Beauty and Wellness Briefing: How beauty brands are managing exclusives

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Though clean skin-care line One Ocean Beauty first launched as a direct-to-consumer brand in July 2018, in April, the beauty company signed on with Net-a-Porter for its first retail partnership. Net-a-Porter exclusives typically run for six months, both in the U.S. and globally, but One Ocean Beauty was able to secure a shorter, three-month deal in the states. At the end of July, the brand will land in Goop, and it will continue to pursue a curated list of wholesale parters through the rest of 2019, including department stores and beauty retailers. Internationally, it will remain exclusive to Net-a-Porter for the usual six-month term.

“Exclusivity can be a powerful tool for brands and retailers,” said Marcella Cacci, CEO and founder of One Ocean Beauty. “It was important for us to have a global reach from the onset. Our exclusive partnership with Net-a-Porter has been extremely successful. Not only have they helped to solidify our credibility in such a competitive market, but they have also extended our reach and visibility on a global level.”

Though Cacci was unable to disclose exact financials, she said the company saw a 30% total sales lift from the prior month after partnering with Net-a-Porter. “It has affected the entire ecosystem of the brand,” said Cacci.

Though exclusive deals can be a brand building exercise for nascent beauty companies and work to fuel buzz for retail partners, these relationships are becoming shorter in nature and are harder to come by as brands realize the importance of being everywhere the customer wants them to be.

Part of QVC’s recent foray into private label via Carmindy Beauty reflected this. “Our view of exclusives is evolving at the same time as our competitors point of view’,” said Rob Robillard, vp of integrated beauty at QVC and HSN. “We have remained video exclusivity before the acquisition of HSN, and we stay true to that, so if a brand wants us to invest media dollars behind a launch, we expect to keep that.”

Robillard said QVC and HSN have seen “great success” with brands they sell exclusively, as is the case with hair-care company Tweak’d by Nature. “We continue to push our partners on product and launch exclusivity so customers will have that ‘why to buy,’ but brands will see us pushing more into exclusives. Our customer has told us exclusives and super curated assortments are why she continues to come back to us; she isn’t coming to buy from us repeatedly for the same brands she is finding at Sephora and Ulta,” said Robillard.

Newby Hands, beauty director at Net-a-Porter had a similar standpoint. “The Net-a-Porter beauty shopper is a frequent shopper and is between ages 25 and 44. She is interested in brands and the latest trends, and wants products no one else has. This is beneficial to any brand looking for a solid customer base,” she said.

Part of the reason a brand would engage in an exclusive agreement is because of a connection to a retailer’s customer base — though many retailers like Sephora do not share customer data with brands. One Ocean Beauty was promoted to consumers through Net-a-Porter on its site, in Porter magazine, in email blasts and through its EIP [Extremely Important People] program, the latter of which has been instrumental to other brands. Hands said that while EIPs make up only 3% of its customer base, it accounts for over 40% of total fashion and beauty sales. EIP shoppers especially want hard-to-find items, she said. For example, when Net-a-Porter launched Cle de Peau Beaute on its U.S. site in September 2018, it sold the entire collection to one EIP. Hands said One Ocean Beauty was one of its most successful exclusives in the last year, along with Carine Roitfeld Parfums and Costa Brazil.

Korean skin-care brand Venn is hoping for the same type of trajectory when it hits Net-a-Porter later this month. “Net-a-Porter commands a lot of trust with respect to the brands and products they carry, and they are regarded as highly selective, as well,” said Venn CEO Brian Oh. Venn will be promoted via a South Korean campaign that Net-a-Porter is running that is timed to its debut.

As for the exclusive time period, Oh feels like it is par for the course. “An exclusivity of six months is reasonable, and is long enough for both the retailer and the brand to invest and support the brand on the retailer’s platform. It also is not too long to prevent the brand from building multiple sales distribution outlets [later],” he said.

For its part, Violet Grey’s exclusive contracts typically hold for three to six months, to maximize marketing efforts around storytelling and communicating why products have been classified as “Violet Code Approved,” said April Uchitel, CEO of Violet Grey. “To introduce a new product and educate our audience as to why we’ve deemed it best in class, the longer the exclusivity window is, the greater our ability is through content and activating on all channels,” she said. She cited skin-care brand Augustinus Bader, which became ranked in Violet Grey’s top-three brand sales in an eight-month time period in 2018 after its two products launched as six-month exclusives.

Marketing and messaging is key to Sephora exclusives, as well. Though several industry founders and CEOs told Glossy the beauty retailer is moving away from longer-term exclusives since the appointment of Jean-André Rougeot as Sephora Americas CEO in January, Sephora did not indicate as such. Some of its most successful exclusives have been with the cult brands of the moment, like Drunk Elephant, which wrapped 2018 with $150 million in sales, Fenty Beauty and Tatcha — the latter is also sold on QVC and typically launches special edition products with both parties. Drunk Elephant and Fenty Beauty started at Sephora, whereas Tatcha began at QVC and later added Sephora as a distribution partner.

According to Sephora, exclusive deals give brands access to the company’s key, unique offerings, like its Clean at Sephora assortment, Play! subscription boxes and Sephoria event. It’s more recent in-store Social Darlings experiment featuring socially-driven brands and products, and its The Next Big Thing initiative also give larger shelf space to up-and-coming, digitally-native companies, which could be a draw for brands hoping to make their mark. Of the latter, Patrick Ta, Farsali, Pretty Vulgar and Melt Cosmetics are all currently showcased in this area with significant store real estate, when they normally wouldn’t have their own space or gondola at the forefront of a Sephora store — this area is typically saved for bigger and more recognizable brands.

Wander Beauty CEO Divya Gugnani said she prefers creating new or limited-edition products for the brand’s own site first, before offering them to a retailer, in order to drive connectivity to the customer, conversation and, subsequently, sales conversion. Wander Beauty first launched as a DTC brand in May 2015. It expanded to Net-a-Porter in fall of 2015 and followed that up with a exclusive for one year, said Gugnani.

“During this time, we continued to see major value in investing in our own channel and have an open, direct dialogue with our customer in real time about her unmet needs, which fuels our product development,” she said. Today, Wander Beauty is also sold at Nordstrom, Revolve and Riley Rose.

“We are at Riley Rose to satisfy that younger Gen-Z shopper and we are on Net-a-Porter for that luxury, jet-setting customer,” she said. “We have chosen to let our customer drive our strategy and prioritize that to decide where we are. We can’t afford to not be at every touchpoint where she wants us.”

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