailer, not a manufacturer. It merely provides the space for the brand to sell, but the responsibility of building a brand lies with the brand owners.
Therefore, brands must consider retailer distribution as a growth channel rather than rely solely on it for its success. Merely securing a partnership with a retailer does not guarantee sales and profits. To use this channel effectively, brands must consistently promote the relationship to their audiences, informing them of more ways to gain access to these products.
But beyond consistent promotions, both D2C brands and celebrity D2C brands need to consider the problem they solve.
Take Fenty Beauty by Rihanna and Rare Beauty by Selena Gomez, which have both found continued success due to their brand-building approach, which goes beyond pretty or sustainable packaging and finding shelf space in high-foot-traffic retail stores.
Fenty Beauty, for one, even with the over-saturation in the beauty space, found an opportunity to be one of the first brands to really offer truly extensive color profiles and palette options for consumers of all races.
Meanwhile, Rare Beauty chose to tap into the authenticity of founder Selena Gomez to form a connection with its customers. Authenticity and genuine brand alignment are critical to the brand’s success. Gomez has also been notoriously open about her self-esteem struggles, publicly sharing her battle with low confidence ensuing from unrealistic beauty standards since she was 10 years old.
Then there’s professional makeup artist, author and the founder of Bobbi Brown Cosmetics, Bobbi Brown, who ventured off and started clean beauty makeup brand Jones Road Beauty. The artist launched the brand shortly after her noncompete agreement with beauty giant Estée Lauder (which acquired her original namesake brand in 1995) was up. Her mission wasn’t to start a clean beauty brand; it was to create products with “the best, most efficacious formulas—and didn’t have any ingredients that I wasn’t comfortable putting on my face,” Brown said in an interview.
Jones Road leaned into something that felt authentic to Brown but also leaned into the increasing popularity and normalization of the clean beauty category. In 2021, the brand reportedly reached $20 million in sales.
While authenticity and problem solving are critical for brand and celebrity brand success, there’s also an opportunity to shine by taking the road less traveled.
With the non-alcoholic beverage industry amounting to $496.5 billion in revenue this year alone in the United States, there’s a lot of room for growth and disruption. Celebrities like Katy Perry are capitalizing on this opportunity by launching their own non-alcoholic beverage lines, such as Perry’s De Soi.
While these celebrities may face more challenges and risks in educating and acquiring new customers, Perry has opted to use her platform to open a narrative and generate buzz around the product category. For example, when Perry posted about De Soi on Instagram, her followers showed curiosity and asked questions about the product, indicating potential interest in the market.
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