Rodan & Fields’ Direct-Selling Approach

The move from retail to direct selling has served the company well.

Amnon Rodan

Rodan & Fields looks at the direct-selling channel through a modern lens.

“Think of it as crowdsourcing distribution, especially in today’s connected environment,” Amnon Rodan, chairman of Rodan & Fields, said during his presentation at the WWD Beauty CEO Summit.

The founders of the antiaging skin-care brand, Dr. Katie Rodan and Dr. Kathy Fields, purchased the company back from the Estée Lauder Cos. Inc. in 2007, and then relaunched it in March 2008 as a direct-selling enterprise.

The move from retail to direct selling has served the company well. “We were established in the channel in 2008 with a little over $4 million in revenue and 16 employees. Last year, we finished with more than $200 million in revenue — and that’s only from the U.S., where we operate — and 190 employees.” He noted that the brand now has approximately 50,000 consultants, or independent sales representatives, and 170,000 subscription customers, who purchase the brand as a 60-day regimen. It’s a  strategy learned from the doctors’ acne brand Proactiv.

“We go to market with a regimen approach because our belief is that a single [stockkeeping unit] cannot deal with the complex skin concern of our customers,” he said. He later noted that 56 percent of its revenue comes from subscription autoship, adding the company’s message that “antiaging is not curable but manageable” has help to attract and retain subscribers.

Rodan acknowledged that in his view the direct-selling channel is largely misunderstood, but that it is being transformed by three major changes. First, everyone is connected, particularly through social platforms, which in his view has made the individual more powerful than corporations. Second, subscriptions, or autoships, create a sustainable revenue flow, and third, digital technology has emerged as major tenant of direct-selling companies.