Shopping Cart

Your cart is empty

Continue Shopping

EP 8: BRANDING'S ROLE IN BEAUTY MARKUPS (+ IN A PANDEMIC)

Julianna chats with Taylor Rohwedder of Wimze Digital, a digital story telling agency with a focus on the beauty and wellness industry, about branding's role in markups in the beauty industry and how COVID-19 has shifted consumer perspective. Specifically, they chat about Brandless vs Beauty Pie, Fur Oil's Shark Tank appearance, and why people have a problem with indie beauty's markups, but there is not the same outrage about luxury brands.

[JD]: Hey, thanks for listening to The Highlight, a podcast about the beauty and wellness industry posted by myself, Julianna of Deco Miami, and soon to launch, Souki. Whenever I have conversations with other founders in the beauty industry, I think, wow, I wish we could have recorded that. And that's exactly what The Highlight is.

Even though there's a pandemic happening, branding is still just as important now as it was pre-COVID-19. There's been chatter in the beauty and wellness industry about product costs and markups, but not much mention of branding's role in these markups. In this episode of The Highlight, I'm chatting with Taylor Rohwedder, co-founder of Wimze Digital, about branding and markups in the beauty and wellness industry. Wimze is a storytelling agency based in Brooklyn, New York that's worked with clients like Indie Beauty Expo and Shen Beauty. Taylor, thank you so much for finding time to record with me.

[TR]: Thank you so much for having me. I'm really excited.

[JD]: Can you briefly tell us what Wimze Digital is all about and your role within the agency?

[TR]: Sure, of course. So I am the co-founder and chief strategist at Wimze Digital. We like to call ourselves a social-first creative agency. For us, what that means is we're really focused on building out brand messaging strategies and brand positioning strategies for brands that are looking to distribute content in the social space. We mainly focus on brands in beauty and wellness. That's just something that we feel really passionately about from a personal perspective. I think that as a marketer, it's really important that you stand behind the brands that you're working with. Otherwise, it's really easy to come off as bullshit.

[JD]: Absolutely, and especially now, people are really closely watching brands and looking at what stories they're telling around the pandemic. Tailoring your story to keep everything in mind and keep everything tasteful is more important than ever.

[TR]: Yeah, absolutely.

[JD]: My first question for you is about Brandless and Beauty Pie. Venture-backed, Brandless, made news in February, which seems like five years ago, when it announced that it was shuttering after a three-year run. It was not a beauty brand per se, but there's a very similar company in the beauty space called Beauty Pie that charges “cost” for somewhat generic products, plus a monthly subscription fee, just like Brandless.

Brandless’s stick was that consumers overpay for a brand tax, hence their bare-bones pricing model. While Beauty Pie’s message is that they help consumers save by cutting out the middlemen, that create markups.

What do you think of this business model and do people want generic beauty products, or do you think that branding plays a bigger part in beauty and wellness products than this model assumes?

[TR]: Yeah, I think that's a really interesting question. I'm not going to pretend to know everything about Brandless’s business model or Beauty Pie’s business model, but I think that from a consumer perspective, considering their pricing model from that point of view, there's a big difference between Brandless and between Beauty Pie.

Brandless was built on this concept that every single item was going to cost $3, and their main message was pretty much low cost with this no brand tax tagline. When they attempted to raise that blanket price to $9, that's when everything went to shit for them.

I do feel like from a business model perspective, Beauty Pie is doing things differently, and they're doing it in a smart way, and that they're varying their prices for each product and kind of comparing it to the typical cost of a similar product. So, I think for that reason, they're being really smart, and I do think from a business level perspective, that could be more sustainable. But from a messaging perspective, I kind of have my doubts about that.

[JD]: Can you elaborate on that?

[TR]: Sure. So, I think that there are really small but important differentiations between Brandless’s no brand tax message and Beauty Pie’s no middlemen message. In terms of Brandless, they always argued that they are a brand, and of course, they agree they were. But to market an anti-brand message insinuates that they're not concerned with like their larger mission, value alignment with their consumers, or a brand identity beyond just price. The position that they automatically end up owning in consumer minds is one of like, you know, screw all of that brand noise. On the surface, maybe consumers felt like, Yeah, I agree with that. Price is really my main driver. But I think the long run, our subconscious minds would probably disagree with that.

[JD]: I wonder if Brandless would have just held out for like a month and been an option when people are buying out toilet paper and like things that don't--. You know, I don't care what brand of toilet paper or like what dishwashing soap I have right now. I'm just like happy to get something, but a month ago, I did care about brands.

It seems like perspectives have shifted a little bit, but at the same time, I totally agree with you that their main messaging point, it was very anti-brand and not necessarily in like a positive way, which isn't good. You never want a negative brand.

[TR]: Right, exactly. I think you're bringing up a really important point too. I think what this whole conversation comes down to with no middleman or no brand tax or whatever it may be, is what position, what primary message, and what space does Beauty Pie want to take up in their customers' minds?

Is it going to be one of low price, which is supported by this no middlemen message? Maybe that's the right position to take right now when people aren't necessarily concerned about price, but they're more concerned about getting the essential goods that they need. Or is it going to be more one of like luxury beauty, cruelty-free beauty with no middleman as kind of a secondary message that aligns with consumer values? If price is the main message and the main customer purchase motivator, then they could find themselves in a really similar situation to Brandless if they ever do decide that they need to raise their prices or increase their prices for whatever reason. There's little kind of motivation for customers to stick around if there's a better deal somewhere else.

[JD]: Sure. The no middlemen differentiating point between Brandless and Beauty Pie is really interesting right now too. I keep talking about this in the other episodes about how the pandemic is affecting everything, but not having any of those intermediary points between a brand creating products and getting them to the customer is huge right now.

[TR]: Yeah. I think especially right now. Convenience is a really important message, and if your brand is built on a message that touts convenience, or if there's any way to work that message into your strategy right now, I think that it's crucial.

[JD 0:07:32]: Let's go back a bit. I'm going to ask you some basic questions. The first one being… what is branding? I mean, we keep throwing the word around. People hear it all the time. Literally, what is branding, and why does a company need to brand their business and products? Why is that important? Especially in beauty.

[TR]: Yeah, good question.

[JD]: Thank you.

[TR]: What is branding?

[JD]: I know. It's like it's so simple. I mean, I went to business school for marketing and maybe on the first day that was like a bullet point in a textbook, but that's it.

[TR]: It's so ever-changing to me. I feel like branding is really all about perception, and especially in this life at least, perception is everything. Companies need branding to differentiate themselves in the market and to communicate what they stand for beyond just the products that they sell. They really need to take up a specific space in their consumer's minds.

I think that from a business perspective, the actual process of building a brand also really forces you to consider things that you may not otherwise consider as a strictly business-minded person. It forces you to kind of get really specific about your values and how those values align with your customers. It forces you to get really specific about what kind of person is actually your ideal customer and how you want them to think of you.

[JD]: Yeah, that's so true. The other thing that I think is important to remember about branding too is that it's not just about like what kind of tissue paper you send orders out with, or what kind of extra stickers you include with your packages. It's so much more than that, and I don't think that consumers are as aware of the costs and the effort that goes into branding that goes beyond something that they're aware of. If that makes sense?

[TR]: Oh yeah, totally. I think that so much of branding happens in this weird subconscious space. But as you’re talking about this, I'm kind of thinking… not to make everything about coronavirus…--

[JD]: Everything is about coronavirus right now.

[TR]: It’s all about coronavirus. I think that brands that have really done this work in terms of really considering their mission and their values as a brand and as a company beyond just the products that they sell. I think that they have a huge leg up right now. Especially given the state of things with coronavirus. It's forced a lot of companies to halt production, to close retail stores. I think right now it's really tempting for companies to go quiet on their customers because they're not necessarily pushing products, and they don't really know what to say. But I think in this situation, it's a really great opportunity to think back to your bigger mission and your bigger why and really prove that mission and those values as a brand and to communicate them with your audience in a way that helps them navigate this really weird, scary time.

[JD]: That's a really good point, and also, making me think of just all of the beauty companies that I see that are offering hand sanitizer or DIY kits to self-care at home… the companies that are donating proceeds to hospitals to buy masks. There's so much that brands can do that's on-brand that relates to COVID-19, but also it's tricky.

I'll say this as a brand. My knee jerk reaction was, “Oh, maybe I should do hand sanitizer too.” But then I'm seeing like everyone's doing hand sanitizer and I'm like, “Well, I guess it's on-brand because manicures and hands and lotions, whatever.” But then I was thinking about it more, and I'm like, “Well, I think I'm going to go back to the drawing board because maybe that need is met and maybe I can do better, and I can do something that's helpful, but even stronger on-brand for me than what other people are doing.” Not to say that hand sanitizer is not important, but I have a feeling that in two or three weeks, you're going to see a lot of hand sanitizer on the market. So, it's an interesting time for sure to continue with your branding strategy in lieu of the pandemic.

[TR]: Yeah. Absolutely, and I think that you're thinking about it in a really smart way. I mean, there are so many different directions to go right now. Building production for hand sanitizer, making masks or something like that. I think that all of those efforts are really great.

But I also think there's smaller things that brands can do from a communication and content perspective right now that require a little bit less time to get going. Like I was just looking at GOOP’s Instagram earlier. I know that they're a very controversial brand in and of themselves, but I really liked what they were doing. They've been hosting video calls with subject matter experts on topics like managing anxiety during triggering times, like, for example, a global pandemic, and just staying connected while social distancing.

I felt like that was exactly the kind of thing that beauty brands can think about right now. If your bigger mission and purpose and your values as a brand align with mental health or wellness, then is there content that you can be creating right now to feed that need with your audience that requires a little bit less heavy lifting than say, a whole production for masks, or hand sanitizer, or something like that? I just, I think there's a lot of opportunity to meet audiences where they're at right now and fill those pain points with some helpful content.

[JD]: You're absolutely right. You don't need to literally put out some sort of soap or mask product as a beauty brand to help in your own way. I think that the bottom line is that consumers are looking to connect right now, and some consumers are looking for connection and escapism, and some are looking for tangible solutions like a mask or hand sanitizer. It's just a matter of figuring out what your audience wants and delivering.

[TR]: Exactly.

[JD 0:13:46]: To change gears just a little bit. Controversial Instagram page, Estee  Laundry, (@esteelaundry) recently posted a clip of a Shark Tank episode that aired in February that featured feminine oil beauty brand, Fur, seeking investment as brands do on Shark Tank. Fur reported $5 cost to make their oil, and they sell it for $42, which sparked Estee Laundree’s post asking if it was fair to sell something for $42 that costs $5 to make. Do you think that consumers should be angry about the markups on their beauty products, or do you think that there is justification in the markups?

[TR]: Yeah, I mean, it's definitely a big markup, but should consumers be angry about it? No way. I mean, just like I said before, when we were talking about branding, I think the perception is everything. And to me, the cost of making and delivering a beauty product is kind of irrelevant in a way. Like the true price of anything is what someone is willing to pay for it and really ultimately how much they value it. Obviously, in other markets, outside of beauty, there's moral issues that come into play. But I think in beauty, it's totally fair game.

 

[JD]: I totally agree with you. I think that what the conversation, at least on that Instagram page was missing, was that marketing 101 is the ability to convince the consumer that the value of your product matches with the MSRP, what it costs. So if you are selling, especially a non-essential good that has a high markup, successfully and people are buying it, that means that your marketing is effective. If the consumer has other options, and if that is again, emphasizing that this is for non-essential goods, I do not agree with this for healthcare, but for something like a feminine oil, I mean, sure. If you like that, oil, if you like the packaging, if you like what the brand is all about. Why not?

[TR]: Totally.

[JD 0:16:00]: In the conversation about Fur’s makeup, there also has been little mention of markups from luxury brands and how these high end brands influence consumers to justify their costs and markups. Why do you think an indie brand got so much flack for their markup, while it's widely accepted that you're “paying for the name” for a luxury brand in comparison?

[TR]: Yeah, I think this is a really interesting question, and again, I think it comes back to perception. In a lot of consumers' minds, I think indie beauty sometimes can correlate with lower price. I think that perception is changing as the indie beauty industry grows, but it's still there to a certain extent. I think that that's kind of due, at least in part to this transparency trend, which is really unfortunate because I do think that transparency is huge, and it's a big value add for a lot of consumers. A lot of indie brands are building themselves on this idea of transparency, which I really love. But I think that sometimes they tend to pull the curtain back on their process a little bit too much. You know, when you think of a luxury brand or there's kind of this air of mystique, and you don't really know, you know, what goes into making the product and the people behind the brand.

But with indie brands, they have such a closer relationship to their customers. Oftentimes, their founders are consumer-facing, and it's really tempting for those Indie brands to kind of lay it all out on the table. But if you have too clear of an image in your head of like, you know, one woman sitting at her kitchen table and mixing together ingredients and hand labeling all of her products. Like it's certainly transparent, but I don't necessarily know that that feels premium.

[JD]: I love the way that you answered that question because I never really thought about the transparency theme, especially in indie beauty versus more traditional beauty. I also wonder how the clean beauty trend and movement is affecting consumer perception on the price and the value of indie beauty products? Because I associate clean beauty with having a higher price tag because it's been drilled into me that higher quality ingredients cost more to make. But at the same time, there's this perception that, okay, well, if you're showing me exactly how small your company is, I'm making assumptions about how much things cost and wondering why is it that so expensive?

[TR]: Exactly. It’s such a fine line. I love transparent messaging. I mean, look at Everlane, like they're killing it with transparency, but at the same time, it's just, you have to be careful about how much you pull the curtain back with that kind of thing. It's important that you're still maintaining somewhat of an air of mystique with your brand if you're going for more of a luxury price point.

[JD]: Absolutely, and on the flip side of that. That's actually something that I think about a lot for my own brand, because from the beginning, I've been very cautious to show too much of the behind the scenes because I don't want people to have this perception that my brand is one person running around like a crazy person putting everything together. And I don't want to be perceived as just doing this as a side gig. I want this to be perceived as a legitimate brand. So, I'm very careful about how transparent I am with what my business looks like. I do want people to--. I like the word you used, mystique. I like that you kind of let people assume what they want to assume.

[TR]: Yeah. No, I think that that makes perfect sense.

[JD  0:19:53]: My last question, which is I think the most obvious question. How do you think the topic of markups in beauty and wellness has shifted in the age of COVID-19?

[TR]: Yeah. I think that that is an interesting question. Outside of beauty and wellness, I feel like markups are a big moral issue, and I think that it's inherently wrong, especially in light of coronavirus. But for beauty and wellness specifically, I really, I do think it's all about perception and price is somewhat irrelevant.

If you're offering a product and messaging that product in a way that's resonating with what people are looking for right now in light of coronavirus and their new situation. They're going to continue to buy that product, no matter what the price may be. At the end of the day, if you're a beauty brand and you're building your brand on a message of self-confidence, self-esteem, and feeling good about yourself. Those customer pain points aren't going to disappear just because coronavirus is ending the world. I think that's all the more reason to double down on that messaging.

Even if you're not going out right now, there's still every reason in the world to want to feel good about yourself and use beauty products to make that happen. If that's something that’s a driver and a purchase motivator for the audience that you're speaking to, then they're going to purchase this regardless of what that price may be. Of course, to a certain extent.

[JD]: That's a great point. I relate to that because I, for the last year and a half, have not let my fiancé buy a $300 beanbag for our apartment. My willingness to pay for a beanbag was much higher last week than it was a month and a half ago.

[TR]: Oh, man. I believe it. That's actually not a bad idea. Maybe I'll invest in a bean bag.

[JD]: I am excited. It's supposed to arrive Monday. Thank you so much for your time today and I hope that you stay safe.

[TR]: Yeah. Thank you so much for having me on. I really appreciate it. Stay safe.

Want a Nail Art Sticker
you don't see?