The creators of Proactiv have a skincare company that uses an army of consultants to sell products - and it's suddenly the most popular in America
- Rodan + Fields was the No. 1 skincare brand in North America in 2017 in terms of total sales, according to Euromonitor.
- It has a unique business structure. Products are either sold directly online or via its nearly 300,000-person team of consultants.
- Rodan + Fields' skincare starter kits start at $170 and are aimed at reducing the appearance of lines, dark spots, and acne in adult women.
Rodan + Fields is currently the top-selling skincare brand in North America in terms of total sales, according to Euromonitor. But unless you pay close attention to your more entrepreneurial-minded friends on Facebook, it's likely you've never even heard of it.
That's partly because you won't find this brand in stores. Its products are sold by a team of consultants who market lotions and potions that claim to combat lines, dark spots, and acne in older consumers. The army of consultants typically sell products by word of mouth, at special events, or on social media.
The consultants can either choose to take a commission on each sale or opt for their sales to count towards discounted prices on their own future purchases of these products. There's a roughly 50-50 split between these two types of consultants. According to company data, in 2016 56% of consultants were paid commission on at least one month of sales, while the other 44% received discounted prices. The consultants are not given commission for recruiting new consultants.
The biggest benefit to the sellers is that they do not need to store inventory, as products are shipped directly from the company to the consumer. A spokesperson for the brand told Business Insider that consultants are actually discouraged from holding inventory.
The system seems to be working - Rodan + Fields' $1.3 billion of sales in 2017 made it the top skincare brand in North America in terms of dollar sales in the skincare category, eclipsing longtime leaders Neutrogena and Olay, according to Euromonitor. It now has nearly 300,000 consultants in the US.
The company was founded by dermatologists Dr. Katie Rodan and Dr. Kathy Fields, who were the brains behind the acne treatment system Proactiv, which made its way into millions of households in the US and became famous via infomercials after initially launching in 1995.
The duo licensed Proactiv to Guthy-Renker, a company that sells products directly to consumers via infomercials, and these products exploded in popularity in the early 2000s. This was also thanks to several endorsements from celebrities such as Kelly Clarkson, Britney Spears, and Justin Bieber.
Fields and Rodan finally sold off their rights to the brand for $50 billion in 2016, after they had shifted focus to their latest venture, Rodan + Fields, which launched in 2002. The pair is now ranked in joint 27th place on Forbes' list of the richest self-made women in America.
Rodan + Fields is the grown-up version of Proactiv
Rodan + Fields can be seen as a more upscale version of Proactiv. Its skincare is generally aimed at older women and split into four categories: redefine, reverse, unblemish, and soothe. A starter kit, which could include a cleanser, toner, and a day and night moisturizer, starts at $170. The most expensive kit, "Age Assault," costs $363.
The brand was brought by Estée Lauder a year after it launched, at which point it was being sold in department stores around the US. This method of selling wasn't successful, and realizing that the brand was a low priority in marketing dollars for Estée Lauder, the pair decided to buy back the company in 2007 and relaunch it with a new spin: using consultants to sell its products.
"We knew we had products that worked and changed lives," Fields told Forbes in 2016. "We were compelled to continue."
The change in tactic came at the perfect time for the company as the recession hit and many were looking for work.
"People were losing their jobs like crazy," Fields told Allure in 2015.
Moreover, the company was growing at the same time as smartphones, Facebook, and selfies, which made the ideal combination for selling skincare products.
Today, consultants predominantly use social media to market themselves, posting before-and-after photos as proof of how effective these products are in reversing the signs of aging and curing adult acne. There are hundreds of groups on Facebook geared towards this.
A select few consultants can end up earning a six-figure salary, according to Allure, but this is generally limited to those who are high-profile figures or celebrities. There's no guarantee of making money, and this is clearly stated on the company's website. In 2016, 60% of paid consultants made on average $334 a year, according to the company.
Bumps in the road
On Tuesday, Racked reported that the company is now facing a potential class-action lawsuit, filed on behalf of four plaintiffs who claim that Rodan + Fields' Lash Boost, an $150 eyelash growth serum, had given them a series of symptoms including burning and swelling.
According to Racked, this is due to a controversial ingredient called isopropyl cloprostenate, which has not been approved by the FDA as a drug. The ingredient is banned in Canada, which means Rodan + Fields is unable to stock the product there.
In a statement to Business Insider, a spokesperson for Rodan + Fields said:
"We stand behind the safety and efficacy of Lash Boost. Many of the legal allegations involve comparisons to unrelated products, including prescription products that have different ingredients and formulations. We are going to let the specifics of our legal defense play out in court.
Lash Boost is intended for use as a cosmetic and as such, has been consistently advertised as improving the appearance of eyelashes. As with any cosmetic, Lash Boost may cause irritation in some users, especially if it is misused. Rodan + Fields provides clear directions to users, including those who experience irritations."