eSalon Marks Tenth Anniversary In Digital-First Economy

Most of the legion of direct-to-consumer (D2C) brands on the scene these days would happily take the trajectory of eSalon: Take a great idea, stay true to the business model, keep the finances in check, get through the pandemic and then create a joint venture with one of the CPG firms the company was trying to disrupt in the first place.

That, at a very basic level, is how eSalon arrived at its 10th anniversary last week. As the pioneer in customized, home-delivered hair color, the company has now created and delivered over 235,000 unique color combinations and has shipped more than nine million orders throughout North America and Europe. As the U.S. and Europe continue to have limited social contact due to the pandemic, eSalon has seen a growth spike in what was already a successful business model. When women (and men) can’t get to the salon to see their professional stylist, eSalon is helping them stay away from mass-market, boxed hair color while playing to the individuality that attracted it to CPG giant Henkel, which bought a 51 percent stake in mid-2019.

Graham Jones, CEO of eSalon, told PYMNTS that its technology, paired with what he says are some of the brightest minds in beauty, science and marketing, are the keys to the company’s success so far. His team has controlled R&D, marketing, customer service, color dispensing, shipping and everything in between, all from its headquarters and warehouse near the Los Angeles International Airport. From there, it has connected with a customer base that has chosen custom products over mass-market options.

“I think our clients are more patient and are willing to learn and try,” Jones noted. “Compared to pre-COVID, consumers are much more tolerant. They have time and motivation to pick a specific shade of color, or they’re willing to view a 30-minute video on our YouTube channel. Before COVID, I think there was a lot more acceptance that the salon was the only way to go, or that boxed color was the only way to go. So I’d say consumers are more motivated to spend the time and energy to get it right at home.”

In some ways, eSalon represents the ultimate in CPG customization. The process starts when a customer sends a photo to the company’s stylist team. A color expert reviews the profile and suggests a blend that fits the customer’s stated goals. When that selection is agreed-upon, eSalon ships a customized box with the color and application tools. The stylist is available to answer questions and make suggestions for the next application.

Within the eSalon subscription model, each shipment is $22, including shade adjustments made with each order. Standalone color boxes are still customized and run to $27.

To celebrate its 10-year milestone, eSalon has launched a new loyalty program in the U.S., which will reward clients with one free color set after every 10 color orders, as well as discounts, offers and access to new product launches. The company has also debuted its “Made Just For You” branding, which highlights the core of eSalon’s business: customization. It also showcases another element of its success: marketing. Most D2C brands can only afford influencer-based or word-of-mouth marketing. But Jones has set up a system and process that gave its customer acquisition campaigns some extra juice during the pandemic by participating in the programmatic advertising platforms that allow brands to bid on the best placement, ad executions and keywords.

According to Jones, eSalon may spend north of $20 million in advertising on marketplaces this year. When the pandemic first took hold, many companies that had spent a lot on programmatic ads had to pull back. A sizable number of those were travel and hospitality companies that couldn’t book business at the time, and actually still needed to monitor what business their ad placements could generate.

For a good deal of Q2, Jones was able to expand his customer base at a critical time, while getting an effective 75 percent discount on eSalon’s ad spend. The strategy worked so well that Jones and his customer service team had to slow down on new orders until its production capacity could catch up. That situation has now been solved.

“One of the differences in the pandemic can be seen through our customer service,” Jones explained. “We have a 70-person team that is always available, and we’re hearing from our clients that they have more time to talk. Before the pandemic, nobody had time to talk because they were at work. Now, everyone is working at home and the conversations are going a lot longer, so we’re supporting our clients more than we ever have. Our clients need people to talk to, and they choose to spend some of that with us.”

Jones noted that eSalon has been very careful with raising venture capital, taking most of its development money from its founders and from existing revenue. Going the direct-to-consumer route has helped on that front.

“D2C brands can go to market and innovate so quickly now, and online advertising allows brands to acquire users upfront,” he said. “That’s one of the reasons there have been all of these pure-play companies, like Dollar Shave Club and Bonobos, and then all of the L’Oréals and the P&Gs that have been buying them. This is forcing the bigger firms to innovate faster to either build new products themselves and allocate resources internally, or purchase companies. They’re either going to buy it or build it. And it benefits consumers, because there’s so much innovation and they don’t have to buy from a big holding company that has tons of brands. Instead, they can buy from a brand that really knows the product. I think it’s a great time for consumers.”