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Bits: A Start-Up Aims to Upend E-Commerce by Selling Nail Polish
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Julep designs, produces and sells beauty products.It is hard to imagine Silicon Valley venture capitalists analyzing nail polish shades. But a number of prominent technology investors are making a big bet on Julep, a start-up that makes nail polish and other beauty products.
On Thursday, Julep announced it had raised $10.3 million in financing from Andreessen Horowitz, a well-known venture capital firm, and Maveron, the investment firm of Howard Schultz, founder of Starbucks. Previous financiers include investment firms affiliated with Will Smith and Jay-Z.
Julep aims to use innovations in e-commerce to upend the beauty industry. It sells paraben-free products including 186 colors of nail polish as well as mascara, lip gloss and face scrub.
“We think the next major beauty brand is not going to be built over the counter, it’s going to be built online,” said Jane Park, a former Starbucks executive who founded Julep five years ago.
Julep designs, produces and sells its products. It works with scientists and manufacturers that develop products for big beauty brands. The streamlined approach means there are no markups for third parties, and it can make available a new nail polish shade soon after it is shown on the runway.
A similar strategy is employed by many e-commerce companies, including Warby Parker, which sells eyeglasses, and others selling products from office supplies to bedding. Though the economics are better than in traditional retailing, the challenge is to persuade consumers to discover the brand when it is not sold by a major company.
Julep dealt with the challenge by selling its products not just in its stores and online, but also places like Sephora and QVC. Ms. Park said she had focused on brand-building, describing Julep as a brand that encourages women to connect over beauty instead of compete.
Julep also taps into other current trends in e-commerce. It asks its customers for ideas about what to sell (think ModCloth), uses social media to build brand loyalty (think Nasty Gal) and sells subscription boxes of products (think Birchbox.) An Instagram feed invites people to share photos of their nails and a blog has tips from professional stylists.
Julep does market research offline, too. It has four parlors in its hometown, Seattle, where women go to have their nails done, socialize and give Julep tips on what they like and dislike, from package design to new colors.
As for pitching tech venture capitalists, most of whom are men, Ms. Park said she had to do some teaching. Men are often interested in how many times a customer could use one bottle of nail polish, like toothpaste. But women rarely finish nail polish, she explained.
“It’s about fashion,” Ms. Park said. “You want access to color for your outfit or your mood, not squeezing every last drop before you buy the next color.”
Friday, October 12, 2012
Bits Blog: A Bedding E-Commerce Start-Up Cuts Out the Middlemen
A new e-commerce company, Crane & Canopy, is trying to use the Web to save customers department store markups on pillows and comforters.
The three-month-old Bay Area start-up says it saves customers up to 70 percent off designer prices, because it designs, sells and ships the products itself, cutting out the fees from licensing firms, importers and exporters, and retail stores.
Crane & Canopy is one of a bunch of e-commerce start-ups that is cutting out the middlemen to sell items directly to consumers at discounted prices. They make their products at the same factories the designers use, but contract with them directly. The trend has the potential to reshape the way everything from office supplies to eyeglasses are sold.
A queen-size white, pintuck duvet cover on Crane & Canopy, for instance, is $99, while a similar one at West Elm is $119 and at Bloomingdale’s is $190.
“From the get-go, flattening the supply chain was part of the process,” said Christopher Sun, who founded the company with Karin Shieh after they met at Harvard Business School. “It took almost a year to get through the supply chain. It’s that convoluted.”
The strategy also means that the company can introduce new products every few days, instead of just every season like the big brands that have to coordinate with stores and licensing companies months in advance.
That means the company gets almost immediate feedback from customers, on Pinterest, Twitter, Facebook and elsewhere, so it can adapt on the fly based on what people like and don’t like, Ms. Shieh said.
Ms. Shieh said she had tried to create contemporary, feminine designs that she and her friends could not find when they wanted to decorate their homes. The designs, which tend to be bland, are named after San Francisco locales — the Marina has a swirl pattern and the Dolores is floral.
Another innovation for people who hate to make the bed: its signature duvet cover looks like it has a flat sheet for people who want to get rid of the pesky flat sheet that bunches up at the end of the bed, and zips instead of buttons for easy removal.
Crane & Canopy, which so far has raised money from angel investors, hopes to expand to other home products beyond bedding, like towels and sofa pillows.
“We’re trying new things with home goods that the big players have never tried, because we’re going to the factories directly and saying, ‘Let’s do something different,’” Ms. Shieh said.