“Our biggest initiative in 2011 was rebuilding our infrastructure so that we can easily scale to 10x our current scale, which is what we’re aiming for,” explained Dan Obegi, CEO of DermStore.com, who noted that the site’s annual volume is currently about a million orders a year. Sales have roughly doubled each year for the past two years, and Obegi expects that pace of growth to continue for at least the next three years.

 

 

 

DermStore.com got its start 12 years ago, evolving from an online extension of a dermatologist’s office to one of the biggest players in the beauty e-tailing space.

 

During the past two years, it has doubled the amount of brands it carries, as well as its sales and site traffic. Last year, the company began the process of organizing its 22,000 SKU catalog and hundreds of thousands of pages of content.Some of the site’s most popular lines include Dermalogica, SkinCeuticals, Egyptian Magic, Obagi, jane iredale, Sonya Dakar, Phytomer, Glytone and Kinerase – however, the list expands as new luxury brands are added monthly.Some of the most recent additions include Butter London, Essie, Jurlique, Weleda, Japonesque, REN, Farmhouse Fresh, Andis, Serge Normant, Dr. Jart, Zodiac Baby, Lavanila and Ahava.

 

While the sheer number of brands is mind-boggling, DermStore has become more than an online beauty outlet.

 

 

“Content we’ve acquired over the years—including more than 66,000 customer reviews, editorial and informational articles, how-to videos, an ‘ask the esthetician’ feature, and a doctor directory—has shaped us into something that’s so much more than simply an e-tail site, but an interactive and informative place where people can learn about skin care and beauty as they shop,” according to Obegi.

 

Who’s shopping at DermStore? Obegi says that when DermStore began, the focus was on serious, high-end skin care. That focus resulted in a customer who was 35 and older with a very high household income.

 

“While that person remains our core customer, we are actively pursuing brands that attract a younger and more cosmetically focused demographic,” said Obegi. “Through aggressive marketing campaigns, as well as social media efforts, we are targeting and growing the younger demographic as well as our core clientele.”

 

What Works…and What Doesn’t

 

DermStore may carry 600 or so brands, but not every line makes the cut. According to David Olsen, DermStore.com’s VP-business development, a potential brand line must work within the Dermstore image.

 

“Although it may seem like 600 brands is an overwhelming number and everyone is accepted, we pass on new brands seemingly daily,” said Olsen.

 

The company relies on a vigorous new vendor process to test the products, and determine how the brand will perform online with keyword and competitive analyses. Then, the staff has an open discourse with the brand about how they see themselves on DermStore.com.

 

“Of course, there are some brands and products highly coveted by our customers that we actively pursue and take extra steps to create a partnership,” Olsen added.

 

At the same time, Olsen stressed that a great brand story and unique product can only get a brand so far.

 

“It’s all about managing your distribution channels and partnering closely with the sites you decide to work with,” he explained.

 

No Shades of Grey

Although DermStore.com will consider a wide variety of products to carry, it has turned down the opportunity for SKU and sales growth from selling grey market items and discounting.

 

“We believe that in order to continue growing we need to maintain great relationships with the brands that we carry because it’s only a matter of time until brands shut down grey market sellers online and partner with companies like DermStore who will treat their customers well and honor their brand,” explained Obegi.

 

Once product gets into the grey market online, or heavy/repeated discounting cycles, brand equity can be destroyed instantly, according to Olsen.

 

“We consider straight discounting unimaginative and would prefer sampling, GWPs, PWPs, Facebook giveaways, print advertising, press tours and other unique offers that excite both our brands and our customers,” he said.

 

Olsen told Happi.com that DermStore prides itself in having very close relationships with its brands, and that starts with purchasing all products directly from them.

 

“We foster open communication, ensure the brand is represented properly on the site, and strive to help every brand achieve success through internal and external marketing initiatives,” he explained. “I always remind the brands, ‘Your success is our success.’”

 

With sales doubling and its roster of brands growing, DermStore is succeeding at a rate that most traditional, brick-and-mortar retailers can only dream about.