No retailer markups: why it makes sense.
by Tandem Skincare on Oct 31, 2019
We use the best-quality, clinically proven organic ingredients and actives – but we’ll never sell a product for more than £25. How do we manage it?
At Tandem, we have two missions.
Mission 1: to create clean, high-performance skincare that will simplify your routine.
Mission 2: to make these products accessible to as many people as possible by offering a more affordable price point.
Exactly how do we marry up these missions, without compromising somewhere along the line?
A little more about Mission 1 – to create skincare products that will streamline your routine. The ONLY way to do this is to use the absolute best-quality ingredients in high percentages based on clinical data.
Our starting point, when we formulated our products, was to ignore cost of goods. If ever there was the chance to bulk a formula out with a cheaper filler we said no - the percentage of the active ingredients we use is based on the maximum recommended levels in clinical studies, not the ability to make marketing claims just by adding a tiny amount.
We also knew that we wanted to obtain organic certification. Certification is not mandatory – brands can call themselves organic by only including a small amount of one organic ingredient in their formula. We firmly believe that organic certification is the only way that consumers can have certainty over a brand’s organic credentials. But it is also expensive and time-consuming.
A third non-negotiable was that our packaging would have as minimal impact as possible on our planet. We package in glass and sugarcane bioplastic, rather than regular, cheaper plastic.
What all the above means is that the cost of goods for each finished product is high.
So, how could we marry this up with Mission 2 – to make our formulas accessible to more people by offering a more affordable price point?
There was only one solution. It was to sell them direct to you – in other words, cut out the middle-man, third party retailers.
Retailers in our industry take a minimum of 50% of the proceeds of every sale.
Say a retailer sold our products in store for £20 each. They would take at least £10 per sale.
With this model, something has to give: either the quality of the product or the price you pay. If we don’t sell through retailers we can charge you less than £20 for the same product (because we won't be having to give away £10 to a retailer).
By choosing not to sell through retailers, we won’t get the immediate benefits of their huge marketing databases, and the time it takes to acquire new customers will be much slower. So please help us on our journey – if you enjoy our products, tell your friends!