Building e-commerce via stars' ties to fans
Updated: 2013-02-17 08:39
By Claire Cain Miller(The New York Times)
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Jessica Alba's start-up, The Honest Company, sells eco-friendly baby supplies and has raised $27 million from investors. Ms. Alba and Brian Lee. J. Emilio Flores for The New York Times |
You might have heard the actress Jessica Alba on daytime TV talking about her new e-commerce company, which sells baby supplies, or seen Kim Kardashian pitching her online shoe store in the tabloids.
The man behind the companies is Brian Lee, a lawyer turned entrepreneur with a simple formula: partner with a celebrity that fans associate with a product, whether stilettos or baby supplies.
Hiring a famous face to represent your brand is a standard practice in marketing. But Mr. Lee uses celebrities' social media connections with fans, along with recent innovations in e-commerce, to sell things in new ways.
The Honest Company, Ms. Alba's start-up selling eco-friendly baby supplies, has raised $27 million from investors. ShoeDazzle, Ms. Kardashian's shoe company, has raised $66 million. But despite this investment, it has recently struggled, replacing its chief executive, laying off employees and raising bigger questions about the new breed of subscription e-commerce companies.
E-commerce is shifting, as retailers move beyond publishing print catalogs online to creating business models for the Web. The National Venture Capital Association said venture capitalists invested $2.2 billion in e-commerce start-ups last year, almost three times as much as the year before and more than they have invested since the first Internet boom, which created Amazon.com and eBay.
Mr. Lee's companies tap the latest trends, including selling monthly subscriptions, using software to determine personal style suggestions and eliminating middlemen by designing products in-house and selling them directly to consumers.
"Given the choice between shopping at a boutique or warehouse, if the styles were right, which would my wife choose?" Mr. Lee said, describing the strategy behind ShoeDazzle and Honest. "A large group of women would choose that kind of curated boutique."
At Honest, customers sign up for monthly deliveries of diapers festooned with anchors or hearts as well as items like shampoo and detergent, each formulated in-house to reduce chemicals. Ms. Alba conceived the idea, along with Christopher Gavigan, former chief of the nonprofit Healthy Child Healthy World, and turned to Mr. Lee for a business model.
When ShoeDazzle was founded in 2009, it was the first of a flurry of subscription e-commerce start-ups. The shoes, generally $39.95, are suggested based on results of a quiz the customer takes.
After struggling, ShoeDazzle switched to a nonsubscription model this year, so shoppers log on whenever they are in the mood to shop instead of receiving monthly boxes.
Mr. Lee said ShoeDazzle would approach $100 million in revenue this year and become profitable next year. Honest is not yet a year old, but its founders say it has proved popular with shoppers.
Mr. Lee's celebrity co-founders use Facebook and other sites to make direct sales, and it works because their fans think they have some authority in the items they are selling.
Ms. Alba said her work on Honest was nearly a full-time job (in addition to gun training for the movie "Sin City 2"). "Being the face of something and not having control and input on the manufacturing process is not something I'm interested in," she said.
She said she tried for three years to find backing for her company before Mr. Lee agreed to join her and accompanied her to pitch venture capitalists.
"I was just turned down by so many people because it wasn't sexy," she said. "I think when you walk in with Brian Lee, you're pretty much golden."
The New York Times
(China Daily 02/17/2013 page12)