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Every Tuesday on the CosmoFactory podcast: Discover the latest innovations along the cosmetics and personal care supply chain. Hear thought-provoking conversations with top beauty industry experts from around the world. Learn about next-level solutions and find inspiration to turn your own ideas into industry-changing innovations.
A PRODUCTION OF Cosmoprof Worldwide Bologna
CosmoFactory is the first podcast from Cosmoprof Worldwide Bologna—the most important beauty trade show in the world. Dedicated to all sectors of the industry, Cosmoprof Worldwide Bologna welcomes over 250,000 visitors from 150 countries and regions and nearly 3,000 exhibitors to Bologna, Italy, each year. It’s where our diverse and international industry comes together to build business relationships and to discover the best brands and newest innovations across consumer beauty, professional beauty, and the entire supply chain. The trade show includes a robust program of exclusive educational content, featuring executives and key opinion leaders from every sector of the cosmetics, fragrance, and personal care industry. Cosmoprof Worldwide Bologna is the most important event of the Cosmoprof international network, with exhibitions in Asia (Hong Kong), the US (Las Vegas and Miami), India (Mumbai) and Thailand (Bangkok). Thanks to its global exhibitions Cosmoprof connects a community of more than 500,000 beauty stakeholders and 10,000 companies from 190 countries and regions. Learn more today at Cosmoprof.com
CosmoFactory was co-developed in collaboration with supply-side expert Deanna Utroske, Host of the CosmoFactory podcast and Editor of the Beauty Insights newsletter.
[00:00:00] This episode is about retail buyers and beauty brands. It's about market readiness, about pricing and profitability. It's about choosing the best distribution channels, and it's about what brands need to do to support buyers and succeed in our industry's competitive retail marketplace. My guest on this episode of the Cosmo Factory podcast is Adrienne Kramer, CEO and founder of ProBeauty Partners.
Deanna: Welcome, Adrienne.
Adrienne: Hi, Deanna. Nice to speak with you.[00:01:00]
Deanna: Yeah, I know. I'm so glad you could be here. Um, ProBeauty Partners, this company you lead, has helped cosmetic brands with, uh, business development, with sales strategy and revenue development for nearly 15 years now. So, uh, you seem like the right person to ask this question to. Um, once a new brand has created a product line, is there like a standard checklist of things that need to happen next?
Adrienne: That's a great question. There are probably a number of things that most founders don't realize are the big next steps to be able to commercialize their business. We meet a lot of founders who've created wonderful brands. They have a great point of difference or unique ingredient story or something like that.
Adrienne: And ultimately what happens is they don't know the next steps. What they need to be able to do is take a look at all the different elements they'll need to commercialize from scaling up. To finding the right warehouse, what do they need from [00:02:00] standpoint of banking and legal information all the way to determining what is going to be the right channel of distribution for them.
Adrienne: So, we help them with all those things just to help them. Even know what questions to ask. And I think that's the right thing to start with.
Deanna: Awesome. And you mentioned choosing a distribution channel there. How can a brand be sure they're focused on the correct distribution channel? What's that process of figuring it out like?
Adrienne: Well, there's a couple of things that they need to do. Um, the 1st is going to be, they have to look at their profitability before they start. Most brands don't do that. They come to us with a product and they say, okay, the cost of goods is. It's roughly 4. And we'll say, Okay, that's not a bad cost of goods.
Adrienne: That'll recommend that you have a certain retail price point of X. And that's going to put you in a certain distribution channel. And they look at you usually a little bit stymied and say, Why does it have to be there? Why can't we be here? And you go through the whole process of explaining what that all means and why you [00:03:00] get into those
Deanna: Yeah, let's, let's do, um, I think go to pricing and profitability before distribution channel, since it sounds like that's a key factor. Help us think about the, the guidance you might give a brand there.
Adrienne: Absolutely. Most of the time, we really recommend before you even develop your products, if we ever get the opportunity to do this and say, keep in mind that whatever the bulk is, that goes into the bottle of the jar and the fill cost as well as. Whether it's a bottle, a jar, and then a carton, depending upon if you want to add a carton around it, and you take that total amount of money and you multiply it between 10 and 12 times, and that's what the retail price point will be, or conversely, say, I want to develop a, a moisturizer that's going to sell in Target, and we want it to sell for 15.
Adrienne: So then you know that your total cost of goods, you want to be at about a dollar and a half or less. Thanks. They then should go to the, [00:04:00] um, uh, the contract manufacturer or the lab, whoever they're using to develop the product and go with that information in mind. So that a, they're steering the, um, the development team properly and be everybody set up front for success.
Adrienne: So we have a lot of people that come to us. Frequently we get people who come to us and say, okay, the product is 8 and I want to sell it for 15 at retail. And we're like, well, that's great, but you're going to go bankrupt in about three months. So we go through the process of explaining to them why that margin is important.
Adrienne: Why that factor of 10 or 12 is really important. Where all the other expenses are going to get covered and so forth. And also, frankly, what the retail costs are. environment is going to take in terms of margin, sampling, and so forth. So that's what's going to be part of it.
Deanna: Yeah, yeah, no, that makes sense. And so then, you know, beyond setting the price, um, what else helps determine the correct distribution channel?
Adrienne: And then the rest of it comes into play, which [00:05:00] is how much is your product going to need education when you get to the store? So you've got consumers coming into stores. Are they seeing your product on a shelf? Are they able to self educate on the brand? How do they know enough information about it?
Adrienne: Where do they get the information? Or is it a product that's going to be behind a counter in a department store where you're going to be having somebody else help educate the brand? Those are critical because again, those are costs you're going to have associated with it. And it will also determine where the right environment is for the product.
Adrienne: So, you know, it may be something that's much more sophisticated. And so we want to have that person standing there talking about the brand all the time. We might then go to a department store conversely, or a beauty chain, such as Mercury or Douglas or somebody. Um, but on the other hand, it may be something that's so.
Adrienne: Easy to understand [00:06:00] that it may be fine on a retail shelf and you don't need to have all of that extra. So some of those things will come into play as well.
Deanna: Yeah, yeah, that makes sense. And, um, I think, you know, in, in my experience, and my work is, is I think much more on the supply side than yours. Um, So, so you can tell me if I'm wrong here, but, but one of the things that many beauty brand leaders are surprised to learn, I think, is how responsible the brand itself is for driving traffic to their retail partners and then how much work is involved in actually meeting sales goals.
Deanna: Um, I know you're not a retail buyer, but, um, it's clear to me that you have very good relationships with buyers. Um, particularly I would, I would imagine here in the U. S. Um, can you help us understand? The roles and responsibilities of a buyer. I know they're not just looking for like, Oh, that's a cool new product.
Adrienne: That's a great way to phrase it. Um, although in many ways they are, I, I, I'm very fortunate. I have great relationships with some buyers [00:07:00] throughout the world, not even just in the U. S. And occasionally I get to walk a trade show with them and hear what they're looking for. And it is so much fun as well as a real treat to be able to hear what they want.
Adrienne: And what they're looking for at any given time. Um, so that's a, that's just really fun to hear. And I wish everybody had the opportunity to see what they, you know, through their eyes.
Deanna: Yeah, no, that does sound like a fun way to approach a show.
Adrienne: Oh, it's so much fun. You know, I'm not trying to plug, but I am going to Cosmoprof Miami and I know I'm going to have a few minutes with one of the buyers and it's I just can't wait to see what's there.
Adrienne: So it's going to be a lot of fun. Um, the other topic, though, back to what you're saying, the buyers really do expect the brands now to do the bulk of the work and that. Is everything from a traditional product sitting on a shelf in a. You know, self service, self selection, um, retailer to even in the department stores where you [00:08:00] have to pay for the beauty advisors and spit the staff behind the counters and so forth.
Adrienne: Um, and if you're an online brand. The retailer has the opportunity to provide you with an advertising package or something like that. They expect you to take advantage of it to drive the traffic to your product on there. Their estimation is they're giving you the opportunity to have the real estate and then they expect you to do everything with it.
Adrienne: So that's really what it's like now. And it's very hard on a lot of the brands. I don't envy them in that sense because it's. It's really hard and you have to know what works for the customer in each retailer.
Deanna: hmm.
Adrienne: so, you know, what's going to drive them? What's going to be of interest? Um, what are the keywords or things that a customer is looking for?
Adrienne: And you just have to keep working at it.
Deanna: Yeah. And, and
Adrienne: find that one.
Deanna: I'd love to, um, hear your thoughts on how a brand might actually drive traffic. I'm guessing you can't [00:09:00] just, you know, send out one social post saying like, hey, we're at XYZ Retailer and, and the people flood in.
Adrienne: Could you please share that with my clients? Um, premise to goodness. Um, it is a constant thing you must do. Um, I understand the battle between selling product on your own website, which has a higher margin than driving traffic to a retailer. That's a whole, that could be a podcast on its own. you do need to through social media, make your consumers aware that your product is now available at these retailers. And you should continue to pepper that in periodically as a reminder. It's not even just that it's a reminder that, oh, I'm on Nordstrom or I'm on Macy's as much as it is.
Adrienne: Oh, look for us in these retailers. And by the way, because we're on these retailers, it means that we're credible. It actually is an endorsement of the brand by being available there. So they really do want to provide, [00:10:00] um, ongoing content through social media, advertising, whatever they can use PR, whatever it may be to help really support the brand.
Adrienne: Um, it just elevates the brand that retailers have decided you're that good. It's not just on your own website.
Deanna: Yeah, yeah. No, that's helpful to understand. And I want to think a little bit more about buyers responsibilities. As I understand it, they have like revenue goals, um, that they, they are responsible to meet, you know, to, to the people they report to. Um, how does that translate into, into how they select brands or partner with brands?
Deanna: Right.
Adrienne: an amazing thing to see that a buyer can make that decision, um, based upon so many opportunities. They get, you know, countless brands sent to them daily and they have to decide between, you know, 25 brands. They're going to select 1. And that 1 is [00:11:00] what they need to drive them to their goals. They will look at what they think their customer likes, and they do really know their customer.
Adrienne: I'm actually amazed that the buyers understand what their customer is looking for. They do get requests. Nowadays, they'll get all sorts of Keywords put into their search engines on their websites, and they'll know that all of a sudden somebody is looking for K beauty at the 50 point, you know, price range versus, um, some kind of Bakuchi all ingredients story and something else.
Adrienne: And so they see what's being asked by their customers. So they do have an understanding of that. Probably much more deeply than we realize. Um, then the question is, they look at it and decide how much volume they think they can do, whether they'll be able to meet their goals and then determine whether it's going to go on the shelf in the store, whether it's going to go on their website as owned inventory, or whether they'll be given, uh, giving the brand [00:12:00] an opportunity to join the marketplace that they may have, which is now a third, um, division of most companies.
Adrienne: And if you're successful on the marketplace, then you can transition. As a mutual choice by both the brand and the buyer, whether you want to go into store and owned inventory or not. Those are, you know, choices that everybody gets to make. If you're successful, you're not successful, then you don't have a choice.
Adrienne: Uh, you're not going to get it and the retail buyers. So I will say are much more giving than they used to be in terms of test. Um, I give them a lot of props because they'll say, Look, don't go into all 60 locations of a chain. Let's start with 10 or 6 and let's see what we need to do to tweak the brand with the presence with the communication and then or displays or more spits or whatever it may be.
Adrienne: And then we can go and see what we need to do to expand further. [00:13:00] If you get to a certain point in the brand has. So if to make changes and try things, and it's not successful with that customer, it usually is about a year before they'll really talk about discontinuing, but they do give you a fair amount of time to make it work.
Adrienne: I, you know, it's not the old days of you said, Oh, you've got 90 days and you're out. That's not the case at all. If they're going to spend the time and take you in, they really want you to succeed.
Deanna: Yeah, of course. No, that makes, that makes great sense. I appreciate your sharing all that. Um, can you say something about the data or evidence that a brand, um, should really be ready to share with a buyer who's interested in them?
Adrienne: well, a lot of the brands when they're new, don't have as much data as we'd like them to have. Um, and it's also hard to get a lot of data from, you know, it used to be years ago. You had public data with and Nielsen and it was really easy to track all of that. Now it's much more difficult. But what buyers are looking for, there are some buyers who will, um.
Adrienne: Who will [00:14:00] actually be willing to pioneer a line, be the first in the market, you've never had anything there, and they're willing to put you up as their new special kind of gem. Other retailers are not interested in doing that. They want something that they know is going to have at least some kind of a jumpstart.
Adrienne: So that's already part of the thing. Decision making that's going to go on and what you need to come with.
Deanna: Yeah, I guess I'm curious. Are there details like, you know, repeat purchase numbers or, or, you know, sort of specific facts that they could put in front of a buyer or is that not as relevant as I'm imagining?
Adrienne: there is in some cases from their own website that information can be meaningful. Um, and so that definitely can be there. You should also discuss your social media, show your engagement with it so that whether people are really excited about a brand or not. Um, we just placed a brand in a wonderful retailer.
Adrienne: And they have a very small social media in terms of number of followers. I mean, it used to be you had to have 10, 000 or 15, 000 [00:15:00] followers and so forth. At the end of the day, they have a very small following, but the engagement is so high and they understand and their repeat purchase is so high. People said, okay, it doesn't have to be the broadest base of customer, but it has to be a really successful base that's committed to the brand.
Adrienne: And so we're, you know, they were like, yeah, we want that brand. But of all the brands that were presented, so that is something it's you have to have the right mix of the things. So, to what you're asking, yes, repeat purchase is certainly important. Um, just showing that you. Are supportive of your customer as well, and you also have to have.
Adrienne: A road map or a path to additional skews and newness. Buyers want to see that, um, and buyers will want to see that you're willing to really spend the time, not just money, but time and invest in the retail partnership. They wanted to going to sample with them. They're going to want to know that you're going to be able to [00:16:00] participate in their programs and events and that maybe you can do in store events.
Adrienne: But all of the pieces combined will create the excitement for the buyer.
Deanna: Yeah, yeah, no, and it makes sense if we think about the expression retail partnership, um, that the sorts of details you're, you're sharing makes sense. It really is a, um, a two way relationship for sure. Now, uh, many of the brand founders listening to Cosmo Factory will exhibit at trade fairs. You had mentioned, um, Cosmoprof in Miami, um, of course also Cosmoprof worldwide Bologna.
Deanna: And and the founders will show up as exhibitors. I hear quite often really with the intention of meeting retail buyers. So I'm curious if you have some some guidance to share about how a brand might show up at a trade fair to to make a good impression on prospective retail partners.
Adrienne: That's a wonderful question, and I wish I could share that with every, um, brand that's coming in advance. Because I think that's a [00:17:00] really important thing. I think they should know who the audience is, meaning which buyers are they really interested in. And then do homework, go into the stores, if they're close by.
Adrienne: I mean, if the store is on the West Coast and you're based on the East Coast, it may not be as easy, but frankly, every single inch of every store is now available online. You can take pictures offline and figure it out. And then, You know, with the beauty of a I today, create your product in a set in their store so that that way, if the Macy's buyer is coming up and you've got a picture of the inside of Macy's and Herald Square and how your product would look, you can say, look, this is what we see.
Adrienne: This is how we do. We want to do it. This is what we'd like to see and the buyer may look at first and be a little surprised. And then all of a sudden, they're going to realize you've thought through what it's going to take. You should also have your homework on what it would take to do business with that retailer.
Adrienne: Know what their margins are going to be. Know whether you need sampling, whether you need to [00:18:00] put in your own beauty advisors, or if you're going to spit theirs, um, know about their sampling programs. Really do as much research as you can in advance so that they know you have a plan for success. Not just, I've always wanted to be a Macy's. And that's great, but that's not what's going to make it work for the brand to sell. Um, so we want to make sure that everybody is well put together in terms of thinking about it. Um, and, and I would do that for 10 different retailers. If you want 10 department stores, put the 10 department stores together and have that ready at hand.
Adrienne: And it can be in your phone. It can be on a piece of paper. Or it can be anywhere. You know, we have so many vehicles today of how we can do this. It's amazing. So I would absolutely have those things available.
Deanna: Yeah. No, I think that's excellent advice. And I'm, I'm particularly curious then if there's anything that's different about, um, like a first buyer meeting on the trade show floor like that and, or a buyer meeting in the office, do, do brands, um, [00:19:00] approach these sort of conversations differently?
Adrienne: I'm going to say they shouldn't and it's a very funny thing. I every touch point you have with a buyer should have the same level of interest. Answers discussion points. Know your brand. Know where it's successful. Know where it might not fit. Um, sometimes you have a vision of how you, the brand has a vision of how, um, it may fit in the store and the buyer may say, well, what about this?
Adrienne: So what about that? Give him, you know, give him something else to work with. Try to figure out a way you can answer the question and work with them because they're not asking a question. Unless they're interested. They don't waste. They don't waste their own time. They've got too many things to do. And that's not a knock on them.
Adrienne: There's just [00:20:00] their job is really hard. People don't realize it. And it's hard to sit there and say no to the brand founder. It is horrible for them. They all have a conscience. They all have a heart. They all have everything. And people don't realize the last thing they want to do is say no to somebody.
Adrienne: It's, you know. You don't want to look somebody in the face and say, Oh, it's terrible. So that's why when you have that, you know, opportunity, talk with them, try to work it out. They're asking the question because they're trying to walk down a path with you. They're not trying to get rid of you. And it's great to see that.
Adrienne: So just be willing to be creative, be willing to be, to change your opinion, to kind of move off what you saw in your mind as the way to do it. And Think that there may be at least three or five more options, but the fact is there are options. How nice. Yeah,
Deanna: No, that sounds like like excellent advice. I appreciate hearing that. Um, do you have any thoughts on, on [00:21:00] putting together a pitch deck? You mentioned, um, you know, using AI perhaps to show your product, um, in, in a store where you're not retailing already, but are there other sorts of, um, maybe key pages, uh, a brand might want to include in a, in a buyer pitch deck?
Adrienne: there are going to be about 8 to 10 pages total in a buyer pitch deck and they should not be longer because the buyer think about how many they see and they just can't get through it
Deanna: Yeah.
Adrienne: and you want it to be the most salient points right up front. You want to say that the brand was created with one page.
Adrienne: You want to talk about its points of difference on page two. You want that right up front. Um, you want to show with that, show them what the current line of products are. Retail prices, and you want to show what additional products you have available. Um, coming down the pie, you know, they don't have to be today, but perhaps in the next 12 to 24 months.
Deanna: Okay. [00:22:00] Mhm.
Adrienne: All of your detail information available. It doesn't have to be in the pitch deck, but it should be on a another piece of paper available, which includes everything from UPC codes and retail price points and size of products and everything else have what we call a master spec list available.
Adrienne: So that that way, you're already ready to go. Sometimes it takes buyers 3, 6, 9 months, and you have to be really patient. And other times a buyer will say, okay, can you send me this back in 48 hours? And we're always like going, Oh, God, it's like, but that means you're going to be in the store really fast. So be ready.
Adrienne: So you always have to be ready is what it's what I'm saying in that part. And then, as far as anything else, do explain a little bit about yourself as a founder, why you're relevant. Um, or what was that lightbulb moment as they say that got you into this brand and why you needed to do it? And what made the difference? Um, and also talk a little bit about [00:23:00] yourself. They want to know you.
Deanna: Right.
Adrienne: It's 1 of the coolest things. You don't have to be the face of the brand on your social media, but they want to know who you are, where you came from. Sometimes whether you have children and grandchildren, sometimes whether you're a dog lover.
Adrienne: I mean, it's, it's funny how these things come together, but there's a personality and a relationship, which is what I really relished about this business all these years. Um, so
Deanna: Yeah. Yeah. No, I love that. We do, um, enjoy knowing about the people we're working so closely with, so that makes very good sense. Adrienne, I have to say it was so kind of you to share all this very useful information. I thank you for joining me today on the CosmoFactory podcast.
Adrienne: Well, it's been a real pleasure. Thank you so much for having me.
[00:24:00]