Subscribe
Share
Share
Embed
Ecommerce on Tap is a world where Supply Chain meets storytelling. Join Nathan Resnick and Aaron Alpeter each week as they offer insights into the backend of successful businesses. Brought to you by Sourcify and Izba Consulting!
Divya Gugnani (00:00)
fragrance is a form of self-expression. Just like we change our clothes, we change, I change my glasses all day long. I change my makeup, I change my skincare, I change my hair, I change my wardrobe. Like why would I not change my fragrance?
Aaron Alpeter (00:17)
Hey everybody. Welcome back to e-commerce on tap. I'm Aaron Alpeter, your host. Today we are doing our category wrap up for fragrances. And we're doing the crossover episode with the other podcast I have, which is a build a business worth buying. And I'm really excited for this one. Again, we've had a fantastic season. We've gone through the history. We've gone through how fragrance is changing and really what it takes to build something
Today's guest is Divya Gugnani.
she's the founder and CEO of 5 SENS, a clean fragrance brand built around a simple but difficult idea.
creating fragrance that's non-toxic, emotionally resonant, and actually performs.
this episode, we're gonna talk about why fragrance has shifted from a luxury to a daily utility, how founders can actually stand up in a crowded category, and what it takes to really build a business worth buying.
before we dive in with Divya, please make sure you like and subscribe. I always love to hear from you in person when we meet at conferences and your subscription really means the world to us and we're really having a lot of fun with this. And so without further ado, let's dive in with Divya.
Aaron Alpeter (01:16)
Divya, thank you so much for being on the podcast. I have been looking forward to this since we first met. just, I can't wait to hear more about your story. So thank you for being on. Thanks for having me. Happy to be here. Yeah. I want to get started
Divya Gugnani (01:25)
Thanks for having me. Happy to be here.
Aaron Alpeter (01:29)
what has been your relationship with fragrance throughout your life, even despite all of these things that you've been doing.
Divya Gugnani (01:35)
So this one is long, deep and personal.
And I found just as an investor in backing companies, the founders that outperform often solve a personal pain point and really give it their all. And that becomes an outstanding business where they ⁓ bring outstanding people in to make it an outstanding business. So my relationship with Reverence really dates back to me being a young girl and like preteen. ⁓ I grew up in a homogenous neighborhood. My parents are originally from India.
kids used to tease me. They're like, you're Indian, you smell. No, you don't smell, your clothes smell because you're currying in your house. And so like that was really hard for me as a young child. And the first thing I did was turn to perfume because that helped me build confidence and helped me feel good about myself. And that was so important during that formative.
Aaron Alpeter (02:09)
You don't smell because you're carving in your house. And so like that was really hard for me as a young child.
Divya Gugnani (02:29)
those formative years of my youth. And so my father, business overseas and used to travel constantly through London Heathrow, Charles de Gaulle, there were no direct flights from New York to Asia at that point. And he used to pick up duty-free perfumes from my mom. So then he started picking up little mini duty-free perfumes from me and I built a collection. I then turned to fragrance to boost my confidence, to be a part of my DNA, to be a part of who I was every day was what fragrance I wore.
Aaron Alpeter (02:49)
to boost my confidence, to be a part of my DNA, to be part of who I was every day was what fragrance I
wore. And I loved it, it just made me feel good. It made me feel good in my skin. then was many years later actually that I diagnosed with an autoimmune disease. I actually wanted to have children and I did a lot more research into hormone disrupting, toxic chemicals, parabens, phthalates, women ingest about five times.
Divya Gugnani (02:58)
And I loved it, it just like made me feel good. It made me feel good in my skin. And then it was many years later actually that I diagnosed with an autoimmune disease. I actually wanted to have children and I did got a lot more research into hormone disrupting, toxic chemicals, parabens, phthalates, and how women ingest about five pounds of this
Aaron Alpeter (03:18)
of this through their personal care of beauty products and their fragrances. So I turned to clean alternatives and quite
Divya Gugnani (03:19)
through their personal care and beauty products and their fragrance. And so I turned to clean alternatives. And quite frankly,
Aaron Alpeter (03:25)
frankly none of them had longevity, had the snage, had the connection, had the emotional storytelling that my designer fragrance collection had. And so I saw White Space and what entrepreneurs do. They see things others don't see, they do things others don't do and I jumped into solving that painpoint
Divya Gugnani (03:25)
None of them had longevity, had the siyage, had the projection, had the emotional storytelling that my designer fragrance collection had. And so I saw white space and what entrepreneurs do. They see things others don't see. They do things others don't do. And I jumped into solving the bean point.
Aaron Alpeter (03:41)
I love that. when when you were looking at fragrance as a young girl growing
up. Was it about trying to change who you were or is it more about you felt good about being you by using fragrance? So I think it's
Divya Gugnani (03:55)
So I think it's a mix of both.
Aaron Alpeter (03:57)
mixable. The analogous thing is make it right. It's like sometimes you enhance your personal features and want to look like the best version of yourself. And such a fragrance will make you feel like the best version of yourself. Sometimes you want to tap into something a little extra.
Divya Gugnani (03:57)
The analogous ⁓ thing is makeup, right? It's like sometimes you enhance your personal features and want to look like the best version of yourself. And sometimes fragrance will make you feel like the best version of yourself. Sometimes you want to tap into something a little extra or different
or morph what your normal is. And take a risk or go out of your comfort zone and create a new version of you.
And that's what I love about fragrance. It allows you to do that. Things that I never thought I would wear, sometimes my husband's like, that's kind of interesting. Like, would you try that? I was like, you know what? I normally would never pick this up, but let me try it. And like, I feel great about it. And there are times and occasions in which you want to do those experiments. I always say people have ever-changing energy. And at 5 SENS, my fragrance brand, we believe in capturing your mood-bottled. It's all about representing the many versions of you, because we're not one version. I don't believe in signature scents.
I believe in a fragrance wardrobe.
Aaron Alpeter (04:55)
Say more about that because that's one of the things that we covered a lot on the season was just how the industry was dominated by this concept of the signature set and everybody's trying to go back to Chanel number five and that's really changed now where people are looking at this and having a personal palette and repertoire that looks at and so talk to me about what does what does a scent wardrobe mean to you?
Divya Gugnani (05:14)
So it's so interesting because
early in my career, it was like I wore Jean-Paul Cotier every time I went on a date in my 20s, okay? I wore Issey Miyake to work every day because like you'd have to come close to really smell it, but I could smell it and I felt good when I would go to work every day. And so that signature scent concept of tapping into the usual, the regular, the expected, but then everyone, it's like wearing an outfit from Zara. Like you'd walk down the street and three other girls are wearing the same outfit.
And so what I think is fascinating about fragrance is that I think different generations are willing to experiment fragrance in different ways. And this concept of fragrance wardrobe is something that I believe in wholeheartedly. want to, when I go out, I suppose I have a very important meeting, okay? And like I'm about to get on a podcast interview. I'm wearing Life of the Party because I wear my 5 SENS life on the party. Because this is to me is confidence in a bottle. I feel like the most confident version of myself.
But if I'm having an intimate moment with my other half, like I may want burn for you on a Saturday night. And that's desire bottled and life of the party would be confidence bottled. And so I channel these different emotions and emotional states and these frequencies capture those moods and they kind of enhance how I feel in the moment, which by the way changes. So I want to have options.
Aaron Alpeter (06:32)
in the moment, which by the way changes, so we want to have options.
Divya Gugnani (06:36)
Intentionally when we built this brand, created it around concept of bottling your mood. We also made the fill size 30 ml instead of 50 or 100, which is typical of a fragrance that you're committed to, that you're wearing every day. The 30 ml allows you to spritz, play, enjoy, move on to the next, and it allows you to build the wardrobe.
Aaron Alpeter (06:36)
So, potentially when we build a brand we created around a concert party, we also need to fill a size 30 ml instead of 50 or 100, which is to give a global fragrance that you're committed to, that you're wearing every day. That 30 ml allows you to spritz, play, enjoy, move on to the next, and it allows you to build the wardrobe.
That's great. You know, it's interesting because I think the the concept of a signature set, like you said, was this is
me I'm committing to this and you're kind of putting yourself into a box and you're committing to being a certain way in the world and what I hear you describe me to talk about these these moods ⁓ bottled is your co-most making a signature scent for each mood and and trying to kind of have those little elements in there
Divya Gugnani (07:04)
Right.
Totally.
I just think that people use to associate fragrance with a luxury. Like I'm going on a special occasion, I'm going to spray my designer perfume. Now I believe fragrance is genuinely a daily ritual. I believe that a fragrance wardrobe is about multiple scents rotated based on mood, occasion, season, whatever it may be. And there are many versions of you. You're not one person, you're a multifaceted human being. And so why not capture your different emotional states with your fragrance?
Aaron Alpeter (07:48)
are you trying to define this is what desire smells like or this is what confidence smells like?
your approach to say, here are all these different elements that are out there, you find what desire smells like to you or what confidence smells like to you.
Divya Gugnani (08:01)
I think
it's a bit of both. It's a push and a pull.
So my point is that I spray Life of the Party and I say to myself, like, this is a fruity floral. When we were working on the spray grids, it made me want to dance on tables. It made me want to like go to the front of the room and present. I was like, I am the most confident version of myself when I wear this. And that's why we gave it the name Life of the Party. However, when I was working on
our hero bestseller, which is In Too Deep. And this is a Vanilla Gourmand scent, which amazing sandalwood and kind of smells like champagne bubbles and sparkling sugar. When I was making this fragrance, I could not stop smelling myself. It was this weird thing that every time I would keep working on it, I'd spray it and I'm like, all day long, I'm like, I'm smelling myself, I'm smelling it, I can't stop smelling. It's like this feeling of self love and being in too deep. Like I then...
in the process of making the fragrance, I tried to, the names really capture the emotional
Aaron Alpeter (09:01)
of making new frameworks, tried to, the names really captured the
Divya Gugnani (09:06)
of how it kind of played
Aaron Alpeter (09:06)
states of how we kind of
working on this. Makes sense.
Yeah, I think it's very interesting because
part of what we've been exploring in this season is this tension between as a company, you need to try to make it easier for consumer to understand this is what this could be for, right? This is what's there.
It seems to me that you've gone through this lifetime of appreciation with fragrance and you've learned different things. You've tried different things. You have the confidence to smell a little bit different and just try things. Do you feel that consumers have to go through a similar journey in order to have that full wardrobe?
Divya Gugnani (09:43)
I think if you're starting from zero, I think there's an appetite today more than ever to create a fragrance wardrobe versus have a signature scent.
People are still experimenting and figuring out who they are on, you know, who you are on Monday is different than who you are on Saturday night. Like when I'm doing the podcast interview on Wednesday with you, I'm one version of myself. And on Saturday night, I'm a different version. And on Sunday, I'm taking
and everything shower and laying on my higher dose recovery mat and like unwinding and want to wear into deep and want to like relax in my like vanilla bliss. You know, like I am many versions of me. And so why not use my fragrance to express those versions of me? Like fragrance is a form of self-expression. Just like we change our clothes, we change, I change my glasses all day long. I change my makeup, I change my skincare, I change my hair, I change my wardrobe. Like why would I not change my fragrance?
Aaron Alpeter (10:36)
Do you feel that there's a certain like if you had to be building a ⁓ Repertoire for someone just to have like the toolbox to be able to experiment learn What are the types of sense whether they be florals or musks or other things out that you think like every wardrobe should have?
Divya Gugnani (10:52)
Oh, I think vanilla is like, it's been trending a lot, but I just think there's something very comforting and very cozy about vanilla. There's some sort of like, it's like wearing a cashmere sweater on a cold winter day. It's about laying by a fire with a, like with a nice throw blanket when it's snowing outside. It's just like, there's something very comforting about vanilla and nostalgic for me, maybe from like vanilla cupcakes from growing up. And that was like my favorite dessert ever, I gotta admit.
Aaron Alpeter (11:18)
I ⁓
Divya Gugnani (11:22)
I think there's something about that. I florals are very new and modern and interpreted a different way. Now I'll give you a perfect example. Like when I created happy tears, we really wanted to channel joy in a bottle and like really create something that was like liquid sunshine. Like you would spray it and you just immediately start smiling and feel happy. Like those, the special moments you're like, you're like, I got the promotion. It was my wedding day. was like just those very
happy, happy moments.
And being able to just wear those happy moments and having joy that you could wear every day. That was kind of the concept in my head. And this is a warm floral, but it's not your grandma's warm floral. It's a very modern interpretation of that. And I think it's something that everyone should have in their wardrobe. So I think there's staples, your gourmands, your vanillas, ⁓ maybe your like very like clean skin scent type twin flame, and also your florals and how you want to engage with them.
Aaron Alpeter (12:18)
and also your florals and how you want to engage
with them.
I love it. I want to kind of dig into how you arrived at starting Fragrance Band because you've built and exited so many companies at this point and you've invested in I think 80 is what you told me. And so with all of these options that are available to you, why did you decide that fragrance was worth your time, your energy, your reputation, and why now? So it's so interesting.
Divya Gugnani (12:45)
So it's so interesting.
I think I hit the timing like almost perfectly because fragrance
emerged as being like the smallest part of the beauty pie to being a larger part of the beauty pie accelerated tremendously during COVID. People were experiencing fragrance at home, lighting candles. I just think different generations are exploring scent in ways that my generation perhaps didn't explore it in. I think that it's the fastest growing segment in beauty. It's growing.
Aaron Alpeter (13:10)
I think that it's the fastest growing segment of beauty. It's
growing dramatically. Clean fragrance options have always been limited. The fragrance market has been dominated by luxury players. I think inadvertently, I just saw so much opportunity. I saw an opportunity to play in fragrance. I saw an opportunity to do clean fragrance. I saw an opportunity to reinvent clean fragrance with emotional storytelling, with a pure, bold, bottled concept.
Divya Gugnani (13:14)
dramatically, clean fragrance options have always been limited. The fragrance market has been dominated by luxury players. I think inadvertently, I just saw so much opportunity. I saw an opportunity to play in fragrance. I saw an opportunity to do clean fragrance. I saw an opportunity to reinvent clean fragrance with emotional storytelling, with a your mood bottled concept,
with not just that clean glass bottle with the stock cap with the millennial type base that everyone's doing on clean fragrance. I know I just wanted to, you
You're a supply chain guy, so like you can appreciate this. Like every bit of this brand I thought through as a consumer and as a founder on both sides and thought to myself, like, I want to create the best consumer experience, which means that if I'm going to spend so much money on quality ingredients, like I'm going to use Madagascar vanilla and burn from you. And I'm going to use Tahitian vanilla, which is like a lighter, softer vanilla in ⁓ too deep. I'm going to source the best.
Aaron Alpeter (14:05)
which is like a lighter, softer vanilla in intertube. I'm going to source the
best quality, clean, sustainable ingredients, but I'm also going to put it in a pay glass model that's going keep the fragrance fresher longer. And the wood cap and feel that connection, feel like the earthiness and everything on the sustainability comes through the wood. So I want to create a consumer experience that was unlike the traditional
Divya Gugnani (14:11)
quality, clean, sustainable ingredients, but I'm also going to put it in an opaque glass bottle that is going to keep the fragrance fresher longer. the wood cap and feel that connection, felt like the earthiness and everything in the sustainability comes through with the wood. So I wanted to create a consumer experience that was unlike the traditional clean fragrance
experience, or like putting it in a plastic bottle, for example, that would...
know, just to my $65 price point. I was like, no, we're doing glass. We're doing glass, we're doing wood, we're gonna spend all that extra money on that wood cap because all these things matter. To me, it's a stigma link. When I pick this up and I feel how heavy it is and I feel the luxury of it, that's part of the experience of the fragrance. And so I saw a lot of opportunity. No one had done that. I really tried to reimagine the fragrance category with what I thought was missing, which is clean.
accessible, sustainable fragrance that had emotional storytelling. I was incredibly sensory, a visual experience that didn't exist.
Aaron Alpeter (15:13)
It almost sounds like you didn't necessarily say I'm gonna create a fragrance where where's my niche? It was like you're a consumer. You knew what was ready to resonate with you. You were looking for something You're like, I don't see it, you know, and so Yeah, love that
Divya Gugnani (15:25)
I don't see it so I'm gonna build it. That's the entrepreneurial way.
I've done this five times. So you'd think by now that this is just a pattern for me. I don't see it so I'm gonna make it.
Aaron Alpeter (15:31)
This is just a pattern for me.
Yeah,
we're thinking about launching a new fragrance brand, I think a lot of founders will look at the menu of all the things they could do, and they may over-index on things that don't really matter to a consumer, don't really matter in terms of differentiation. So how do you think about what things
actually move the needle for a consumer when you're in that product design perspective.
Divya Gugnani (15:57)
So the most important thing is data and to have viewpoints.
And so I felt incredibly, incredibly strongly that I should not lift a pencil and try and make anything without surveying tons of consumers and understanding their behavior with fragrance. I did absolutely nothing in terms of product development until I did research first. What came out of that research was that women, traditionally 25 to 45 year old women,
wanted clean options. didn't, they knew they were like worried about wearing perfume too much. Like, I want to like during the fertility years and want to get pregnant or having babies. And I was like, I said, safe for my baby. Like, so many concerns about this, but yet there was not a lot of like knowledge, research, power, clean options, all of this emerged as a theme. So that I knew I was onto something there because that to me is table stakes. It's not, we are, we don't define ourselves as clean brand because we're like, we're clean. Like,
Aaron Alpeter (16:26)
wanted clean options. didn't, they knew, were like worried about wearing perfume too much, I want to, like, during the fertility years and want to get pregnant or have a baby, then I was like, is it safe for my baby? Like, there so many concerns about this, but yet there was not a lot of like knowledge, research, power, options, all of this emerged as a pain, so that I knew I was onto something there because that...
to me is table stakes. We don't define ourselves as clean-brained, we're like, oh, we're clean.
Divya Gugnani (16:55)
We define ourselves as like we're you're more bottled. We happen to be clean because that's good for you. You know, so that that's also the positioning of like going. If your brand story is you're clean to me, that's not a brand story as an investor. Like just putting my investor hat on, like what is your brand story? Like I want your brand story, not,
Aaron Alpeter (16:55)
We define ourselves as we're young, we're bottled. We happen to be clean, because that's good for you. So that's also the positioning of going, if your brain story is your brain, to me that's where the brain story is, best friend. Like, just putting my best friend hat on, what is your brain story? Like, I want your brain.
Divya Gugnani (17:13)
you know, what's Table Spakes and for 10 other brands in the space. what emerged during that research period was it's so many people said, I want Tom Ford quality.
I want EDP, I want longevity, I want my clean fragrance to last and it doesn't. I want quality ingredients. I don't want to smell it and smell like, and no shade because my daughter's 11 and she loves Bath and Body Works body sprays, but many sophisticated women who are going to spend money on fragrance want something
than a body spray and the synthetics that are in a body spray. And they want to feel rich in luxury.
Aaron Alpeter (17:47)
And the synthetics that are anybody's friend. And they want to feel rich and
luxurious and smell expensive.
Divya Gugnani (17:52)
and smell expensive. And that's
Aaron Alpeter (17:55)
And that's okay. That was a niche we could fill. That makes a lot of sense. think the quality aspect of people kind of hearkening back to some of those legacy brands that you mentioned is interesting. know, Clean fragrance is an interesting piece in general because the industry is largely built on synthetics. so Clean is kind of where things started in the...
Divya Gugnani (17:55)
Well, you know, that was a niche we could fill.
Aaron Alpeter (18:17)
1500 1600s and now it's coming back into into vogue. But where do you see most founders? Cutting corners that they really shouldn't be cutting because it's hard because it's expensive I think the ingredients is the first place.
Divya Gugnani (18:29)
I think the ingredients is the first place. I think you
Aaron Alpeter (18:31)
I think you identified it. think the packaging is the second place. And then just, I'll do an expensive plastic that's, you know, an easy choice. And then we just have to work with that. And you can, you know, attach or recycle it, that's fine too.
Divya Gugnani (18:32)
it. I think the packaging is the second place. And then just opting for inexpensive plastic that's an easy choice. And there's nothing wrong with that. And you can at times recycle it. So that's fine too. ⁓
I just think that the cutting the corners usually happens in the ingredients first and in the packaging second.
Aaron Alpeter (18:48)
I that the cutting the corners usually happens in the ingredients first and in the packaging
second.
Divya Gugnani (18:55)
And I always say,
start with the formula first. The juice has to be incredible. I make one fragrance a year and that's a dedicated choice. like, would we as a brand generate a ton more sales if we launched five fragrances a year? Absolutely we would because newness drives sales and core drives profit. And that's what you learn from being in the beauty business. That's like a big learning and lesson from being a five-time CEO. When you launch something new, customers flock to it. But ultimately the profitability of your business
relies on your core. And so I don't launch new notes because I'm an intentional consumer. And what I'm trying to do with my brand is to have people have a wardrobe, have choices and make sustainable cleaning choices. But I focus on quality, not quantity. And that's an intentional choice for me as a founder. Am I leaving money on the table? I absolutely am. But I'm leading this brand with intention. I mean, we have
Aaron Alpeter (19:27)
And so I don't watch donuts because I'm an intentional consumer and what I'm trying to do with my brand is have people have wardrobe have choices and make sustainable cleaning choices, but I focus on quality not quantity. And that's an intentional choice for me as a founder. Am I leaving money on the table? I absolutely am. But I'm leaving this brand with intention. have
Divya Gugnani (19:50)
which purpose and what we're doing. support Bring Change to Mind, which is, you know, a health organization, a
Aaron Alpeter (19:50)
much purpose in what we're doing. We support brain change to mind. We just, you know, help organize a health plan.
Divya Gugnani (19:56)
mental health organization that we support their high school program to have conversations about, you know, mental health issues early in your life. We're for the people. We're for the planet. We support Oceanics Society and I'm on their advisory board and we want to clean up the world's oceans. So if I'm going to lead with my values, then everything about my brand has to live up to those values.
I can't launch 10 fragrances a year and be like, I'm a clean, sustainable. That to me is like those two things don't go together.
Aaron Alpeter (20:27)
Yeah. How do you reconcile that with the pressures that investors or the market may have in terms of like, you should really be growing a lot faster because this category is growing at 30X and you're growing at 20X and you should be at 50X and you kind of have those conversations.
Divya Gugnani (20:48)
It's very simple. I don't have investors. It's all my own money. This is why I can be pressured with what I like to do. And I don't have anyone's growth expectations and forecasts that I have to meet. And listen, most companies don't have that ability to make those choices, right? They have investors, they have growth numbers and expectations, and they have to stick to them.
Aaron Alpeter (20:51)
Hahaha
And listen, most companies don't have that ability to make those choices, right? They have investors, have people who can put on those expectations and they have
to stick to them. Yeah, for sure.
I think, yeah, being your own boss and your own investor is a great gig if you can get it. If a founder came to you tomorrow with a strong concept for a brand but had limited capital, what are
some some things that you you would say?
I have to nail these things first before spending money elsewhere.
Divya Gugnani (21:29)
I think you have to do research first. You absolutely have to understand what is the white space that you're going after, who is the consumer that you're going after, and what are the needs of that consumer. Don't build something and hope they're going to come. Actually find out what the pain points of consumers are today. Create a brand that is unique and has a point of difference. So if you don't do market research and you don't have a point of difference, you're dead in the water because then you're creating something that's already out there and you don't have the marketing dollars to compete with.
Aaron Alpeter (21:45)
find out what the pain points of consumers are today, create a brand that is unique and has a point of difference. So if you don't do lot of the research and you don't have quite a difference, you're dead in the water. Because then you're creating something that's already out there and you don't have the marketing dollars to compete
with someone who already has that space, right? So really do research and look around what you're trying to create and why is that different from everything that's out there. That is super important. And then I would say build community. That's the most important thing.
Divya Gugnani (21:59)
someone who already has a customer base, right? So really do research and homework around what you're trying to create and why is that different from everything that's out there. That is super important. And then I would say build community. That's the most important thing. Person
by person, day by day, DMs, messages, people that I help along the way, all of that matters. I feel strongly that building community in this market, especially when you're trying to like,
The grassroots evangelists will get you more customers than any meta ads will.
if
Aaron Alpeter (22:33)
If you do that, I want to do it well.
Divya Gugnani (22:33)
do that early on and do it well.
Aaron Alpeter (22:35)
I mean, yeah, how do you go about building community? mean, it's you've got this idea. You don't have a product yet. Maybe you've had some conversations. Is it as simple as having a bunch of samples and sending it out to people or?
Divya Gugnani (22:44)
Reach out to fragrance influencers.
Absolutely. read before I launched a brand,
I reached out to fragrance influencers. I I'm thinking about starting this brand. What do you think of this juice? Can you give them your input? Like I paid people for their time because I don't like to ask for free free favorites from people, especially that I don't know. And so I think getting the product right. If you were to tell me like, what is the most important thing? Is it like you need to get the product right? Because if you
Do a bunch of buzzy marketing and you get marketing right, but the product isn't good, people aren't coming back. And businesses are not built on customer acquisition and one-time buyers. And you're built on retention and loyalty and LTV. The long-term value of that customer is what's going to keep you in business over the long haul. So they're not coming back for crap product. If they have buzzy marketing and they try it once, great. They're not coming back for shit product. So make sure you nail the product to the best of your ability. I always say MVP, like launch what you think is
the best you can get at that time. Don't be precious about it and wait years to do something because the market's not going to wait for you. The market may move on to something totally different. And so I think that it's super important to get the POD, do the market research, build the community, get evangelist in your community.
Aaron Alpeter (23:42)
Yeah, it makes all sense. When we met first, you were talking about how
Divya Gugnani (24:00)
and then take it from there. Take it step by step and don't mask product market fit with marketing sped.
Aaron Alpeter (24:11)
with 5 SENS you've grown you start I think on DTC and email and now you're on Amazon ⁓ For early stage fragrance founders what channel mistakes you see most often and I guess like what's the sequencing of channel expansion in your mind? That makes the most sense
Divya Gugnani (24:26)
So, so many classic mistakes.
Number one is opening too many channels too quickly. So people want to do everything and they can't get one thing right. So like do one channel, get it right, then launch the next. Like when you launch DTC, use it as a testing ground to test everything. Your product offer, your bundles, your pricing, your everything about your brand and your consumer experience, you should test on DTC. Cause that's your rapid fire product development feedback loop.
and you have direct communication with the customer through customer service, through social media channels, all of the above. Okay? Then what happens is that you take those learnings and then you know your customer and you're like, okay, where does this customer shop? What are the other touch points for this customer? Is it Amazon? Is it retail? Is it something else? And so when you understand who your customer is and what that person likes to buy, then you make channel distribution decisions.
Aaron Alpeter (24:56)
and you have direct communication with the customer through customer service, through social media channels, all of the above, okay? Then what happens is that you take those learnings and then you know your customer and you're like, okay, where does this customer shop? What are the other touch points for this customer? Is it Amazon? Is it retail? Is it something else? And so when you understand who your customer is and what that person likes to buy, then you make channel distribution decisions
Divya Gugnani (25:24)
based on the data that you have. Too
Aaron Alpeter (25:24)
based on the data that you have.
Divya Gugnani (25:26)
many people launch too many channels too quickly. They don't know who they're going after and where that person shops and what they're going to buy and what the price point is. You may start out in luxury and realize that your customer really wants that quality same product for less money. And so I feel so strongly that you got to test everything. Test, learn, iterate, build. That is the framework for being a good CEO. So you test.
your market offering, you learn from it, you iterate, and then you build your channel distribution based on that. So I always say start DTC first, then you decide if retail makes sense. Then you decide if Amazon makes sense. Then you decide if TikTok Shop makes sense. And so like you do it strategically and methodically based on the data that you have. The classic biggest mistake that I see people make, particularly in DTC, is they pour money into paid marketing initially thinking they're going to get scale and volume. And I feel
incredibly strongly, just like I told you earlier, like building community, having those evangelists, like building email, building your own DTC, doing in real life events, instead of just throwing money and paid media every month, you really understand product market fit to a better degree. You can mask product market fit with a big marketing budget. So many brands in the beauty space, they have launched with tons of investor funding or a big media budget. They're basically creating touch points that are just don't like in
totally in your face for the consumers. The customer has to see your seven points before they convert to buy. So you're getting the billboard, you're getting the subway advertising, you're seeing it on social media, you're seeing it on Instagram, you're seeing it on TikTok, you're seeing it on every influencer. And it creates this kind of mindset of like, I have to have it. And so then you end up buying things, but then that's like a one-hit wonder if the product isn't good. So you're masking product market fit by inundating channels on social and marketing with tons of.
Aaron Alpeter (27:11)
Do you draw a distinction between the distribution channel
Divya Gugnani (27:21)
funding and money. So don't go all in on paid media until you really know what your product market fit is. Figure out what the product market fit is and then take money and put it against that product market fit and scale the heroes. And then you can iterate on the pipeline from
there.
Aaron Alpeter (27:40)
channels and which distribution channels you scale versus the advertising channels that you'll test and scale? Do you see DTC as something that's a distribution channel versus an advertising channel? Yes, it's a distribution channel, but at the same time, you have have advertising to support it to get scale there to figure out what
Divya Gugnani (27:51)
Yes, it's a distribution channel, but at the same time, you have to have advertising to support it, to get scale there, to figure out what works.
Aaron Alpeter (27:59)
But you have to test. Meta might work for you, Snapchat might be better. On ads and influencer, smart codes might be even better. It depends on the product that
Divya Gugnani (27:58)
But you have to test. Meta might work for you. Snapchat may be better. Like, block ads influencer, spark codes might be even better. It depends on the product, category,
and who it is. And no one marketing strategy works universally, across every brand. Your marketing strategy is unique to your brand. I'm emotional storytelling. What works for me may not work for another fragrance brand.
Aaron Alpeter (28:10)
What it is is no one marketing strategy works universally plus every brand. No marketing strategy is unique to your brand. I'm emotional storyteller. Like what works for me may not work for another fragrance
brand. Yeah. You know, and with kind of getting into that marketing conversation,
I just think it's been so fascinating this season because fragrance is inherently something that you experience. It's difficult to capture that in Instagram. That's why, you know, the department store counter used to be
where all the fragrance was purchased because people would experience and decide that I like this, I don't like this. And so how do you
translate something that's as intangible as how something makes you feel into that clear brand storytelling and acquisition that you're working on? I think that it's super important to see how the consumer shop.
Divya Gugnani (28:54)
I think that it's super important to see how the consumer shops today.
Aaron Alpeter (28:59)
It's so easy to things at a TikTok
Divya Gugnani (28:59)
It's so easy to buy things on TikTok shop.
Aaron Alpeter (29:02)
There's no friction. You just go in there and it's like one, two, three, you're done. And so you have to understand the consumer behavior and the appetite to purchase anywhere, anytime through mobile device has changed product discovery and how people discover brands and how they consume them and purchase them.
Divya Gugnani (29:01)
no friction. You just like go in there and it's like one, two, three, you're done. And so you have to understand the consumer behavior and the appetite to purchase like anywhere, anytime through mobile device has changed product discovery and how people discover brands and how they consume them and purchase them. And so you need to be where the customer is. And so I believe
Aaron Alpeter (29:19)
And so you need to be where the customer is. so I believe
that visual storytelling, immersive videos, like all of this can deliver an experience of telling you what to buy. So traditional fragrance marketing is about notes and how things smell. And we actually don't go down that route as much. We're more along the emotion that it captures. Like when I say happy tears, can literally like liquid sunshine. You know that's going make your
Divya Gugnani (29:23)
the net visual storytelling, immersive videos, like all of this can deliver an experience of telling you what to buy. So traditional fragrance marketing is around notes and how things smell. And we actually don't go down that route as much. We're more along the emotion that it captures. Like when I say happy tears, it's literally like liquid sunshine. You know that it's gonna make you feel happy
and it's a warm floral and it's gonna like...
exude happiness. So that emotion actually allows you to understand what it smells like, if that makes sense. So I think that you have to change storytelling if you want to be heavily digital to make consumers understand what your product smells like without being so literal. Like, I don't know how many people know what orange blossom and Arabian jasmine smell like. I would guess the average person doesn't. So I sit there and spend all my time explaining Arabian jasmine and orange blossom to you. You may not understand what that smells like. But if I say it's a warm floral that makes you feel happy,
You kind of know what it smells like.
Aaron Alpeter (30:25)
does the emotion come before the name or does the name come before the the emotion? Okay
Divya Gugnani (30:30)
They go hand in hand. I think the emotion comes first and then I think of a name for the emotion. But there have been times where I've
been like, I want to have a fragrance like this and then I create the fragrance for it. But mostly I create the fragrance and then I think of the right name.
Aaron Alpeter (30:41)
like this and then I create the fragrance for it. But mostly I create the fragrance and then I can go to
the right thing. Okay, so then it followed there. Does the emotion or slash name, does that come before the fragrance or do you develop a fragrance and say, this smells really good, this is how it makes me feel and maybe we'll end it. I'm just curious about the creative process there.
Divya Gugnani (30:59)
So it's interesting. I have a new fragrance coming out in a few months.
Aaron Alpeter (31:02)
months
Divya Gugnani (31:03)
I worked on it tremendously. was like, originally I was going to use the name come closer, but we couldn't get the trademark for it. But like every time I sprayed it, people wanted to come closer and they wanted to like, you know, just like, what is that? What's intriguing? That's mysterious. That smells like warm skin. It's got musk in it. Like, and so that creative process of creating something amazing drives
Aaron Alpeter (31:03)
I worked on it tremendously it was like originally I was gonna use the name come closer but we couldn't get the trademark for it but like every time I sprayed it people wanted to come closer and they wanted to like even just like what is that what's intriguing that's mysterious that smells like warm skin it's got musket like and so that creative process of reading something amazing
Divya Gugnani (31:29)
what it is. Sometimes I start out with a family and like, we don't have a really true skin scent. So let's go after that category and here's how I envision it. So that was part of some of it. But sometimes it's like, do I want to go after a category? What would I want that fragrance to smell like in that category? And then I name it.
Aaron Alpeter (31:40)
helpful.
Interesting. Okay, it's just interesting how these these things come together. I can almost imagine, you know, you in your home with a bunch of fragrance concoctions going on your kitchen. And then I don't know if you're going out into public and you're like spraying things and watching people's reaction or what. I love it.
Divya Gugnani (32:00)
I'm freezing. I take all the feedback I can. I spray anyone and everyone.
Aaron Alpeter (32:08)
I can't wait to see some when we're together in a couple of weeks. I know and every fragrance captures a feeling and that's what it is about life. So it's the feeling and then it's not about the ingredients, it's about the feeling. Love it. So, know, fragrance broadly is just one of the fastest growing beauty categories.
Divya Gugnani (32:12)
I know and like every fragrance captures a feeling and that's what it is about 5 cents. It's the feeling and then it's not about the ingredients. It's about the feeling.
Aaron Alpeter (32:29)
If you were starting today without an audience, you mentioned how important it was. What are some of these non-obvious ways that new brands can stand out beyond just packaging, influencer seating, and running Facebook ads? I think solving a problem, I think we really just find the light space, find something no one's doing.
Divya Gugnani (32:41)
I think solving a problem. think really just find the white space, find something no one's doing. Don't
Aaron Alpeter (32:48)
Don't innovate, don't imitate. I think that's the best way to answer your question. If you truly innovate and create, solve a problem that's not there, and you...
Divya Gugnani (32:48)
innovate, don't imitate. I think that's the best way to answer your question. If you truly innovate and solve a problem that's out there in a unique
and interesting way, I think you will have success.
Aaron Alpeter (32:58)
I think ⁓
Divya Gugnani (33:02)
then you really need to lead with purpose. You see how I lead with purpose with my brand. If I'm creating something clean and sustainable and I'm launching something once a year and maybe I'll launch more along the lines many years down the road, at this moment,
being intentional and being an intentional beauty consumer and a less is more and focus on quality in that quantity is something that I've cared about. The other thing is I think you should build relationships and channels that matter. And as I said, like invest in them. Like I really want my DTC to be successful. So every customer that emails like,
I tend to see a lot of that. There's a customer service chat that I monitor all the escalations. I read them because I want to know what people are saying.
I think being very closely connected to your consumer is the secret and the sauce that makes brands catapult.
Aaron Alpeter (33:48)
So how do you, you mentioned this like innovate, not imitate. What does that actually look like? Because I feel like so many people feel like they're innovating, but in reality they're imitating. So how do you know if you're doing one versus the other?
Divya Gugnani (34:03)
I think it's really, I think consumers speak and I think in the world of two way communication where communication is two ways on Instagram, on TikTok and all these other places, it's very clear if someone's innovating. Innovation is like people want to share it with their friends. That network effect is there. But when it's imitation, the network effect isn't as strong. So I think signaling as an investor, you see that.
Aaron Alpeter (34:03)
I think it's really, I think consumers speak and I think in the world of two-way communication where communication is two ways on Instagram, on TikTok and all these other places, it's very clear of some of the innovation. Innovation is like people want to share it with their friends. That network effect is there. Whereas imitation, the network effect isn't as strong.
So I think significantly as an investor,
see that you can differentiate who's innovating and who's imitating based on the customer's So based on customer sentiment, you can really tell who's innovating versus who's
Divya Gugnani (34:29)
You can differentiate who's innovating and who's imitating based on customer sentiment. So based on customer sentiment, you can really tell who's innovating versus who's imitating
Aaron Alpeter (34:40)
and also just who's for appetite. Makes sense. And we never come back just really there. Yeah. If you zoom out and think about all the companies that you worked in, you've built, I mean, it doesn't have to necessarily be 5 SENS. What are some of the broader signals that you'll see that a brand is
Divya Gugnani (34:40)
and also just consumer appetite. Network effect is really there.
Aaron Alpeter (34:56)
truly becoming valuable and not just temporarily popular. That staying power is so important and how do you avoid being a one hit wonder?
Divya Gugnani (35:01)
Staying parallel is really driven by
the metric of having repeat purchase rate versus having customer acquisition stories. think brands that can have the longevity of having people come back, come back, come back. Like I have to tell you, we are a fragrance brand. We are a new fragrance brand. People have to use the fragrance for a while before they potentially need another one. But if they trust us and they like us, they may come back for the second and third. That's not the same bottle. It's a different fragrance. may
Aaron Alpeter (35:09)
I think brands that can have the longevity of having people come back, come back, come back. Like I have to tell you, we are a fragrance brand. We are a new fragrance brand. People have to use the fragrance for a while before they potentially need another one. But if they trust something they like us, need another one, second and third, that's not the same model, it's
a different fragrance. mean, try something new. And so the trial discovery all this ways in. But what signals to me that a brand is doing well?
Divya Gugnani (35:29)
try something new. so the trial of discovery all of this ways in but what signals to me that a brand is doing well is
loyalty. It's a repeat purchase rate.
Aaron Alpeter (35:41)
So as an investor you would look at a brand that is great acquisition channel, you know so so Repeat rates worse than somebody who's growing more slowly but has been that phenomenal repeat rates Okay, I love I feel like it's sometimes it's important to say that loud that
Divya Gugnani (35:55)
Yes, yes and twice on Sunday.
Aaron Alpeter (36:02)
that quiet part out loud because so much of what we've seen is just, hey, you've got a really good marketing team and you know what? I'm really good at spending $5 million a month and I can generate a million dollars in sales and we tend to lionize that. think it's also super important is unit economics. Too many founders start their business and they set themselves up for failure and not success. This is your world, right?
Divya Gugnani (36:04)
Yes.
One thing I think is also super important is unit economics. Too many founders start their business and they set themselves up for failure, not success. And this is your world, right? You're this play-tongue
guy. If you're buying your components and your pieces and all of the elements of creating your product or your service, and you are not able to sustain strong unit economics such that there is margin and money to do marketing in today's competitive environment, dead in the water.
So unit economics are so important. And as an investor, as a founder, always encourage people to have strong unit economics out of the gate that only improve with scale.
Aaron Alpeter (36:47)
So unit economics are so important. as an investor, as a founder, I always encourage people to have strong unit economics andality that only improve the
scale. Makes sense. You know, a lot of founders will dream of an exit one day. You've done it three times. Maybe one day you'll do it a fourth. But what does a real acquisition look like in this space in fragrances? Like how should a fragrance founder be engineering for their exit from day one, especially...
that's so emotional, so connected, like how do you have something that's going to survive beyond the founder that people can find value in? I think number one,
Divya Gugnani (37:23)
I think number one, have to create
Aaron Alpeter (37:24)
you to create something to make a difference. it's a point of difference, it's 100 % having strong economics that can acquire your...
Divya Gugnani (37:24)
unique and different so that it's a point of difference. It's 100 % having strong union economics that an acquirer can acquire your brand
and be able to scale efficiently. You want to build a few channels and demonstrate success in those channels. you focus on DTC or you focus on TikTok shopping, you can show real strong success there. Essentially, I'll give you an example of Rhode and Elf.
Like she built DTC and knew how to do it. Then they put her in Sephora and they're doing like, you know, $10 million on a weekend when they launch and gave Elf the opportunity to take something that was working in one channel and bring it to many more other channels, which they could then scale and capture that growth made it worth them paying the price that they paid. And so I feel so strongly that when you're building a company for a potential exit, you have to
Prove out some areas of your business and show success, but then you have to show an acquirer how they can have further opportunity to grow and build. There are many brands in the space and I know people kind of, you know, make comparisons. Makeup by Mario is a really great one. He's been so successful. Kudos to him. Amazing founder, great product, scaled, raised money, is doing well in Sephora, has launched multiple outside markets. Like, what are you leaving for an acquirer to do at that point?
And that's what's really challenging is that if you build out everything, then your prospects of selling become harder because the acquirer needs to be able to see a lift and see growth in the next phase and iteration of growing your brand. And if you don't leave anything for them to do, like if I'm just focused on the U.S. market and I can prove real niche success here and someone says, OK, I'm going to take 5 SENS and I'm going to launch it all through Europe, which is a larger fragrance market than the U.S., they see an opportunity for growth and value for what they're willing to pay for me.
But if I launch all through Europe and I'm selling incredibly well there, what are they doing with me?
Aaron Alpeter (39:20)
It's true. It's true. I've long said that you kind of need three ingredients for an acquisition. You have to be profitable, which I can't believe you have to say that out loud.
but you have to be making money. You've got to have some sort of unique capabilities, so whether that's distribution, patents, a team that you're able to do something. And then there needs to be meat on the bone. And so you mentioned that at length there has to be something more that an acquirer can do. And I'm just curious, how do you balance that as a founder?
Divya Gugnani (39:45)
You need growth and you
need profitability. This market is very different. It used to be you only needed growth and you didn't need probability. Then people were like, you need profitability, but like it's okay if your growth is kind of mediocre. Now every acquirer is like, I want growth and I want profitability. They want both.
Aaron Alpeter (40:01)
Why not yeah, you know, I'll take brownies and cake. Thank you very much. So You know, I'm curious how you how you've seen people navigate this tension between You know on the one hand I I need to focus on One channel do it really well, you know somewhat cap my upside a little bit so I can leave something for an acquirer ⁓ versus
Divya Gugnani (40:05)
Correct. Double dessert.
Aaron Alpeter (40:24)
hey, I don't know if I wanna sell or maybe I need to launch in another country in order to fix something else that's going on. So how do you balance that tension between when I burn that red shirt, so to speak, versus I double down on something?
Divya Gugnani (40:40)
I think it's a very delicate decision that you have to make day by day, month by month, year by year. You have to see what feels right for what you're building. No two businesses are the same. For me, I'm building in the US only right now. I'm not even launching in Canada because we haven't even made a dent in the US market. But if we go to, I can inflate my sales by getting a ton of distributors in foreign countries to sell my product. That will destroy my brand equity because I haven't built my brand equity and I haven't built
an amazing brand in the US first. If you build an amazing brand in the US, that success translates to successful sales abroad. But if you don't spend the time and energy and build the brand equity here, you're limiting the upside of what you can do abroad. So I feel so strongly like you've got to just focus, focus, focus. One of the hardest things about being a CEO is that you're presented with so many opportunities every day. And the most successful CEOs are ruthless prioritization experts. They prioritize what's important.
Aaron Alpeter (41:37)
How
do you learn that? I think you learn about making mistakes. And I think this focus is something that will always serve you well. Do a few things and do them well.
Divya Gugnani (41:41)
I think you learn about making mistakes. And I think the focus is something that it will always serve you well. Do a few things and do them well,
and you will see way more success in spreading yourself than being a jack of all trades, master of not.
Aaron Alpeter (41:51)
and you will see way more success in spreading your self-santage of being a jack-of-all-trades mastermind.
I love that. Well, Divya, this has been an absolutely wonderful episode. Thank you so much for being on, and I hope that all of our US listeners go and go to the website and pick up some bottles of 5 SENS. If people want to get in touch with you, what's the best way to do that?
Divya Gugnani (42:13)
I'm @dgugnani, D.G-U-G-N-A-N-I on Twitter and on Instagram and definitely visit our site, 5SENS.co. We have an incredible welcome offer and would love for people to subscribe to email and get engaged with our brand and kind of check it out.
Aaron Alpeter (42:30)
Awesome
and thank you all for joining this episode of ecommerce on tap and for being with us all season as we dove into fragrances we hope I've certainly learned a lot and I have changed my habits as a result of doing all this research and I look forward to the next ⁓
next season soon.