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What It Takes to Break Through in China

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From starting a hedge fund to owning the DTC beauty market in China is a career path you don’t hear too often. But that’s the winding road that Julian Reis has traveled and along the way he’s picked up some critical intel about the ecommerce world and Chinese trends that he shared with me on this episode of Up Next in Commerce.

There are a bevy of factors to take into account when entering the Chinese market. From the vast differences in the way consumers shop in China to the sheer volume of consumers that can make a huge boom in sales in the matter of moments, there is a lot to contend with. And how does a brand even get in front of a consumer without traditional ads or email marketing? And what about social media? Or regulations? Julian explains how to take all that information into account and build an ecommerce strategy that lets you win abroad. Plus, he dives into how his company, SuperOrdinary is working with top skincare brands to enter the Chinese market, and some of the experiences that can be expected when embarking on this new path. What a fascinating discussion that was so different than any interviews I have had so far, enjoy! 

Main Takeaways:

  • It’s All Chinese To Me: Brands might want to expand to the Chinese market and believe that there is a huge opportunity there, but rushing into the market without doing the proper research could be a huge mistake. Despite the fact that a lot of information is censored in Chinese, consumers there still find ways to access the content that is important to them. Brands need to get more social awareness, learn about what Chinese consumers are interested in and let their actions reveal whether or not you have a product-market fit before trying to make a splash in that market.
  • Platforms vs. Pages: There has been a bifurcation of ecommerce between platforms and webpages. The debate about where to invest more is coming down to how you see your customers acting. SuperOrdinary’s theory of the case is that platforms are the way of the future because at the end of the day, customers spend more time on Amazon and Tmall than on a company’s website. Therefore, more focus should be on creating content that drives engagement on those platforms. 
  • Boom and Bust: In China, the volume of consumers is so much higher and there is so much more emphasis on influencers and celebrities, that if something goes viral, a brand could do millions of sales in a matter of seconds. Being prepared for that kind of boom is very different from working in the U.S., where you prepare for steady growth over a longer period of time.

For an in-depth look at this episode, check out the full transcript below. Quotes have been edited for clarity and length.

Key Quotes:

“I moved to Shanghai almost four years ago and wanted to study how brands are being bought and sold in China. And then the light bulb went off and said to me, ‘This is an incredible opportunity. All these digital native brands that we see in the aisle of Sephora and Ulta and Mecca, why aren’t they available?’ So, I started the company and started hiring my first-year employees in a country that I had very little experience in. And I didn’t speak the local language. I could only speak pidgin Mandarin. And I said, ‘Well, this seems like a big enough challenge. Let’s go.’”

“Where we call ourselves not a distributor. I would almost call ourselves the general manager of your brand in China, because we do everything that you would do as a brand owner by operating your brand in a foreign market. “

“We have experts in each of the categories that we manage who really are our first port of call in terms of trying to see if there’s an understanding or a demand for this product. Remember, all these brands have zero social awareness, and as the market’s got more and more expensive to launch a brand, it’s really important for us to make sure that if we get behind it, we’re going to be able to spend the marketing dollars to get the brand to where it needs to be for it to make sense financially.” 

“I think the hedge fund world really gave me an appreciation of data, and really thinking about data in a different way than I would normally do. For us too, whether it’s analyzing the influences that we work with, or analyzing the livestreaming broadcast that we’ll do tonight with Austin Li, or analyzing LTV and CAC on the brands that we manage, it’s really become you’re heavily reliant on it because if you don’t rely on it, then you start to not make better decisions. And what we’ve done at SuperOrdinary is using that data that we give our brands, our partners, visibility into the consumer in China. And that gives us informed decisions on what products to make next… for us to be successful, they have to be successful in their product development. So, data has become a really big part of our business model.”

“The world’s bifurcated between platforms and D2C websites. And our view at SuperOrdinary is that platform is where the market’s headed to. The websites are where you discover your brands, you learn more about the content, you go to Instagram, you go to Sephora. But at the end of the day, where do you gravitate to? Well, where you’re buying your products. On Amazon, on Tmall, on Lazada. And this is where I think we really try to create this vision of where SuperOrdinary is headed. And it’s very important that our brands believe in this strategy too, because this is the direction we think beauty is headed in China.”

“Understanding the culture is very important to know where is your consumer spending most of their time? I think it would shock most people that 88% of the beauty market is Gen Z and Gen Y, Millennials. And more than 50% are purchasing products on their mobile phone. And they’re looking to spend more and more on skincare and color. I think understanding that just helps you frame how do you get in front of those consumers. Where are they spending their time? They’re spending their time on TikTok, or Douyin in China. They’re spending their time on Little Red Book to discover.”

“Building a brand from zero to one is the hardest part. It’s the most expensive part of the curve. And then year two, year three should be easier. Getting it right is very important, so providing a very concise go-to-market strategy, making sure that the messaging, whilst it’s in local language and it feels local to the consumer, is not different to what it is in the US. We don’t want to be talking about a brand and not be in line with the brand guidelines, but making sure that the emojis, the hashtags, the cute names around the products really make sense to the local consumer. There’s a lot of hard work that goes in before we even launch a brand. It’s not just putting it on Tmall and then putting a price, which is traditionally what a lot of the local TPs have done. We really feel like you have to take a much stronger brand view about building that channel.” 

“The market there moves very quickly. It’s very saturated as well, because everyone sees China as almost like the Holy Grail during the COVID environment. I can’t tell you the number of times people have asked me, “Oh yeah, this is a must have.” Also, I think the downside is just measuring people’s expectations lower. Just because it’s a big market, doesn’t mean your first year you’re going to do 10 million in sales. It takes time to build a brand. Five years, minimum, in the global market, so why should it be any different in China?”

Mentions:

Bio:

Julian Reis is the Founder and CEO of SuperOrdinary. Jilian’s passion is discovering the small patterns that lead to big change across industries -from finance to energy to consumer brands. After getting his start as a macro-trader with an eye for market-shaking trends, he used those talents to build and sell two successful hedge funds (including Pagoda Capital, later acquired by Tudor Capital) as well as an international oil services business (Kuiper International, later acquired by Gulf Capital). In 2013, he was inspired by exciting changes in the beauty space to become angel investor to cosmetics e-tailer Luxola (later sold to LVMH) and to Skin Laundry, the disruptive dermatology business quickly expanding across the US, Europe, Asia, and the Middle East. Tracking the social commerce phenomenon in China, he founded SuperOrdinaryin Shanghai in 2017 as a laboratory to grow the next generation of innovative consumer brands. He’s proud to lead a team that currently includes over 70 employees from companies such as L’Oreal, Nike, Airbnb, Tencent, Microsoft and Paypal

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Transcript:

Stephanie:

Hey, everyone, and welcome back to Up Next In Commerce. This is your host, Stephanie Postles, CEO at Mission.org. Today on the show we have Julian Reis, the CEO and Founder of SuperOrdinary. Julian, welcome.

Julian:

Thank you, Stephanie. Lovely to meet you.

Stephanie:

I’m happy you’re here. I’m glad you’re not in Hong Kong. I was a little bit worried at first. Like, it’s got to be 2:00 AM for this guy, talking on the show. I mean, I would have also appreciated that, but that’s okay. Before we dive in to SuperOrdinary, I want to hear about your background because you have a very fascinating background, and I want to hear what led you to the beauty industry.

Julian:

Great. Thank you for having me. Well, first of all my background, I’m half Australia, half Chinese Portuguese. I was born in Australia, and at the tender age of five I moved to Singapore, where I followed my parents. My dad was working for Pizza Hut. And my twin brother, who’s identical, we grew up in Singapore and we kind of were brought into this world to experience all these different cultures, and really thank my parents for giving us such an international upbringing. We all went to these international schools in Singapore, and then Hong Kong, and really got a flavor for all the different Southeast Asian countries growing up. I went to study in the UK to confuse myself even more, and studied economics at University of Nottingham. And Justin, my brother, was in London at the London School of Economics. And we kind of had these parallel paths where we didn’t know what we wanted to do after university. And I was always intrigued by the financial markets when I was at university. I always thought that … This was at the time when we still had analog Internet, dial-ups. I was always curious to see how people were thinking about this global economy.

Julian:

I applied to probably 150 jobs after university, and got very disheartened that I couldn’t move to Tokyo, which I had this dream to always live in Japan. And I found myself finding a job eventually in New York, at J.P. Morgan. I was one of 3,000 applicants to the markets training program, which was a rotation through JP Morgan training program. And I still don’t know how I got it, but I was so thankful. I went to New York without even an interview, and basically phoned from downstairs and told the graduate recruitment officer that, “Hey, I’m downstairs. You might as well see me.” And suddenly, I got the job. I feel very, very lucky for that.

Julian:

Went from there to, as a trader, I was trading derivatives in fixed income, which is straight derivatives. And that really started to shape my career, about thinking about the macro markets and how you need to think about the world. And after three years, I moved back to Asia and found myself working at Deutsche Bank and building my career as a proprietary trader.

Julian:

And then I realized that I would love to try and build my own business. And in finance, you either work at the lease investment banks as a trader … Because the idea of a hedge fund was still very new. And when I was 27, I decided to go alone and start my own hedge fund. And tried to rustle up as much money from my friends and family, and realized I didn’t have that many friends and family. And started my first hedge fund, which was called Pagoda Capital, which was one of the first macro funds in Singapore. I got acquired by Tudor Capital a year later and became CEO of their Asian business, building out their macro strategies in Singapore and Australia.

Stephanie:

How did they want to acquire you after a year? What were you doing? You must have been doing something amazing.

Julian:

You know, it was kind of interesting at the time because we were one of the only funds in Asia doing what we were doing. And there clearly was … And this actually dovetails into what we’re doing now because we saw this opportunity to build a business around the Asian markets, and many of these big, large, successful brands or hedge funds in US wanted to get exposure to this market. And the way they did that was find like-minded individuals who were trading, and eventually we came together and built this business. And Paul Tudor Jones is still, to this day, one of the guys I idolize the most in the world. And that gave me my introduction to the financial markets.

Stephanie:

Very cool. Okay, so your hedge fund gets acquired. You’re working there for a bit. And then what?

Julian:

And then what? I moved to the UK again, working at a new hedge fund which I founded. And I realized that the common thread to all of this was that I really enjoyed building businesses. And I really felt like from zero to one when you’re building a business, it’s all about hiring the right people and building successful partnerships. And after a couple of years of working in the hedge fund industry, we entered 2008, which was obviously the financial crisis. And what became really apparent and important to me was that this was not sustainable, and that it was really exciting to see what other opportunities there were for me in my life. And at the time, was a very difficult time because to change out of a career or something that you’d been trained in to move to a completely different industry was very scary. And I thought long and hard about making that decision.

Julian:

And I met this lady who was starting a Groupon startup, and I said, “Listen, if you decide to do something in beauty, come back to me because I think there’s a really big opportunity.” And I started to see that the Asian population or the communities were really interested in foreign brands. And I was a founding investor of a company called Luxola, which was the ecommerce 1.0, distributing brands in Southeast Asia. And after two years, was acquired by LVMH to become Sephora’s digital presence in Southeast Asia. So, really got an understanding about learning, about building and investing in the beauty side.

Julian:

And then I thought, well, why not try my hand at building my own brand? So, moved to the US to start a brand called Skin Laundry, which is a skincare brand focused on disrupting services. And really proud of what Skin Laundry has become today. It’s now in five countries around the world, in the Middle East, London, Hong Kong and all throughout the US.

Stephanie:

Did you sell that?

Julian:

No, I didn’t. The brand is still operational. I still remain one of the largest shareholders in the business. But really brought a management team in to really accelerate the brand. I think it’s a very unique concept, and continues to be a loved brand by the customers. And I think by working and building a brand on that side, really started to, when I was back in Hong Kong and I noticed in China many of the brands that we were exposed to whilst we were in the US were not available in China. And that’s where SuperOrdinary was born.

Julian:

I moved to Shanghai three and a half, almost four years ago now. And kind of just wanted to study how brands are being bought and sold in China. And then the light bulb went off and said to me, “This is an incredible opportunity. All these digital native brands that we see in the aisle of Sephora and Ulta and Mecca, why aren’t they available?” So, I started the company and started hiring my first-year employees in a country that I had very little experience in. And I didn’t speak the local language. I could only speak pidgin Mandarin. And I said, “Well, this seems like a big enough challenge. Let’s go.”

Stephanie:

That’s a niche, [inaudible] opportunity. All these brands should be in China but they weren’t. I mean, what are some of the top reasons why brands maybe don’t even think about bringing their products to China? Because from the outside, it does feel scary, and regulations. And does the customer there even want what we love here? Seems like very different things that they love versus maybe what I might like. What are some of the reasons that you hear brands are like, “I’ve never thought about that before”?

Julian:

Well, I think the first thing which you kind of touched upon is the regulation. First of all, animal testing is obviously something that many of the brands, or most of the brands in our portfolio, goes against the DNA of what they believe in terms of cruelty-free. Luckily on May the 1st, animal testing regulations now be announced to have gone away, which is incredible because it just opens up this huge, untapped, physical market domestically.

Julian:

I think because of that restriction, it was very difficult for brands to enter China, and so everyone hears of these stories about Chinese tourists coming overseas and bringing back suitcases of products in the suitcases, and reselling them locally. And I think what happened was that the government obviously realized that this was happening and said, “Rather than smuggling products into the country, let’s create a channel for these products to enter the country on a legitimate basis, and let’s make sure that they’re real products, authenticated, they’re registered, and then they can be sold.”

Julian:

But in order to do this, this channel which we call the cross-border channel, only limits the amount of products that you can sell to an individual consumer in China on a given month or a given year. There’s a quota in terms of absolute R&D value. Whilst it’s an exciting channel and it continues to grow, represents close to 20% of the ecommerce market, obviously there are restrictions for that. We started our business as a cross-border business which allows us to work with brands anywhere from Farmacy to The Ordinary, to Drunk Elephant, Supergoop!, and we really have an incredible partner portfolio. And to be able to build their presence in China by creating a profile for them on social media in all the different channels, on Tmall, and really build a brand from zero and continue to grow them there across multiple channels. That’s how we started.

Julian:

Now, we currently have globally close to 300 employees in the company now, most of which are based in China. And I think what we do as a business is really provide that one-stop-shop service where we really build your brand. Where we call ourselves not a distributor. I would almost call ourselves the general manager of your brand in China, because we do everything that you would do as a brand owner by operating your brand in a foreign market.

Stephanie:

Yeah. What are some of the tests that you do to figure out what the market here even wants this? Because that seems like a big thing. If a brand comes to you and they’re like, “I’m selling this,” and you’re like, “That might not even go well here.” What are some things that you think about if a brand should even try to enter China.

Julian:

Yeah. I think, I mean that’s the million dollar question. And I think what we do, we’ve gotten a lot better at it because I think the consumer there is very discerning, even though a lot of the information about that brand is not readily available on Chinese social media. There are ways to get it, and people do find out about it. What we typically do for any brand that wants to work with us is really have initially a conversation to really understand what the point of difference of the brand is. And really just see if there’s a product market fit. We do a lot of desktop research around the brand, not only in its home market but in China to see how big that opportunity is. If someone comes to us and says, “Oh, we want to launch blonde hair dye in Shanghai and we think it’s a big market because it’s big in the UK,” we have to question is there a demand for people to dye their hair blonde.

Julian:

And I think that’s what we do, and we’ve gotten better at, is we test a lot of the products within our team. We have experts in each of the categories that we manage who really are our first port of call in terms of trying to see if there’s an understanding or a demand for this product. Remember, all these brands have zero social awareness, and as the market’s got more and more expensive to launch a brand, it’s really important for us to make sure that if we get behind it, we’re going to be able to spend the marketing dollars to get the brand to where it needs to be for it to make sense financially.

Julian:

After two weeks of very deep due diligence on the brand, we’ll go back to the brand founder and say, “Listen, we think your hero product in America is this, but you know what? Actually in China, we think it’s A, B and C.” That helps us have this conversation and once we get to that point where we think that there’s an alignment, we then start working on financial terms on how we would work together.

Stephanie:

What’s interesting is that your background in the hedge fund world seems like it would be so helpful when coming and analyzing brands, and looking for opportunity.

Julian:

That’s right.

Stephanie:

And looking at competitors and stuff. I mean, it seems like a perfect fit of how you came about even into this world, which is really fascinating.

Julian:

I think the hedge fund world really gave me an appreciation of data, and really thinking about data in a different way than I would normally do. For us to, whether it’s analyzing the influences that we work with, or analyzing the livestreaming broadcast that we’ll do tonight with Austin Li, or analyzing LTV and CAC on the brands that we manage, it’s really become you’re heavily reliant on it because if you don’t rely on it, then you start to not make better decisions.

Julian:

And what we’ve done at SuperOrdinary is using that data that we give our brands, our partners, visibility into the consumer in China. And that gives us informed decisions on what products to make next. And I think that’s really exciting for our brand partners, to know that this product, this moisturizer, may be too viscous on the skin. Or, this tint doesn’t blend well with this lipstick shade. It’s too bright. All of this information helps guide their product development. And for us to be successful, they have to be successful in their product development. So, data has become a really big part of our business model.

Stephanie:

Is there a different way they have to go about collecting the data there? Versus in the US, maybe you would do surveys, you would just directly ask, you would do your email marketing stuff. How would you go about collecting that data in a way that keeps you safe?

Julian:

Well, I think everything you learnt about business in the US market, you leave at the door when you walk through Shanghai Airport. And I think that’s where you have to really come in with eyes wide open to say, “How is the consumer interacting?” First of all, there’s no websites in China, so you’re working through these platforms. And we have a market in the US where you have a very large amount of websites in the US market, whereas in China you have zero websites. But you have all these platforms. The world’s bifurcated between platforms and D2C websites.

Julian:

And our view at SuperOrdinary is that platform is where the markets head to. The websites are where you discover your brands, you learn more about the content, you go to Instagram, you go to Sephora. But at the end of the day, where do you gravitate to? Well, where you’re buying your products, on Amazon, on Tmall, on Lazada. And this is where I think we really try to create this vision of where SuperOrdinary is headed. And it’s very important that our brands believe in this strategy too, because this is the direction we think beauty is headed.

Julian:

In China, I think to your question collecting data, the data that we get is readily available. You can see what people’s revenues are by looking at Tmall data. But I think what’s interesting is that we have a lot of other platforms, like the equivalent of Reddit and Quora that allow us to see what people are asking about brands. They’re looking up ingredients. They’re looking up what squalane means. They’re asking what hyaluronic acid does to your skin. And that kind of data there is really important.

Stephanie:

I mean, how would a brand even think about getting in front … I know you’re talking about platforms and different ways to think about it. So any brands here are used to paid media and email marketing and Instagram and all that, so I know you have to just completely turn off all those ideas and start from scratch. How should a brand think about entering a new market? Even trying to get their product there is one thing, but then trying to get the word out, especially if they aren’t working with a firm like those. How would they even go about that?

Julian:

Well, I think that historically, when a brand has entered the market it had a number of choices. One is to go through a multi-brand website that sells products and posts it into China. The problem with that is that your product may or may not get to the end consumer, so there’s a lot of risk. That channel is obviously a very small one.

Julian:

Two is to go in it alone. Go to China, hire a team, spend 10 million dollars. Really go nuts. And after five years, you’ll have lots of learnings. Pretty much what I’ve done, and figure out oh my gosh, there must have been a better way to do this. I’m not only spending a lot of money, but I’m losing time.

Julian:

Really, the way we approach our playbook … And it is a playbook, because it is after many years of learnings, is making sure that you focus on the brand and what it stands for, making sure that the messaging behind the brand is consistent. You don’t want 16 different platforms saying 16 different things about your brand. And also, the other thing is there’s no such thing as seeding. You can’t just send out 100 packages and expect to receive 100 posts. So, it opens a pay-per-play environment. And that’s because the cultures are very different, too. Understanding the culture is very important to know where is your consumer spending most of the time? I think it would shock most people that 88% of the beauty market is Gen Z and Gen Y, Millennials. And more than 50% are purchasing products on their mobile phone. And they’re looking to spend more and more on skincare and color.

Julian:

I think understanding that just helps you frame how do you, again, those consumers. Where are they spending their time? They’re spending their time on TikTok, or Douyin in China. They’re spending their time on Little Red Book to discover … And so we at SuperOrdinary have a very large team now that speaks to over 40,000 influencers or KOLs, directly or through agencies. And I think because SuperOrdinary has a very exciting portfolio of brands, we’re able to authenticate the types of brands we work with. So, we’re able to work with the very best livestreamers in China. We’re probably one of the most active in the livestreaming area. And that creates a lot of awareness around the brand.

Julian:

Building a brand from zero to one is the hardest part. It’s the most expensive part of the curve. And then year two, year three should be easier. Getting it right is very important, so providing a very concise go-to-market strategy, making sure that the messaging, whilst it’s in local language and it feels local to the consumer, is not different to what it is in the US. We don’t want to be talking about a brand and not be in line with the brand guidelines, but making sure that the emojis, the hashtags, the cute names around the products really make sense to the local consumer. There’s a lot of hard work that goes in before we even launch a brand. It’s not just putting it on Tmall and then putting a price, which is traditionally what a lot of the local TPs have done. We really feel like you have to take a much stronger brand view about building that channel.

Stephanie:

Yeah. I mean, totally agree. What are some of the biggest surprises, maybe, that brands have? When you’re going through and you’re working with them and maybe you say, “Okay, but we need to do it this way,” or, “This is what they’re expecting,” or, “Influencers are the way here. It’s not just a nice to have like it is here. It’s like, this is the way to go.” What are some of the surprising things that brands maybe aren’t expecting when you work with them?

Julian:

I think volume. Volumes can get big very, very, quickly. It’s not uncommon that you will enter a livestreaming event and will do 3 million in sales in 20 seconds. The market is that much bigger. But at the same time, in the US we’re used to growth, very steady, 10, 20% every year. And that’s achievable. And in China, something could happen where a very big celebrity will go to London and find your product and talk about it, and then boom. It’s all gone in China. You cannot find it. And it’s just because the absolute size of the market is that much bigger than the US, and that when the community is all on their phones buying and following these influencers, it’s very much an influencer-led market and celebrity-led market. I think that shocks a lot of brands. Why doesn’t it have some steady growth?

Julian:

I think they also realize, the shock, the difference is that it’s how text-heavy the interaction with media is. While here in the West we’re very visual, in the East it’s very much about information. Before you even get to the ingredients, there will probably be seven pages of text telling you about the product, the storyline. And then at the end, there will be some more information about the product itself. It’s really important to realize that’s how they shop. I think that’s another one.

Julian:

I think yeah, I think also the market there moves very quickly. It’s very saturated as well, because everyone sees China as almost like the Holy Grail during the COVID environment. I can’t tell you the number of times people have asked me, “Oh yeah, this is a must have.” Also, I think on the downside is just measuring people’s expectations lower. Just because it’s a big market, doesn’t mean your first year you’re going to do 10 million in sales. It’s really about it takes time to build a brand. Five years, minimum, in the global market, so why should it be any different in China? My advice is really be patient with your brand. If you give it the love and tender, loving care over the next five years to make sure that it’s there in five years. You don’t want something doing this and doing this.

Stephanie:

Yeah. I mean, that’s what I was kind of thinking when you said okay, you could do 3 million in sales in a matter of seconds. How could a brand think about setting up maybe a longer-term strategy there? Because when I’m putting on my US-centric view, I’m like okay, you’ve got SEO stuff, you’re getting to the top and you start ranking, and then people see you more because you’ve proved that you’re best long term, and Amazon do the same thing. And there, it feels like if it’s so based on maybe influencers and celebrities, because you can have these blips of when you can get in front of people. How do you maintain a brand there long term, where it’s not just crazy sales and then to until you have your next celebrity or influencer talking about you again? How do you think about that?

Julian:

I do think that’s a billion dollar question. Really believe.

Stephanie:

I do those in my head, billion dollar questions.

Julian:

Because I feel like China has gotten to a cycle or a rhythm of doing shopping festival after shopping festival, whether it’s 11.11, 12.12, 618, Secretary Day. These events become so gravitational for the consumer because they know they’re going to get the best offers on those days. Naturally brands, if you don’t participate in them, you miss the traffic which helps get you more and more awareness.

Julian:

I think channel dispersion is important because you don’t want to be so focused on one channel versus the other. But I think with the opening up of the market with the removal of animal testing it’s going to allow us to become a much more measured approach. And what I mean by that is just imagine if you could only sell your brand through Target. And you live and die by Target’s traffic. Of course you’re going to play along the rules that Target might have given you to go and say, “Oh, here you go and sell that.”

Julian:

If you can imagine that you can leave Target now and open up in all these different retailers in the US, now you have a lot more control about your brand. Just like that in China, I think we’re going to have this opportunity to build brands in a much more succinct manner, and open the doors that we think best represent the brand and not have to scattergun it through all these different social channels.

Julian:

And also, it’s fair to say that the consumer now will get to touch the brand and the product for the first time in these physical stores. And it’s not just Sephora. There’s seven to 10 other competitors in China which have got insane new retail experience, so I think the market there is 10 to 15 years ahead of the US in many ways. And that’s another shock to most brands, is like, “Oh my God. This really, truly exists?”

Stephanie:

Yeah. What are some of these experiences that are so far ahead that maybe we should be looking into?

Julian:

Yeah. I think the consumer, when they go to a retail store in China, traditionally you go to a Sephora which is really much about it’s glossy black, it’s got music, you’ve got these beauty assistants that will come in and they would really sell you the product. China has also gone the other way, where they’ve removed all the beauty assistants and you go in there and it almost feels like a ghost town. But you get to try all these product and sample sizes. There are examples of that. And there’s a shop called Harmay, H-A-R-M-A-Y, you can Google it, have a look. It looks like a museum. And they’re 10,000 square feet, and it’s very Instagram-able. That’s a word. But it’s one of these things that I think has really changed the way that people are interacting, because people want to drive traffic towards the door, there has to be a reason. Especially when you can buy everything online.

Julian:

I think that’s really exciting. And I think I always get asked the question of, why is livestreaming working in China versus US?

Stephanie:

Yeah. That’s a big one. Whenever people have come on here and talked about … We had one guest who taught Harvard, and they brought a livestreamer from China over to show how many Harvard t-shirts they could sell, or hats or something. And it was insane. But then also it was like, I don’t know if that would work here. I don’t know. I just doesn’t feel like a similar market around how it was happening. I don’t know, it just didn’t feel very familiar.

Julian:

Yeah. I think culturally, in the US and the West we don’t like to be sold to. And that’s why Instagram is very much a place where you build relationships with the other person. I think that’s fundamentally where the big difference is. And remember, livestreaming in China is a business. These livestreamers are starting work at 6:00 PM and clocking off at 2:00 AM, and they do that 365 days a year because it’s a business. And they have tens of people underneath them that are helping them bring in product to talk about. I think when you think about this is your starting block, and when you think about in the West, I don’t think people will approach livestreaming in the same manner.

Julian:

I think at the end of the day, the winner in livestreaming in my view is that it will be the platform. I would make a bet that Amazon would probably be the leader eventually, because they’re the ones that are going to be able to fulfill and deliver multiple brands and multiple products to the consumer in a very fast fashion. However, it’s exciting to watch all these new platforms come about into the space.

Stephanie:

Yeah. Are there any other trends that you see happening in China right now that you’re like, this could work in the US? Or, this should definitely be brought back because people would love that here?

Julian:

I think China’s done a really incredible job of cross-collaborations with really interesting partners, like very nonsensical to the West. I don’t know. In the West, you’d see a clothing brand pair up with a skincare brand. But in China, they’ll go KFC will do something with a perfume brand. Or, a bubble tea will work with Fenty Beauty. Really, they like to think out of the box in the market, and I think that’s really exciting.

Julian:

I do like the idea of sampling. I think sampling is something that the US has always been involved with, these boxes that get delivered to the customer and these subscription boxes, whether it’s Birchbox or BoxyCharm and all these different ones. In China, I see that there’s this interest to go and try sample size products at stores. I think that could eventually translate over here, and I think that would be well received.

Stephanie:

Yeah. I mean, I think about Costco. I wonder how much business they’ve lost because people like samples.

Julian:

They do, yeah.

Stephanie:

I mean, yeah. It seems like there is the stores that are okay with letting you try everything. And I know COVID mixed that up a bit and made it harder to do that, but I wonder if it will lean heavier into that because they think that’s such a great way to sell. But it seems like some brands are kind of stingier, like I don’t want to give this away for free. And it’d be interesting to have a case study of like well, when you get a sample, here’s the ROI and the LTV just based off that one, little, teeny sample that you did give away consistently. Not just once a week when you send someone in to be an ambassador.

Julian:

Yeah. No, I think that’s really exciting. I do love the idea that I think the US is incredible at creating these ideas. [inaudible] has done a great job and really given the consumer a more accessible way to try products. But we have to always ask ourselves the question, what’s going to drive the end plus one customer to go to the next multi-brand beauty store? And I don’t know about you, but how many times do I get … I’m buying my groceries online because I don’t to go and queue up. I mean, this is the trend and it’s accelerating faster and faster.

Stephanie:

Yeah. Yeah, I agree. The one thing I’m thinking about now too is that it feels like in some ways, the US and Chinese buyers are the same, and in other ways very different. Thinking about the sale aspect where it’s like, that’s big in China. And actually, it’s kind of like going away here. Why are we doing these Black Friday events? There’s no point. And that’s once difference.

Stephanie:

And the other one I’m thinking about is all these new D2C companies popping up where you see consumers here kind of falling in love with the brand, which is very different than maybe even five years ago. And maybe you didn’t always know who the brand was behind the product. Are the buyers in China similar, or are they not really open to new brands? Or do they not really want to hear about the story? What are the differences there?

Julian:

I think for example when we started SuperOrdinary, we saw this opportunity to bring clean beauty into China. Which at the time, there was no social listing around clean beauty. If you checked out clean beauty packaging, clean ingredients, there was really nothing there. And that was very important. I think the US, where they’re ahead of China in this respect, is the brand story, the mission behind it. What does the brand stand for? What’s the why? I think those types of ideas are becoming more and more important in China. We’re starting to see brands really care about the environment, the packaging, what they do. The say/do ratio, we call it.

Julian:

But I think one of the learnings we had, and it’s why I think SuperOrdinary, we moved to the US to really build out the Amazon business. Because we saw the opportunity of what we were doing in China and reapplying that to beauty on Amazon. Everyone knows the story that there are rogue sellers on Amazon. There’s plenty of opportunity. And over one third of all beauty purchases are now on Amazon. And it’s like this dirty, little secret we all know. We’re all purchasing our toilet paper, our mineral water on Amazon, so why don’t we buy our skincare?

Julian:

We set up a team. We have a team just under 25 people here in the US focusing on building brands, the story, making sure their D2C websites look exactly like they do on Amazon. And it’s just been really exciting, because in five years’ time from now, I think if you ask yourself the question, “I want to buy a product today and I want it on my doorstep in 30 minutes, who’s the player that’s going to be able to do that?” And it’s not your own D2C website. It’s really the part that can actually have the tentacles everywhere that’s going to be able to do that.

Stephanie:

Yeah. Yeah. That’s going to be huge. All right, well with a couple of minutes left let’s shift over to the lightning round. Lightning round is brought to you by Salesforce Commerce Cloud. It’s where I ask a question, and you have a minute or less to answer.

Julian:

Oh, wow.

Stephanie:

Are you ready, Julian?

Julian:

Let’s go.

Stephanie:

All right. If you had a podcast, what would it be about and who would your first guest be?

Julian:

I would invite Anthony Bourdain. I just think he’s the coolest guy, and I really enjoyed his international aspect on traveling and eating. I love eating.

Stephanie:

Yeah? He’d be your perfect guy?

Julian:

Yeah.

Stephanie:

So, a show all about eating and food, then. I like that.

Julian:

Yeah, exactly. Definitely nothing to do with ecommerce.

Stephanie:

Yeah. That’s good. Well, when you want to stay on top of new trends that are popping up, how do you stay on top of that? Where do you go? What are you looking at? Yeah, how do you know what’s hot?

Julian:

I’m lucky enough to have three boys, who are 16, 14 and 12.

Stephanie:

Oh, so they know.

Julian:

Who keep me on my toes, yeah. I actually ask them, and they find everything on Twitch. I usually ask them, and then they frown at me like, “Dad, what are you doing in makeup?”

Stephanie:

You can ask makeup stuff on Twitch? Wow. That might be a new-

Julian:

Yeah, it is. It’s true.

Stephanie:

What do they ask?

Julian:

Well, they just find out … They know everything from men’s grooming, and they get targeted. And it’s so funny, because the young one, he said, “Dad, what’s manscaping?” I’m like, “Where did you learn that from?”

Stephanie:

We’ll talk about that later.

Julian:

I’m learning about new projects and new things all the time.

Stephanie:

Oh my gosh. That’s awesome. That could be a whole, new trend there. Go on Twitch. Ask the people. They’ll let you know what all the trends are.

Julian:

That’s right.

Stephanie:

What was an idea that you thought was brilliant but ended up failing?

Julian:

Oh, I’ve got so many of those. I’m trying to think of the one that’s the least embarrassing.

Stephanie:

You have embarrassing?

Julian:

During COVID, I was like, wow. I was thinking about everyone is staying at home. Everyone is on these Zoom class, why doesn’t people create comfortable clothes? Maybe I should start a pajama company. And I quickly had a handbrake on that. So, I didn’t do that. But I’ve also done other things. What else did I do? I invested in a pool cleaning company back in the day, and that was my first, real investment. And I had a very big learning from that because I gave them all the money upfront. And the second day, he never showed up for work. I’m like, “Huh. That was a bad trade.”

Stephanie:

Never saw that dude again? Oh my gosh.

Stephanie:

All right, what’s up next on your reading list?

Julian:

On my reading list. I guess I’m a creature of habit. I think one of the books I wish I read 20 years ago, it was available, was Ray Dalio’s Principles.

Stephanie:

Yes. So good.

Julian:

I think he gives you this honest look at yourself. It’s very introspective. And tells you how to build teams. I recommend everyone in the world to read that book over and over and over again.

Stephanie:

Yeah. He’s such an interesting person. All his philosophies, and I think yeah, he came and spoke at Google when I was there. And just how he thinks about rating his employees, have you read about this?

Julian:

Oh yeah, of course.

Stephanie:

You get a rating.

Julian:

I know.

Stephanie:

And if you’re this level, you actually just probably shouldn’t speak up until you get to this level, but everyone gets access to everything.

Julian:

I know. The scorecard is like a baseball card. I mean, but it gives you a very different perspective about radical transparency. And also, teaching you how to take constructive criticism in a positive way, knowing that collectively the information in the room will allow you to make better decisions.

Stephanie:

Yeah. Yeah. Love that book. Well, awesome. Well, Julian, I’ve loved having you on the show. If people are trying to get into China and they’re looking for help, where can people find out more about you and SuperOrdinary?

Julian:

Yeah. We have a website, SuperOrdinary.co. Not .com. Thank you, whoever took that website away from us. We’ll find you. Or, reach me on JulianReis, R-E-I-S, @SuperOrdinary.co. Really, thank you so much, Stephanie. You’re wonderful. It’s so nice to speak to you.

Stephanie:

Thanks so much. It’s been awesome.

Episode 122