Beauty for the greater good

Transcription

1 1 Beauty for the greater good

2 Our mission is to make women feel beautiful inside and out $ 15 from traditional retailer $ 15 from BeautyKind ADDITIONAL BEAUTYKIND BENEFITS 2 Gives back to what she cares about Rewards her for sharing and raising money Personalized beauty experience Empowers, inspires and makes a difference

3 Massive market opportunity that has barely changed in 50 years Online Cosmetics Revenue Limited customer choice Industry market size Massive online opportunity 2 Specialty retailers $6.5B+ in revenue + 6 Department stores $8B+ in revenue US is $82B Global is $265B 94% of US market in store 6% is online 3 Source: NPD E-comm across all consumer industries is 13% of revs, which means there is a $5.7B online only opportunity for cosmetics industry.

4 Beauty: Broken for retailers Beauty retailers offer the same products at the same price Traditional beauty rewards program offered by department stores and specialty retailers is the only customer differentiator Little to no customer personalization for the customer at the department stores or specialty retailers Online revenue cannibalizes store revenue and margins ULTA only wants 10% online revenue mix* 4 *Source: ULTA financial reports

5 Beauty: Broken for consumers In-store and online customer shopping experience is uninspiring and undifferentiated at the current beauty retailers Little to no customer personalization No meaning or purpose tied to the purchase What retailer the customer decides to purchase from is often driven by the rewards program of the current beauty retailers 5

6 Why consumers will love BeautyKind: We make beauty meaningful & personalized BENEFIT 1 BENEFIT 2 BENEFIT 3 Give back to your personal cause What is more powerful than supporting your Best of class rewards program in beauty 10x more financially rewarding then the current beauty retailers Personalized experience e.g., BeautyKind's homepage for each customer will be their personal beauty counter and not a generic homepage 6

7 How do we pay for these additional benefits 1 We don t have the overhead of a large and 2 We use those savings 3 to pay for the benefits fixed cost store base Our variable cost model creates meaningful margin expansion opportunity 15% Profit 1% Loyalty program 7% Marketing Brick & Mortar Retailers 37% Cost of goods sold 5% Loyalty program 5% Cause giveback 15% Profit BeautyKind 42% Cost of goods sold 3% Marketing 15% Corporate overhead 15% Corporate overhead 7 Source: public filings of the current beauty retailers 25% Store operating cost 15% Fulfillment expense

8 Leveraging Social Networks to drive growth & retention Personal social networks, media influencers and engaged online communities increasingly drive consumer purchase behavior and brand preference Social Networks Leveraging thousands to millions of people through cause and influencer's communities Causes Customers BeautyKind is the first company to harness the power of connecting cause, community and commerce 8

9 Examples of online sharing & virality

10 Why Millennials & Gen-X love BeautyKind The BeautyKind core demographic Age Millennials Gen-X 83% of Millennials trust a company more that gives back 74% are more likely to pay attention to that company s message 79% are more likely to purchase that company s product $$$ Looks for the best deal & value possible $3,000 annual spend on beauty & cosmetics 86% 74% online are more in 2012 likely to pay attention to that company s message 10 Cone Millenial. UNH Report. American Express. PEW.

11 Both new customer & repeat customer growth increasing meaningfully Total orders New customer orders Repeat customer orders New customer orders Repeat customer orders 14,000 18,000 10,000 14,000 10,000 6,000 6,000 2,000 2,000 4Q: 14 1Q: 15 2Q: 15 3Q: 15 4Q: 15 4Q: 14 1Q: 15 2Q: 15 3Q: 15 4Q: Q1 is February through April, Q2 is May through July, Q3 is August through October and Q4 is November through January

12 Year/year growth in our Google analytics increasing significantly Users Sessions Pages/Sessions 18,000 Year ago quarter Recent quarter 30,000 Year ago quarter Recent quarter 14 Year ago quarter Recent quarter 14,000 10,000 6,000 20,000 10, , Q 1Q* 4Q 1Q* 4Q 1Q* Page Views Average Session Duration 350, , ,000 Year ago quarter Recent quarter 7:12 4:48 2:24 Year ago quarter Recent quarter *Data for Q1 this year is for January 1-11 only vs. 90 days in the year ago quarter. 50, Q 1Q* 4Q 1Q* for y/y comparisons Q4 is September through December and Q1 is January through March 2015 versus only the first 11 days of January 2016

13 Marketing creates instant & significant increase in customer acquisition & engagement Users Sessions Pages/Sessions 70,000 Without marketing With marketing Without marketing With marketing Without marketing 400, ,000 30,000 10, , , , Q 1Q 2Q 3Q 4Q 1Q* 4Q 1Q 2Q 3Q 4Q 1Q* 4Q 1Q 2Q 3Q 4Q 1Q* Page Views Average Session Duration 2,500,000 1,500,000 Without marketing With marketing 9:36 7:12 4:48 Without marketing With marketing *Data for Q1 this year is for January 1-11 only vs. 90 days in the year ago quarter. 500,000 2: Q 1Q 2Q 3Q 4Q 1Q* 4Q 1Q 2Q 3Q 4Q 1Q* Q1 is February through April, Q2 is May through July, Q3 is August through October and Q4 is November through January

14 Four effective customer acquisition channels driving growth CHANNEL 1 CHANNEL 2 CHANNEL 3 CHANNEL 4 Local and national causes BeautyKind Cause Ambassadors Referrals Physical Experience Get $25 off your first purchase at BeautyKind! For orders $50 or more, BeautyKind will make an additional $10 donation to Dress For Success! & Get $25 Give $10 Promotional codes are valid for first time purchases, once per customer or address. FFHHDALLAS Valid for 30 days Conversion rate of 10% Cause Ambassadors Lindsey Vonn Conversion rate increases with more familiar brands We could issue over 3m gift cards this year alone 60+ College Ambassadors Adding 10+ Cause Ambassadors a week Bloggers Customers Bloomingdale's store in store Pop up road show 14

15 3 marketing programs that will drive our acquisition channels National Cable TV Ads 6,000,000+ people reached Bloomingdale's Store-in-store 1,000,000+ people reached College Sorority Tour 100,000+ people reached CHANNEL 1 Local and national causes CHANNEL 2 BeautyKind Cause Ambassadors CHANNEL 3 Referrals CHANNEL 4 Physical Experience 15

16 Channel 1: Example of our gift card program Get $25 & Give $10 to Get $25 off your first purchase at BeautyKind! For orders $50 or more, BeautyKind will make an additional $10 donation to the American Cancer Society! Promotional codes are valid for first time purchases, once per customer or address. GiveACS Valid for 30 days 16

17 Channel 2: BeautyKind cause ambassadors We are proudly represented by Cause Ambassadors College Ambassadors 17 Our Cause & College Ambassadors Cause Ambassadors help create awareness of BeautyKind at the local level (by sharing with friends) as well as support our efforts to partner with local causes.

18 Channel 3: Example of influencers the sorority challenge This year we are launching our first Sorority challenge at 20+ SEC, ACC, Big 10, & Big 12 colleges. Year one Pledges will compete to raise the most money for their national cause using gift cards. This is modeled after the St. Jude s program at the University of Alabama. = 70,000 X $ = $3.5-7M Year one total revenue New BeautyKind customers Average spend per customer Participating schools X 5 X 35 X Sororities per school Girls per sororities 20 Consumers they convert to our customers

19 The model is working: Raising $5 to $10 million of growth capital This capital will be used to accelerate our revenue growth We have over $2+ million on our balance sheet, which can get us to cash flow positive Customer acquisition funnels work and can scale rapidly to tens of millions of customers Average spend per customer is solid and will increase as we continue to add brands Customer retention is high and will increase as customers see their rewards and benefits to their cause grow Positive customer ROI in 12 months or less Capital efficient model 19

20 Strong unit level economics reduces capital needs TODAY 5 YEARS FROM TODAY High gross margins and low fixed operating costs create strong unit level economics. This creates meaningful cash flow to reinvest in growth, which significantly lowers our capital needs. Transaction value COGS % Operating margin Operating costs Credit card fees % Distribution expense % Shipping & packaging expense % Cause Contribution % Rewards contribution % Total operating expense % $ % 58.0% 2.9% 4.8% 10.3% 5.0% 2.5% 25.5% $ % 60.0% 2.3% 4.5% 9.3% 5.0% 4.0% 25.1% Contribution margin 32.5% 35.0% G&A 38.6% 15.0% Operating margin -6.1% 20.0% 20

21 Why customers will switch & stay HEAD Same products for the same price HEART Share because you care WALLET Stay because you earn cash Sephora: US ULTA BeautyKind* Revenue # of loyalty members $3,700,000,000 7,000,000 $3,250,000,000 14,000,000 $3,100,000,000 10,000,000 $s given to cause $s given to rewards program less than $20m less than $20m $2,500,000 $30,000,000 $150,000,000 $175,000,000 *BeautyKind revenues above are based on the average of Sephora and ULTA s revenues above 21

22 Use of proceeds: National cable TV We plan to test national cable TV advertising in 1Q 2016 TV ads create a 68% brand retention with customers. TV ads result in 39% increase in sales within 3 months of the campaign. TV ads create a 30% increase in customer response across other marketing channels. TV ads have a 6% average conversion rate of customers watching to purchasing. This has been successful for many e-commerce companies, increasing brand awareness and driving customer acquisition, retention, frequency and average spend This should make BeautyKind a major player in the industry & help us onboard the major beauty brands BeautyKind advertising forecast Year Total National Cable TV Spend Customers Reached $1,550,000 4,960,000 $2,700,000 8,64,000 $5,000,000 16,000,000 $9,250,000 29,600,000 Conversion Rate New Customers 2.0% 148, % 259, % 480, % 888,000 Retention Rate Retained Customers 15.0% 22, % 51, % 96, % 170, Revenue from TV Ads $8,556,000 $20,754,000 $54,360,000 Date from the CableTelevision Advertising Bureau, Harvard Business Review, Media Design Group & ThinkBox $83,670,000

23 Use of proceeds: Bloomingdale s store-in-store We opened our first store-in-store concept with Bloomingdale s Outlet in their New York City flagship store This store-in-store concept creates significant market awareness, customer traffic and engagement without having the risk of building and running a stand-alone store We expect 1,000,000 people a year to visit this store* We believe this channel will generate $50 million to $75 million in annual revenue Will be cash flow positive, creating significant brand awareness & customer growth We plan to open more store-in-store concepts with Bloomingdale s Outlet in the future This program is based on the success of Sephora inside JC Penney s program Launched in October 2006 More than 485 stores & generates $500+ million in annual revenue We believe the Bloomingdales Outlet program offers BeautyKind the same growth opportunity as the JC Penney program did for Sephora 23 *Source: Bloomingdale's research

24 Use of proceeds: Technology We believe that we can create a competitive advantage with our technology, driven by personalization. This tech investment should increase customer acquisition, engagement, retention and annual spend. 24 New brand notifications Replenishment notifications Notifications on how much their networks have raised for causes Notifications on their rewards points Product recommendations based on the customer s needs and desires Customer rating and reviews of products One-touch replenishment Personalized product sampling Personalized replenishment requests

25 25 Appendix

26 Leadership team Hil Davis founder J. Hilburn Grew J. Hilburn from $0 to $55m in 6 years Gina Kohler co-founder Guthy Renker/Beachmint Green lighted Wen Hair for Guthy Renker, ~$300m in revs Michael Hawley GMM Bloomingdales/Saks Fifth Avenue Managed $200m cosmetic business at Bloomingdales Advisers 26 George Cleary April Dec 2014 President of Coty North America a $9B market cap company Nathan Research An enterprise software and technology firm with 25+ years of providing a portfolio of software products and technology services to specific industry verticals such as Retail, e-tail and logistics.

27 Examples of our beauty brands Grown from 60 brands at launch to 132 brands today and we are adding brands every week 27