Back to 'How to Launch a Beauty Brand for 1.5M'

There’s more than one way to skin a cat

You’re probably reading this because you’ve been sitting on an idea for a little while. It has something to do with launching the best beauty brand the world has ever seen (or in the very least a brand that makes a real and measurable impact).

But first, what if I told you that you needed to front $1.5 million dollars before a single product was made?

In 2015, Julie Fredrickson famously launched Stowaway Cosmetics, a brand that has since gone on to _______. But it left a lot of us in the industry asking: what is the real cost of bringing a beauty brand to market?

Here, at at E xD we believe that a product can be delivered from concepting to customer with significantly less capital, expenditure and operating expenditure.

We know this for a fact.

At E xD, launching beauty brands is our business. As a product studio in the beauty and wellness space, we design, develop and manufacture beauty products for fashion, lifestyle and beauty brands. Globally and at scale.

ACHIEVING SCALE LIKE THIS IS, IN A WORD, EXPENSIVE

What’s the catch?

Often, we see businesses struggle to identify the most effective path to take to _____.

So with that, we make it to the fun part! Get cosy. Join me. For the next 3 minutes we’ll be unpacking the ins and outs of building your brand, together :)))))

To use the entirely gross adage: There’s more than one way to skin a cat. Who is skinning cats? I don’t know. Who is documenting all the different methods to do so? I’m also not sure. I’m also not sure I want to know and so here is where the exploration of that analogy stops.

There is more than one way to launch a brand.

To bring you up to speed, the first article in our series on beauty brand development, explored product development and brand launch. This time, we’ll be deep diving into approaches to ignition.

How you launch should be defined by what you want to achieve.

Do you want to build a Glossier-esque behemoth, tapping into the cultural zeitgeist and selling millions of units? (Of course you do, but this requires a very specific set of conditions that you need to be ready to foster).

Do you want to launch a side hustle with organic growth that starts small and finds a natural path the scale?

Do you want to create a vertically integrated, DTC (Direct-to-consumer) brand that undercuts all the competition?

Do you want to create an affordable workhorse range that looks to supermarkets and chain-pharmacies to achieve volume?

Each of these approaches can work. Each of these approaches require different risk appetites, different capital structures, different personnel and different business models. It first, requires a decision as to the type of business you want to create.

And finally, of course, adding beauty as a category to your existing brand 🙂

Let’s take each of these approaches and briefly unpack their underlying principles

The Glossier-esque behemoth

The first thing I think about when considering launching a brand like Glossier is capital. Achieving scale like this is, in a word, expensive.

Building a behemoth brand is ALL about spending: spending money to acquire customers. The people who are running these brands are thinking about one thing. CAC vs. LTV. That is to say Customer Acquisition Cost Vs. Lifetime Value. The CAC is the amount of money the company spends on average to acquire a single customer. The LTV is the value that a customer, on average, returns to the business. In this model, if you customer returns $980 USD to your business, you know you can spend $979 USD acquiring them, and still turn a profit. These kinds of businesses spend a lot of time trying to develop metrics-based systems to get accurate readings of these numbers.

These businesses might seem fun and chill from the outside; but in reality, they are well oiled machines run by sharp executive teams with rigidity in budgets, plans and operationalising goals. You have to execute this kind of company in this way because it’s the most efficient way to create value. Why do we HAVE to do this? Because to launch this kind of company we have to have investors (unless we are wildly rich, which we aren’t… are you? Then we should talk).

Speaking of wildly rich, let’s get into the number crunching. Glossier has had 7 funding rounds in 4 years. Starting at $2million in Seed Capital and growing to $240million this year. All in the name of growth.

To build a brand like this, you need to be thinking of scale, by going after a part of the market that can support a company of the size you want to build. A cuticle care company made from West Indian botanicals… probably not the best option forachieving the size. A topical natural remedy to male pattern baldness, on the other hand:— as the largest category in men’s grooming, you betchya . Overall, if scale is your desire, take a long hard look at the product(s) you are thinking about. The good news is that run feasibility studies on behalf of our clients, as a baseline,to understand if scale is achievable and the margins on the products can support that growth.

Launch with a small range of hero products.

Look at Glossier’s initial 3 products. Necessaire’s range of body care products or Him’s range of hair-loss products.

Expect to spend $6 per unit for your first 5000 units.

Launch with 3 – that’s $90k.

Expect to spend 9 figures on marketing.

Start small. Launch on your own. Gain traction and seek seed funding. There are a number of firms looking to invest in this kind of company. We are, after all, in the golden age of CPG (LINK).

Just fight off all the acquisition offers along the way to building your unicorn :heart eyes:.

Do this if you see yourself as an Emily Weiss, Steve Jobs, Elon Musk or The Widow Cliquot.

The Side-Hustle

Ah, the trusty side-hustle. Best prescribed for those out there with a high enough risk appetite. High enough to want to flex your creative juices, aiming to build an empire, but not so high as to bet the house and the family on the big idea. The cap requirements for this kind of venture are A LOT more palatable. The time requirements are… gruelling (remember you still have a full-time job).

As for the skill requirements, you kind-of have to be good at everything when you are launching a side-hustle. One day you are thinking finance and then the next you are packing orders. Another you might be doing product development; the next you are responding to customer enquiries in your DMs.

Expect to spend a baby amount here (relatively small). You’re making runs of 1000 products, you’re launching 1, 2 or 3. Expect to drop between $10,000 and and $30,000 on product. Another $5,000 on your website and you’re cooking with gas.

Automation and virtual assistants are your friends here.

Expect to spend $20-50k

There are so many ways to launch a CPG brand, and so much opportunity within the growth and shifting values of the market, that a unique path exists out there for you no matter what your tolerances, goals and vision.

At the end of the day we are product and business geeks over here… and I’m just excited to see what you come up with :)))))))

Bitnami