Jo-Anne Hui-Miller: How would you describe what life has been like at Adore Beauty since the coronavirus outbreak?
Kate Morris: It’s been pretty crazy for everybody. It’s funny, I feel like I’ve been training for this for the last 20 years by accident. I think any bootstrapped business that has survived for as long as we have, well, you get used to fighting for survival. It’s certainly not the first time that we’ve faced an existential crisis, it’s just the first time we’ve faced one with the rest of the world. But actually, I find I’m oddly suited to a crisis!
JHM: How has it impacted the way you’re doing business at Adore Beauty?
KM: We’ve had to make a lot of changes to the way we work. Fortunately, we’ve offered flexible work for a long time, so I guess on one level, it wasn’t a huge adjustment for many of those in the office. I think one of the challenges for the team is that there’s been so much uncertainty. I don’t feel that there’s been a lot of clear communication from the powers-that-be, and that’s made it extra challenging for anyone to manage their own anxiety. At any given moment, you’re operating within at least three or four different scenarios of all the things that might happen.
When I think of the way we were operating only a few weeks ago, it feels like a million years ago – things have changed so quickly and every day brings a fresh set of information and assumptions you need to work from. I’ve been proud of the way the team has adapted and how everybody has supported each other, especially as working from home doesn’t work for everybody. Our warehouse staff still need to physically put things in boxes and get them out the door, but even they’ve been able to adapt well. We’re rolling out split shifts at the moment.
I guess the key thing for us has been to make sure we continue to communicate to the team and remind them of our priorities, which are protecting their health, safety and jobs. If you continue to communicate consistently and people understand why you’re doing what you’re’ doing and where you’re getting your information from, then it all makes a bit more sense to everybody.
We’ve been very fortunate that our sales have held up, so that’s good – that’s one less thing to stress about in the short-term and I know that certainly hasn’t been the case for a lot of retailers in different categories. Fashion’s doing it tough, as well as anything event-related – if there aren’t any events, then you can’t rent someone a black-tie gown if there isn’t anything to attend. There have been a lot of other businesses that have had to do it much tougher than us so far.
JHM: Adore Beauty’s revenue for 2020 will be more than $100 million and beauty is doing well in this current climate. What kinds of products are customers buying right now?
KM: Handwash, sanitiser and soap are going nuts as you would expect, people want clean hands, but they still like their Aesop, too (sales are more than 300 per cent year-on-year). To some extent, there have been people stocking up on the basic things like shampoo, conditioner and skincare – there’s been a 60 per cent spike in sales. We’ve also seen strong results in our wellness category, particularly in our AdoreYou category – the sex category is doing really well – so that’s been good to see.
There are a lot of comfort items that are selling well, like face masks, massage tools and jade rollers – anything people can use to give themselves a little moment of self-care and relaxation at home. Skincare is definitely a thing that people are looking to now. My guess is that people are less inclined to wear makeup now if there’s nowhere to go, but they still want their skin to look nice. I often think one of the nice things about beauty is the ritual to take the time to apply skincare, that routine is a comfort and I think people still enjoy that.
Everyone’s finding it so stressful. I’ve always felt beauty is way more about self-care than appearance. Giving yourself a face mask, having a nice bath and burning a lovely candle all just make you feel a little bit better and when times are uncertain, that’s what people look for – little moments where things feel normal.
JHM: When the pandemic really hit its peak in March, you rallied the Australian e-commerce community together to create a Slack group, or ‘war rooms’, so that you could all lean on each other. What’s that been like?
KM: It’s been really nice to see the whole industry pull together and support each other. There’s been some staff sharing – some retailers have had to shed staff and refer them on to other businesses that need more. Like everybody, everyone is feeling anxious, uncertain and a bit frightened.
I think the group has made everyone feel less alone, particularly the ones who are struggling with sudden drops in demand. Before, everyone was worried it was just their business, or that they were doing something wrong or maybe they weren’t managing it properly. It’s always a bit comforting to know there are others going through the same thing and no-one is necessarily better off than you.
It’s not that you’re stuffing it up, it’s just the environment has changed so dramatically in such a short space of time and nobody was ready for this. How could you be ready?
JHM: How would you describe the sentiment in the e-commerce community right now?
KM: I can only speak to those in the Slack group, there are 250 of us. I think there are mixed sentiments. Some businesses are doing really well. Beauty’s holding up, alcohol’s doing well as you’d expect and books are doing well, so there are some categories that are doing great and dealing with challenges around capacity and going, ‘Goodness, our sales are doubling what we expected, how do we make sure we get orders out the door?’ Then there are others that have hit the wall in a really short space of time and facing really difficult decisions.
I think among the entire community, there’s definitely a sense that no-one’s telling us what to do, we’re all needing to figure it out by ourselves, which is why I thought of starting a group. If everyone has to figure these things out from scratch, there are a lot of shortcuts we can all gain from sharing what we’ve done so far, and that’s been one of the main things people have found useful in the group. One of the other sentiments is uncertainty and people wondering, ‘I feel like I don’t know what’s going on here, am I missing something?’ Half the time, you’re not missing anything, it’s just the information is not available yet.
JHM: Are there any other interesting insights that you’ve gathered since creating the group?
KM: There have been a lot of insights in terms of what’s happened with e-commerce trends in other countries where the virus has advanced, what categories went up and down, how consumer behaviour changed. That’s been really fascinating.
People have been sharing different tactics around dealing with reduced air freight, too. There are hardly any planes going overseas, so people who source goods internationally have been talking about different ways that they’re getting supply. People have been sharing different challenges around the impact of the Australian dollar.
They’ve been discussing a lot of different techniques around ways to structure your workforce in your warehouse, like splitting shifts, spacing out work stations and managing those bottlenecks to make sure you can continue to protect your team and meet all the health guidelines.
People are getting quite creative with marketing collaborations, which is wonderful.
JHM: You’ve spoken out a lot about the need for vendors to help retailers during these times. What has that been like so far?
KM: I’ve had a couple positive initial conversations with vendors. There are a lot of fixed costs to keep an online store that aren’t tied to revenue and they’re effectively our ‘rent’, so I’ve had some positive conversations and I’ve had some less positive conversations. I’ve had conversations with others in the industry who aren’t willing to rock the boat. Personally, I’m fine with rocking the boat, but not everybody is.
JHM: Let’s move on from coronavirus. Last year, you sold 60 per cent of the business to private equity firm Quadrant. What’s been happening there and what have you used that investment for so far?
KM: It’s been tremendous actually. We just launched our YouTube channel, which has been great. We’ve been doing video content for Instagram for a long time. It’s great, but it’s often limited and it’s suited to talking briefly about things in the moment, but we’re about educating consumers and empowering and entertaining them as well – it’s beauty, it should be fun.
We launched our podcast just before we announced the investment. That’s going really well and we’re looking forward to scale that up and also create more channels of content production.
Our brand is very much about making beauty real, approachable and removing that airbrushed veneer that has stood over the sector for such a long time. Beauty always used to be about making women buy things by making them feel bad about themselves and showing them something that’s absolutely unattainable.
We’re going about it the other way around. How can we maybe sell stuff by making people feel normal and good about themselves? That’s the approach of our podcast and it will continue through our YouTube channel.
JHM: It sounds like you’ve invested a lot into the content marketing side of the business.
KM: I think it’s really important. E-commerce 101 is having a website that just sells product, but the retailers that are doing well offer a great experience where the customer gets education or entertainment and I think that extends to bricks-and-mortar. And for us as an online retailer, content is part of our experience. We want to be a part of our customers’ lives, even if they’re not buying anything that week – beauty is fun and we want to educate and entertain.
JHM: I know one of the other exciting things for the business was when you started selling sex toys last year. Let’s talk about that.
KM: I think beauty is about self-care, and internationally, the trend we’re now seeing is the sex category is a part of it. It has never been a particularly female-oriented category. There have been retailers here that have stocked those products, but not in a very empowering or women-oriented kind of way.
The sex category is becoming more mainstream and getting really into wellness and self-care, so we think that needs to happen in Australia. We need to offer Australian women a safe, inclusive, tasteful and luxurious way to buy these products. We need to have a range that’s curated by women for women; I think it’s very hard to imagine how women can be empowered if we leave sexuality out of [self-care]. It’s such a big part of who we are and we reckon Adore Beauty is the best one to do it. I think Australian women deserve it.
We have eight categories, but we’ve got just 30 products now and that will continue to increase.
JHM: How have your customers responded to it?
KM: I think people are feeling really comfortable with the way we’ve approached it and our product selection, too. The products are really luxe. They’re not these big, tacky, phallic, vein-y things. Everything actually looks like something you’d be happy to have on a bedside table – something chic and discreet and the packaging actually makes it look like a beauty product.
I think people are showing us they’re willing to buy that category of product from a mainstream retailer because it comes in the same Adore Beauty box as your shampoo and sunscreen, so nobody’s the wiser if you don’t want to tell anyone. I think customers are absolutely right up for it, so to speak! We have not had one complaint.
When we launched, we were all very wary and we wanted to make sure that we did it right because in the past, we’ve certainly seen mainstream retailers try to launch into the category and face a backlash. One of the things we did right at the beginning was to use consent as a guiding principle in the way we display these products to our customers. Consent is such an important part of sex and we thought it needs to be an important part of how we run the category. There are no products all up in your face the second you’re on the homepage and even if you visit the category, before you see it, we say, ‘Hey, we have to make sure you’re comfortable, these are the products you’ll see in here, are you OK with that?’ Then if it’s not, you can head back to the homepage, that’s cool.
People respect that we’re not trying to be controversial, we’re not trying to shock you. We get that our customers are all at different stages in terms of how ready they are to embrace the category and we want to let them come to us when they’re ready.
We want to be real and we use the proper names for everything. We don’t use euphemisms, we don’t skirt around it, we just call it what it is. What are we calling this product? If it’s a clitoral stimulator, that’s what we call it. People have appreciated that. We’re just going to have our real and sometimes humorous approach to all this stuff and we don’t need to shock anybody.
This story is from the May 2020 issue of Inside Retail magazine. Subscribe here.