In 1989, almost 27 years ago, Cindy Melk founded a company called H2O+ Beauty, which was created by the frustration she felt from the lack of skin care items available. The products she made were water and marine based.
Her first store opened in Chicago that same year offering approximately 100 products. Over the next several years 78 stores appeared, and the company grew to $27 million in annual sales. It seemed Cindy was not only ahead of her time in offering up natural ingredients at a fair price, but had hit upon beauty gold.
Fast-forward two decades and H2O+ was generating approximately $100 million in sales with almost 100 stores in the US. But even beauty stars can age.
Over the past seven years the company has changed hands several times. Most recently, Pola Orbis Holdings, the massive Japanese cosmetic company that owns Orbis, Pola and Jurlique, bought H2O+ in 2011. And though sales increased in Asia, revenue diminished to approximately $60 million globally.
It was decided an entire overhaul was needed.
Enter Joy Chen, who became the company’s new CEO last year.
“The brand was really successful when it was created and Cindy had a lot of courage for starting her own line when other skin care products didn’t speak to her. But over the course of the past 27 years there hasn’t been a lot of innovation within the brand,” Joy said. “Then the company went through three or four cycles of ownership. When Pola Orbis bought it, they sat with it, brought in a new CEO, but were not consistent with the direction they wanted to take the brand.”
Prior to her new position, Joy was CEO of Yes To, another fast-growing maker of organic skin care products. (At H2O+ she replaced former CEO, Rick Ruffolo, who had worked at Crabtree & Evelyn and Bath & Body Works.)
The first thing Joy did was transform the company’s business model. “They were manufacturing-focused, which needed to be changed to being innovative sales and marketing focused to grow exponentially,” she said. “I closed their manufacturing plant in Chicago and moved the company’s headquarters to San Francisco.”
Rather than make their own products, they will outsource to third-party companies in the US. Joy also paired down their highly extensive product list to a mere 47 items. Those that stayed were reformulated with new technologies and ingredients while eliminating parabens, mineral oil and formaldehyde. New items were added to the line-up, as well, and clinicals on key products were done for the first time.
“We kept our strongest and most popular products, which was the Oasis collection, while reformatting others,” she said. “Our Infinity Line, once called Sea Results, is now our anti-aging line where we’ve added a serum, reformulated the night cream and revamped the eye cream.”
H2O+ also offers a brightening line, Waterbright, an Elements line, and a body care collection. Prices are still kept modest, with most items ranging from $28 to $58.
For Joy, knowing what to keep and what to change was simple.
“Part of it is experience. Part is seeing what’s out there in the market. And part is testing it out with consumers,” she said. “So it’s a combination of external and internal.”
Loyal customers have stayed, and the company is hoping to attract a new core of followers.
“Our customer, who is in her 40s, bought the products in her 20s and stayed true to the brand and has continued to buy it,” she stated. “We are now going after the same woman in her 20s, who we call ‘the cool hunter.’ She’s 25 to 35, loves skin care, is always looking for the next thing and new technology, and loves to share what she finds with friends digitally. She’s also very social and loves to entertain.”
This month the company will launch a new website. Advertising will mostly focus on digital and social media.
“The company plans to do banner ads, SEO searches.We’ll reach out to influencers and bloggers to get our name out there, and do email marketing,” Joy added.
They’ve also created what they call a ‘taste maker’ plan, which will connect the company to other like-minded brands – think Urban Outfitters.
Though H2O+ still has stand-alone stores in Asia, China and Hong Kong, but is no longer interested in opening their own shops in the US. Come July they’ll launch in Ulta and are currently looking at premium beauty e-commerce sites to partner with.