On day one of the Glossy Beauty and Wellness Summit, taking place this week in Huntington Beach, beauty executives met for a town hall-style discussion on the biggest challenges they’re facing. All talk turned to four topics: fundraising obstacles, supply chain holdups, inflation impacts and TikTok strategy. Below are the highlights from the session, lightly edited for clarity.
The challenges of fundraising
“For a lot of founders, [fundraising] has totally changed over the last six months or so. Expectations are different. And also, investors love to start hating things — like DTC. So for founders and younger companies, if you know what game you’re playing, it’s easy to figure that out. But if the game changes on you, it’s really challenging.”
“A challenge we’ve been experiencing throughout the [fundraising] journey has been with investors saying, ‘You’re too big,’ or ‘You’re too small.’ So we’re trying to make more money. One thing we’re doing is taking on larger retail partnerships, which is also expensive. But investors want those retailer names, in order to invest.”
“Family offices tend to be less painful than [other investors] — that means rich individuals or family offices of rich individuals They’re less likely to ask you 20,000 questions and then, in the end, tell you you’re too small or too big.”
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The state of the supply chain
“The supply chain is not getting better; there are still extremely long lead times of 4-24 weeks. It requires planning far out across our teams in-house and also understanding and strategizing around retailer deliverables.”
“We switched to USPS about a month ago, based on a recommendation of our 3PL [partner]. I was worried about making the switch because USPS doesn’t have the best reputation. But it’s been working out — we’re now saving about 40% on shipping.”
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“I’m partnering with other brands as part of a collective, to see if we can leverage more, in terms of our manufacturing, Because by ourselves, we’re small. But the three or four of us working together [makes sense] — we’re all good for you, good for the environment brands that use many of the same ingredients. We’re considering: How can we leverage each other to get a bit more scale? We’re in the process of experimenting.”
“We’re trying to move to a local U.S. manufacturer. We’re in Orange County, so the closer, the better, to maintain shipping costs. It’s challenging to find a manufacturer that will make space for you and do things the way you want, breaking out of their comfort zone.”
The impact of inflation
“Along with [increased] lead times, prices have also increased as the supply side has been so slow. So suppliers are losing money, manufacturers are losing money, the prices of ingredients going to suppliers have gone up — so prices have gone up extraordinarily,”
“I recently looked at our numbers just to see if raising prices had impacted business and, from an order volume, it hasn’t changed; the business has actually grown a little bit. Our AUVs have obviously gone up, but they’ve gone up beyond the rate of the increase. So it’s about value — if you have a product that the customer values and loves, they’ll continue to buy from you. If your product provides value for the skin and has proven to work, they’ll continue to invest in it. It’s like when a new iPhone comes out — they’re going to put up the money for it.”
“The decision to raise prices should be based on where you are in the lifecycle of the company you’re in. We’re still early in, and we’re going to [temporarily live with lower margins] so we can play the long game. Now’s the time to get the awareness, secure the trial and build a following. Later, maybe we’ll take the price up. But not now.“
Leveraging the TikTok opportunity
“Keep testing the virality of sounds and trends when you can. With TikTok, the more you use the in-app features, the higher the algorithm will bump you up and the higher you’ll rank. You’ll have the most luck with 15- to 30-second videos, and you should always lead with your hook — a lot of people will bounce after 3-5 seconds.”
“On TikTok, it doesn’t have to be perfect. With a lot of the top influencers in the app, [their videos] are just them in a room. ‘Perfect’ works against you on TikTok, unlike on YouTube.”.
