In this episode of Alicast, Alizila’s Julie Huang sat down with Julian Reis, Founder of SuperOrdinary, a brand accelerator based in Shanghai that’s helping global beauty brands make their mark in China.
Reis launched SuperOrdinary in 2017 has since helped innovative young beauty brands like Supergoop!, Biossance, and Drunk Elephant build their presence in China. Recently, SuperOrdinary expanded its business in the U.S. to help brands build their portfolios and presence in the crowded Amazon marketplace.
The founder shares his learnings from China’s e-commerce operations to the businesses they will help on Amazon.
Below is a transcript of this Alicast, edited for clarity and brevity
JH: How did you suddenly hone in on the beauty market and e-commerce?
JR: It’s been quite a journey. I’m 46 years old. I grew up in Asia most of my life. My mother is Australian, my father is Chinese. The beginning part of my career, I started my first hedge fund when I was 27 years old. I didn’t know that this concept of starting your own fund management company could happen and I was very lucky and fortuitous at the time. What I did at the hedge fund was really focused on big trends that were happening in the market globally.
I was always a very curious person and started to develop the skills to understand big patterns. I got into the beauty market in 2010 when I first invested in a company called Luxola.com. It was really e-commerce 1.0 where it was distributing beauty brands in Southeast Asia. That business at the time never made any money, but it really opened my eyes to how the beauty market was so diverse and the ecosystem back then was very early stages. That business got acquired by LVMH and became Sephora’s digital presence in Southeast Asia. So that’s a long way around, but I got myself into the beauty industry then.
JH: How would you describe SuperOrdinary?
JR: After Luxola, I had some more experiences in the beauty market. I went from there to start my own beauty brand, which was called Skin Laundry. Skin Laundry was a business that was focused on bringing laser facials to the mass market. So rather than going to an expensive dermatologist, we would provide quick facial treatments for US$50 to US$70 per treatment. I really took the time to learn how to build a brand from scratch, which was very, very challenging. It takes five years to build a brand.
And when I was in Hong Kong opening the business there, I noticed in China, at the time there were many local brands and some of the big brands, but none of the exciting, digitally native brands that we saw in the U.S., weren’t available in China. At the time, to enter into the China market, you could bring brands in via the cross-border model. And this is a channel which allows beauty brands to get into the China market very quickly using platforms such as Tmall Global. And SuperOrdinary, the name came around for describing how to bring brands to these inaccessible markets and making it super easy, SuperOrdinary.
JH: One thing that we know is businesses that want to sell in China via Alibaba’s platforms like Tmall Global and Tmall, often work with a third-party service provider, or what we call TPs, to help them with distribution and marketing. How is SuperOrdinary different from a TP?
JR: I think TP, or trade partner, is a word that really describes the operational aspect of operating a brand in China. In our day and age, it takes a lot more to build a brand in a foreign market, especially when there is very little information around that brand. In China, we’re really starting from scratch so brand marketing is at the heart of what SuperOrdinary does, so building a brand from zero to one.
I think what we’ve done at SuperOrdinary is really take the view that we are the brand partner, the brand manager in that local market. So, we’re not a trade partner. We really see ourselves as the extension of that brand’s office, whether they’re from New York or LA, we see ourselves as that satellite partner. And everything that we do on a daily basis, we feed back to the brand so we can make more informed decisions about how to build that brand. What SuperOrdinary really does and why we continue to perform well is that we see ourselves as that true partner that does all the brand marketing, we do the campaigns, we pick out the KOLs, we localize the brand in a way that we think resonates well with their end consumer.
JH: So how do you then vet the brands you decide to take on? Are there some common characteristics you look for in that brand that you think would help them succeed in China?
JR: That’s a great question, Julie, because when I moved to China back in 2017, it wasn’t clear to me what would work in China and it was a little bit of shooting in the dark. And just because I thought it would work in China doesn’t mean that it would. I had to take a step back and leave everything at the front door when analyzing brands. Today we take a very different approach. It’s very much involved in terms of desktop research, analyzing the product, analyzing the brand DNA. The hero products are often not the same as they are in the West. Sometimes we have different products that do better in the local market and that’s just purely because of skin texture or the goals that the end consumer is looking for.
What we’ve done is, and I think this is probably something that we go back to, is a lot of homework and due diligence. But at the end of the day, it ends with the product. The product has to work and it has to do what it says. I would say the majority of our portfolio is skincare, followed by haircare and color. We work with fantastic brands like Milk Makeup, Olaplex, Drunk Elephant, Farmacy, Supergoop! and The Ordinary, so some really interesting brands across very different price ranges.
JH: China is a very fast-moving market and it can be hard to understand. I thought it was interesting on your site that you have a saying that “the world moves fast, but SuperOrdinary moves faster”. So, what does faster mean?
JR: You’re actually the first person ever to ask me this, but I think this is a good point because when we work in China, I think that the biggest challenge I found was that it is a 24/7 work environment where you have to react extremely quickly to any of the noises or signals that you get in the market. And that can mean many things. So that could be jumping on an opportunity to work with a livestreamer through the Alibaba platforms to access a certain customer. It could mean understanding a signal in social listening where the consumers are looking for hyaluronic acid or manuka honey. When you work in an environment where data and information signals are so quick, you can’t operate that type of business model from being in a foreign market. You can’t be based in Sydney or Paris or London to operate the Chinese model. So SuperOrdinary built has built strength from within.
We have close to 300 employees in Shanghai, all local who’ve been working in the beauty industry for many, many years. And I think having that deep bench, knowledge and know-how of understanding the consumer has really helped us move fast. And when I say we move faster, one of the things I say to my colleagues is that we always have to be two steps ahead. You know, livestreaming is something that we had to heavily invest in three years ago and it paid off very well because now livestreaming is a very large part of our business model. We’re always looking for different platforms, different ways to connect to the consumer, but also different ways to market to that consumer. So, it’s an exciting model. It’s an even more exciting market now that it’s the biggest market in the world. And I feel like we’re very lucky in timing.
JH: How does Alibaba enable you to do what you do for brands?
JR: When I first came to Shanghai and started investigating how to work in China, very quickly Alibaba showed me that the concept of websites really didn’t exist in China at the time. So, for a brand to demonstrate and introduce their products, it was through Tmall. And Tmall for those who don’t know, is the main platform, it’s Amazon on steroids. It really has everything under one roof. And when I think about a multi-brand store, it’s really what Tmall is. Tmall is a multi-brand store that has individual storefronts for every single brand that’s out there. And you can further bifurcate the model because Tmall was broken down into Tmall domestic and Tmall Global.
Tmall domestic is for brands that exist locally and Tmall Global is for cross-border brands, which are most of the brands that we operate in China. When we first started, Alibaba was integral for us to open up individual stores for each of our brands and the team at Alibaba have been instrumental in helping us build SuperOrdinary’s business. And for those who don’t know about the other parts of the Alibaba ecosystem, there is a platform called Taobao. Taobao is also an extremely exciting platform and does not only do domestic business, but also cross-border. Taobao typically targets different tier cities within China, tier two to tier five, but it’s still an extremely important platform. So, when we think about SuperOrdinary and where the customer spends most of its time – Tmall Global, Tmall domestic, and Taobao are the main drivers of e-commerce in China.
JH: Are there any particular tools in Alibaba’s ecosystem that you think have been particularly effective – is it livestreaming?
JR: I think this is a topic that we’re going to hear more and more of over the next six to 12 months because I believe livestreaming is something that’s very particular to the China market and not to the U.S. market. And the reason why is because I think that the consumer is very different and at the end of the day, the consumer likes to be sold to in a particular manner in each market. So, livestreaming is very much entertainment-driven and anyone that’s watched any livestreaming in China will realize how insanely addictive it is.
The livestreamers are phenomenally talented and for them, it’s a business. These livestreamers are online 365 days a year and they start at 6:00 PM and they finish at 2:00 AM. People tune in and they watch religiously. And it’s truly not just looking at the products, but supporting these superstars and the sales volumes that come out are insane as well. SuperOrdinary has extremely strong ties with the very biggest and best livestreamers such as Austin Li and Viya and we have incredible partnerships. So any brand that works with SuperOrdinary, we often work with these very large livestreamers to build awareness in the local market.
JH: Diving into some specifics. Can you share some highlights from past campaigns with brands that you’re particularly proud of?
JR: I can’t really name names but I can tell you that it’s not uncommon for us to do 100,000 units of a product within a couple of minutes, which translates into four to seven million USD. So, these types of numbers are not uncommon in China, but would be very uncommon in the West. The revenues that we see from the big shopping festivals are only getting bigger and bigger and that’s where I think the excitement of the Chinese market is only going to continue. The consumer there is extremely different. They love to try new products, they love to discover and be the first ones to find that product and at SuperOrdinary, we love being the ones to introduce those products to the consumer. So, while we’re going through a very difficult change in the world today, coming out of the pandemic, the consumer has not changed. Beauty is one of the categories that continue to get stronger and wider and larger all the time.
JH: How do you keep this up and how do you set expectations? And is that a concern when you are dealing with brands that they come in and they expect these kinds of numbers?
JR: Yeah. We spend a lot of time educating the founders and the managers of the brands, because while the market’s big and growing, competition has gotten to be a lot fiercer. There are so many brands coming into the market, also because of what’s happened with the relaxation of animal testing regulations in China, so I think it’s fair to say that to launch a brand in China has got a lot more expensive and you have to be a lot more patient. Telling a brand to launch in China, I think there are a few things that I would highly recommend before they do so. It’s to really think carefully about why they’re launching in China and what kind of partner they’re looking for because it’s not a straight line.
Most brands don’t hockey stick in the first six months and it means that you have to take a longer-term view because I think the brands that truly do succeed in China are the ones that really understand the USP of their brand in the local market. So, does the brand resonate and if not, why not? And what products should work? We may have a product in China that doesn’t seem to work and it’s because sometimes we haven’t done the homework to really get that product ready for market so it’s not just about sending your products across and putting them on Tmall. It’s really about understanding why the consumer needs that product and how do you deliver that message?
JH: It’s interesting, you’ve mentioned the Chinese consumer as a driving force a couple of times now, and I feel like the retail e-commerce landscape in China is a bellwether for global retail. Do you think that in China e-commerce, are the changes and pace driven by consumers or is it the tactics and the platforms driving it and then the consumers adopt it?
JR: I have a pretty strong view about this and this is something that SuperOrdinary is thinking about globally and this kind of dovetails a little bit into why we’re on Amazon as well. Traditionally when you set up a beauty brand, the brand would build its direct-to-consumer website, start producing some content on Instagram and Facebook, and building the brand. And then eventually when it’s big enough, it would choose a partner such as Sephora or Ulta in the U.S., it potentially would go to Australia with Mecca, and we truly think that the world has changed, driven by the platform business, particularly what really led me to this business model was what was happening with Tmall.
I truly believe that the consumer is spending more and more time on platforms because of the nature of the convenience of a platform. When you’re expecting your product to be on your doorstep in 30 minutes, who’s going to be able to deliver that service? It’s really Alibaba. So, if you don’t have the infrastructure to support that customer, I find it very hard for even your own direct-to-consumer website to compete with these large platforms. So, our view is that platforms are where the consumers are going to be in the future. They’re already here in Asia, 100% percent where beauty transactions are taking place online, but in Southeast Asia, it’s 60 to 75% on platforms. And in the U.S., Amazon only represents I would say a third of all beauty transactions. So, we see that as a big opportunity for more and more beauty transactions to happen on Amazon in the future because of that convenience factor. We think that whilst the consumer is growing globally, we think that where the activity is going to convert in the future is really going to be on the platforms.
JH: You expanded your business model to help U.S. brands navigate their presence on Amazon. What prompted this move and how will your learnings in China and with Alibaba inform that work with Amazon?
JR: Yeah. I think what differentiates what we do at SuperOrdinary is we only do beauty. We really, truly want to become the global one-stop partner for your beauty brand to go into the global markets and on platforms. What we really wanted to do was take some of the learnings that we realized in China on how we operate a beauty brand and the flagship store, and apply it to Amazon. There are a lot of rogue sellers that buy products and resell them on Amazon and what we wanted to do was really clean up that environment for our brand partners so that they have a clean environment and that we would own the majority of the buy box. So, whenever you’re purchasing a product on Amazon, you would know that they’re authenticated and coming from a trusted partner like SuperOrdinary, so Amazon is our first foray into another market and another country and it won’t be long until we start moving into other markets globally.
JH: Will you use some of the tactics that you’ve used with growing brands in China specifically, and try that with the brands on Amazon?
JR: Our view generally is that we look at the return on our ad spend and we’re always, I guess from my hedge fund days, we’re very much a data-driven business where we look for opportunities where on the conversion, on each of the SKUs that we operate so we run a lot of technical analysis in terms of seeing which products are converting and why. And the ones that aren’t, is there an opportunity to expand them into different quadrants of the market? So, a lot of those learnings are being applied to Amazon. And I think what we do as a business is we typically are very aggressive in terms of our ad spend so we over-index on spending and that’s where we’ve driven a lot of our results. So going forward, I think we’re looking for opportunities to really grow the beauty category on Amazon.
JH: What do you wish the platform could offer in terms of functionality and capability? Is there anything that Amazon can learn from the Alibaba playbook?
JR: If you look at the interface of Amazon compared to Alibaba’s platforms, it’s almost like night and day. The UX for many of the storefronts or the product listings hasn’t changed for many years, even though it has been subtly changed. But if you look at a Tmall flagship store, it’s an extremely luxurious, rich experience with video content and it’s very much text-heavy. In China, the consumer looks less visually, but more at the information behind it whereas in Amazon, it’s only recently that they’ve introduced all the different functionalities, like video and so forth, but we’re still missing a lot of the additional functions like livestreaming. Even though livestreaming has not been successful so far in the U.S. So when you’re on a Taobao page or a Tmall page, there’s an icon that floats around that you can click on at any one time and watch the latest livestreaming videos.
And I think that type of entertainment really is something that’s missing. When you think about Amazon, my buying behavior when I go to Amazon, I typically already know what I’m looking for when I’m buying on Amazon. So, if I’m looking to buy toilet paper, I’ll go to Amazon, click on toilet paper and buy it. You’ve already been sold and you already know what you’re going to buy. When you go on Tmall, there’s still a lot of discovery, it’s really exciting on Tmall and I think there could be a better way to discover products on Amazon. So, what we call the top of the funnel, which is when you’re really creating a lot of awareness around the brand, I think there can be better ways to communicate to the end consumer. So, there’s a lot to be done and that’s why I think it’s exciting, because SuperOrdinary takes the view of a very long-term view and wants to be there operating and teaching and learning and feeding back information to the Amazon team of what we think could be better for the consumer. So it’s an iteration all the time, but I think we’re just getting started.
JH: You have such great visibility into a cross-section of working with different brands. So, for younger, newer brands now to succeed in the U.S., China, wherever it may be, because you’re working with them all over the world, what are the three or four tips that you find yourself always sharing with them as they’re growing their business?
JR: Yeah. I think the world has changed a lot and anyone could start a brand these days. So, I think you should always have a very unique selling proposition, unique USP. It really has to be a strong story for you to carry that product into these global markets. My advice is to spend time making sure that the product story resonates and test your products. I think in terms of like market entry into China, some people come in too early and get very frustrated that they haven’t seen the sales volume that they would expect.
I typically advise brands to be doing between 25 to 50 million of revenue in the domestic home market before they consider the China market just because once you’re at that type of revenue, you typically have a team of 15 to 20 people so your infrastructure can handle managing another global market entry. I was on a call today with a brand that only had three people and moving to five, and there’s no way they could operate in China, even with a very strong partner because naturally there will be lots of things that will frustrate the business and the relationships so take your time. There is no rush and I think being patient and letting the cards fall where they fall is a mantra that I live by because the longer time you take, you will end up investing for the longer term rather than trying to invest for the short term.
JH: Did you ever think actually you would be where you are with SuperOrdinary at this point, with the growth as fast as it did?
JR: It’s really amazed me and I feel extremely lucky for many, many reasons. One of the learnings I had was hiring the best-in-class team in China. It was hard to hire people but at the time I think we were really lucky by building a very strong culture. We’ll be close to 500 people by the end of this year, and I’m super excited to have founded this business and work with so many great founding skincare brands and color brands and haircare brands. It’s one of the most fun ecosystems that I’ve ever been introduced to, and now I’m really excited for everyone’s growth and really excited for my partnership with Alibaba over the years to come.
JH: Looking ahead, what is your aspiration for SuperOrdinary? Where would you like to be?
JR: Our vision is to truly become the global partner for beauty brands globally in the digital universe. I want to look back and be proud of the work that we have done, helping brands localize their brands in the global markets. It’s a very big ask and a big vision, but I think we can do it. I think five, 10, 20 years from now, I’d love to see SuperOrdinary in every global market with the presence of being the go-to partner in China or Southeast Asia or the U.S. I want to make sure that we do a good job so it’s quality over quantity, and really focusing on each brand that we work with because it’s not a straight line. Some brands don’t work in China and it takes time to course correct, but we don’t want to back out. We want to focus and help them get to the target. So, big ambitions, you have to think big. I’m a dreamer but I’m really excited.
JH: One last question. Do you miss finance?
JR: I miss trading, I love the excitement of it, but I have to say essentially trading beauty products is even more exciting. So I get my fix from skincare rather than futures and options now.
JH: Julian Reis, founder and CEO of global beauty incubator, SuperOrdinary, the future looks beautiful indeed. Thank you for joining Alicast and I’m looking forward to seeing all the new brands you bring to China and the U.S.
JR: Thank you so much for having me, Julie.
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