Business Growth

I had the pleasure of chatting with Kate Morris, the founder of adorebeauty.com.au Australia’s First Online Beauty Store. We talk about the importance of a customer centric approach for business growth.

With a strong focus on business growth Adorebeauty.com.au now has a turnover of more than $10 million dollars annually.

If you'd prefer to listen to the podcast interview, click here

Kate launched the business from her garage in 1999 at the age of 21 while still an undergraduate student. In 2015, after fifteen years of bootstrapping, Adorebeauty.com.au announced an investment by retail giant Woolworths Limited. Kate was awarded the Business Innovation Award for Victoria at the Telstra Business Women’s Awards in 2014 and was inducted into the Australian Businesswoman’s Network Hall of Fame in 2015. Congratulations Kate in building a highly successful business and your amazing achievements to date.

KM: Thanks, Caroline.

CK: Now tell me, how did it all begin?

KM: Well, it all started in my garage way back in 1999. I guess it started because I always loved beauty products—that was just my thing. I always loved the way that even if you’ve been having a rubbish day, you could put on some nail polish or slick on some lipstick and feel a little bit more confident or more fabulous. But I grew up in Launceston in Tasmania, and if anyone’s ever been there, it’s a lovely town, but it’s shopping options are a little bit sit on the cramped. So I had to get used to doing without for a long time, and it’s just—of course in the days before online shopping ever existed. And then I moved to Melbourne for uni and started a part-time job working at the clearance counter in department stores… and that was when I discovered that a lot of women hated the experience of having to go to a department store to buy products. They found it very intimidating. They found it very disempowering. When I explained to people what I did, they’d pull a bit of a face and say “Oh, yuck. You know I hate having to go in there. There are these scary women that will pounce on you spray you with stuff, make you buy things you don’t need.” And that’s really sad, you know, these products are supposed to make you feel confident and fantastic. But the shopping experience is making people feel the opposite. I thought, “Well that’s not right.” So when online shopping started to come under my radar, I thought, “You know what, that would be perfect! Someone should start an online beauty store,” and I waited for someone else to do it… then I thought that maybe that someone should be me.

So that was when I decided to get started as a very clueless 21-year-old student with no money, or connections… or clues about anything, really.

CK: You know what, the key to that is that you saw a problem, and you presented a solution to that problem.

KM: Very much. And I think that’s where a lot of good business ideas come from. Certainly, if it’s a problem you feel as passionate about as I did, it’s something that you can get excited about. And even if there are challenges at the start, you know, your passion and excitement for solving that problem can get you through it.

CK: Now, in 2015, you sold a 25% stake to Woolworths Limited Australia. Firstly, congratulations on that investment, particularly from a critical player like Woolworths.

KM: Yes, yes, as far as first capital raising go, it was a relatively big one. It probably wasn’t what I was expecting either when we set out to find a strategic partner to take Adorebeauty to the next level. If you had said Woolworths, I would have said you’re barking mad. Yeah, in the end, we got introduced to some good people there, then it made a lot of sense.

CK: What did the investment mean to you and your business?

KM: Well, that was the first cash injection of any significance we had ever had. So, the initial seed funding was a twelve thousand dollar loan from my boyfriend’s dad back in 1999. That was it. That was all we ever had. The business had to go out of cash flow during all that time which on one level it’s great because it forces you to create a business model that works. You know, you can’t afford to burn cash on heading down the wrong path. You have to get accustomed to quite quickly, and kind of find that product market quite quickly because otherwise, you just can’t survive if you don’t have any cash to, you know, get you through. But it does become very limiting after a while, and I think the business got to a point where—how long can it stay a small business. But in terms of being able to make the investment needed to get to the next stage of growth, I thought, “I don’t believe that we're going to be able to make it quick enough.” Just through cash flow because sometimes… there were big investments that were needed to be made regarding marketing, regarding software, regarding bringing on new hires kind of before we could afford them, which you know, there are certain stages in a business where you have to do that. And then I thought, “Well, it can either stay a small business, maybe that’s okay. But I don’t think that interests me. Or we can try and find a partner, that can come on board and bring not just cash, but, some smarts, and maybe some other resources as well that can help us to grow.

CK: You know, as you said before… Woolworths… wouldn’t have traditionally aligned with an online beauty, but certainly, they are a key player in a market and they do have those resources as you say actually to contribute. Don’t they?

KM: Well they’re the largest online retailer in Australia. So from that perspective, I guess it was leveraging the assets that they had to help a business like ours grow. Even though it might not have on the surface seemed like a perfect match, it did make a lot of sense.

CK: Certainly their interest in your business is a credit to what you’ve achieved as well. So, congratulations on that. You know, you should give yourself a pat on the back.

KM: Thanks.

CK: Sometimes we forget to do that, don’t we?

KM: We do, it’s always on to the next thing. We finally announced the investment and everyone’s saying, “Oh that’s great! I hope you’re opening the champagne,” and I’m just, “You’ve got to be kidding me, I’ve got work to do now.”

CK: You won the Business Innovation Award for Victoria at the Telstra Business Women’s Awards in 2014 for findation, tell us about the findation?

KM: Findation was another example I guess of seeing a problem and trying to solve it, and the problem we were having was a retailer with foundations and colour cosmetics, and more generally I guess it was harder to sell them online because you didn’t necessarily know what colour they would be. It was okay if it was repurchasing, and it was a product that they had bought before, but if it was a new product that they had never bought before, all they had to choose from really was just a bunch of little squares of beige. It’s next to impossible for people to choose the right colour. You know, because if you choose the wrong foundation colour, it’s not a good thing.

CK: I’ve experienced that before.

KM: Exactly. And so the problem that we had as a retailer was that people would phone us every day and say, “I want to buy this new Clinique foundation, but I’ve been using Lancome, and I don’t know what colour I am in Clinique. We’d be running around the office, trying to sort of rummage up testers for things, trying to match up the colours… and we said to ourselves, “There should be a database for foundation colours for cross brands. That would be great,” and there wasn’t one. So in the end, we just sort of thought, “to hell with this, we’re going to build it.” And originally the plan had been to use, those, paint shade matches, so we thought, “Oh, we’ll try to do that.” But we soon discovered that it wasn’t going to work. For starters, because to get matches across to every foundation shade available in the world. There’s over twenty-five thousand foundation shades once you factor in all the different brands. It’s a ridiculous amount, so we thought, “Oh, how will we ever take on the task of taking on so many?”

CK: It seems quite overwhelming.

KM: Exactly! And the other thing that we encountered that when it comes to foundation shades, it totally depends on the coverage and the finish of the product as to whether or not the people feel like it’s a match for them. And then we thought that maybe it’s not as important whether the shades are exactly the same. What’s important is that people feel like it’s a match. The solution that we came up with after… trawling through a bunch of makeup communities and forums is that the way people were solving this problem for themselves was to say something like, “You know, I’m a fair beige in Clinique, has anybody tried this new Bobby brand foundation. You know what shade I would be?” And people would seek out other people who had used similar colours to them to try and work out what a match would be. Then I thought, “Oh, why don’t we create an algorithm that does that on foundation,” and that was how we set it up. So it uses crowd-sourced data by people entering the foundation shades that match them. Let’s say you and I wear the same shade in Clinique, but I use Bobby Brown and you haven’t. Then you probably know that you can use the same shade as me cause we match in another brand. That’s how it works. So it’s had more than 2.8 million people usage at foundation.com. It’s had more than 1.3 million data peers in there of matching foundation shades, and the most popular countries that we receive traffic from are the US, Brazil, France, and South Korea.

CK: Wow! All international. CK: Well, congratulations. Again I think you’ve been very proactive and looking at “what are the problems faced by the industry and how do we solve them” to make the consumer experience, the customer experience a better one.

KM: Yeah, and I think it’s a real change of attitude for the beauty industry, which I think has made us seem a little bit disruptive I guess to the traditional plans… because the beauty industry for a long time liked to treat women like students, or like patients. We take the approach that the consumer is the empowered one and that they should be the one driving this conversation and making their decisions. And what tools can we provide them that makes them be in charge of their beauty experience? So that philosophy of empowerment is really in everything that we do.

CK: And I think that’s quite evident in everything that you do, and it’s so important. If you’re not disrupting, you’re not moving forward. I mean, not every business can disrupt an industry, but industries have to evolve… and they do evolve.

KM: Well, that’s the thing. You can either be part of the evolution, or you can be steamrolled by it. So we like to be at the forefront.

CK: Well, it means that you’ve got a sustainable business because you’re remaining relevant as people change, as industries change, and as consumer buying patterns change—and as you say, empowering people. That’s what they’re looking for, to be empowered.

KM: That’s certainly been what we’ve encountered, and I think that’s the thing that’s kept me going throughout the early years where it was quite difficult was getting great feedback from the customers going, “You know, this is fantastic. You’ve improved my life.” I mean, it’s not a cure for cancer or rocket science, but when people say, “Hey, you know what? I received a parcel from you, and I was having a terrible week. But I got this parcel from you, and I love the products, and I feel fantastic today.” That’s all we’re up to achieve, to give people that lift and that feeling of confidence, and it’s no reason the beauty industry can’t be a force for positivity rather than make women feel bad about themselves.

CK: Absolutely. Now, you recently expanded to China. Tell us about that?

KM: Yes, so that’s a very new thing. That’s our newest baby because we’re not happy unless we’re biting off more than we can chew.

CK: I love that about you.

KM: It’s a blessing and a curse. So, China… one of the things that have blocked beauty brands from entering China is their requirement for animal testing. So that meant that China consumers are very limited to the sort of products that they can access. They can’t necessarily get the best of what’s available… and maybe about eighteen months ago, the Chinese government opened up regulations on cross-border e-commerce, which meant that in the same way that we take for granted here… that Chinese consumers can now order directly from overseas suppliers. We thought that was a fantastic opportunity for us to provide our collection of new products and kind of service to Chinese consumers, and to open that up for them. So we’ve opened up on Timol Global. It’s this small online store. It’s got about fifty products under it at the moment, and it’s very much in “test-and-learn” experiment phase—and it’s been at it for about a month… not very long. So, yeah, it’s been very early days, and we’re still learning lots about the Chinese market and these consumers, and they’re not quite as… what’s the word? They’re not quite as advanced in terms of the number of products that they use as Australian consumers, so it’s a lot more educational as to what the products are for. It’s a bit of an adventure, so we’re having a good time.

CK: Great! Now, what has been the biggest lesson you’ve learned in business?

KM: My absolute, number one biggest lesson is that when you stop thinking about the customer and how you can add value to the customer, that’s when bad decisions happen. And I’ve seen it happen a lot with other businesses, I’ve seen it happen a couple of times in my business… where you make a decision ‘cause it’s based on “Hey, what resources do we have and how can we deploy them more?” It’s a thing that sorts of seem like a good idea at the time—but if it doesn’t come from a place of “how can I continue to reinforce my purpose in terms of how I’m delivering value to the customer if it doesn’t originate from that place… it almost never works. And that’s something that I’ve noticed in many, many areas of business; you see it all the time. You see massive companies try something new and ultimately fail because they haven’t done it in a way that puts the customer first. But yeah, I think that’s my biggest one.

CK: And I would agree with you, one hundred percent. I think that businesses can tend to focus internally as opposed to externally, which is on the customer. They can get quite caught up in looking at “Well, what do we think the customer wants,” as opposed to asking the customer and doing research. They can neglect the customer, and I’ve witnessed it. They can lose relevance as a result… because they make assumptions as opposed to just asking the question.

KM: And what’s even worse is when you see businesses develop their strategy, and drive their strategy based on what competitors are doing. That’s just the worst idea ever. I mean, yes. Obviously, keep an eye on what everyone else is doing, but in the end, what your competitor is doing doesn’t even matter. How happy you make your customers, that’s what matters. In the end, mind your own horizon, and forget what your competitors are doing because it might not be right, and put the customer first. Don’t worry about anybody else.

CK: Now, you’re a mum to a beautiful five-year-old little girl, and you’re about to throw a new baby into the mix.

KM: Yes.

CK: You’re a brave woman. How do you balance family life, with a highly successful, and I’m sure, very demanding business?

KM: I think the only way that that happens is for my children’s dad to be as involved as he is. And I think the real challenge for us is to be thinking, about… not so much work life balance, but of work-life integration, and for that to be not just a thing for women, but also for dads as well. Because that’s the only way it works, it’s not possible for anybody to be a full-time parent and also give what they need to give to their career… and you shouldn’t have to. All these successful women I know with families can manage that because they have partners who are actively involved in the parenting because they are smart about outsourcing the things that they can add particular value to. For instance, you know, pay the money and get a cleaner.

CK: Yes, exactly. Cleaning the house is a prime example.

KM: Cleaning the house is not a good use of your time when you think, okay, well my time can either be spent adding value to my business or enjoying my children… and you know, not mopping the floor. Those three things, I can tell you which one’s right down the bottom. So, you see, you can have it all, but you can’t do it all.

And so, it’s just kind of a matter of relentlessly prioritising your time, and recognise that you are a resource to your business and a resource to your family, and how best you are going to spend that resource in the same way as you think of any business decision. It’s the same kind of thing. I don’t want to be mopping and, I don’t want to be doing laundry… so let’s see if we can find a way to minimise that. But you need to make sure that you have a partner that’s prepared to support your career. And that means doing half the parenting because it’s not just a woman’s job.

CK: I agree with you, and I am fortunate enough to have a husband similar to yours who is a co-parent. It’s a balance. But without him, I wouldn’t be able to do—or fulfil my career, and do what I love to do outside of the home. It’s so important to success.

Now, what advice do you have for anyone struggling in business?

KM: Well, business is hard. That’s the conclusion that I’ve come to. I know that I used to think that everybody that I read about in the newspapers, or in the media, these people who are held up as success stories. I was thinking how my life does not look like that. My business does not look like that; I must be doing something wrong. One of the things I’ve learned is that everybody’s got their stresses and their problems. Business is hard, and I think to a certain degree, you have to expect that. And if you don’t want to be doing something that’s hard, then you know, maybe get a job. But if you do want to do it, and you do want to stick it out then I think you do have to find something, a problem that you’re passionate about solving. Because that’s what will keep you going through the times when you think, “Oh, it’s too hard. I’ve got to chuck it in,” but you need to have that kind of thing burning in you that says, “I can get up on my own and do this again.” You know, that’s having a business that you’re passionate about really makes the world different. How anybody would do it if they were just doing it for the money, it’s the wrong end of the stick, and I think those people will find it very difficult. What other advice do I have… keep thinking about your customer and be prepared to challenge your assumptions about what it is they want. How you’re going to give it to them. That’s something that you have to do constantly. An original idea that you had in your head might not be the right one, and so find quick and cheap ways to test out your hypothesis to see whether you’re right. The third thing I think would be, if you’re sure that there are customers with a problem that you can solve, then don’t take no for an answer. You’ve got to find a way through, and if you know there are customers with this problem, and you know your solution will solve it, you’ve got to find a way.

CK: Yeah, persevere.

KM: Yes. Be creative, think about different ways to approach it. You certainly can’t accept no.

CK: I agree with you. And sometimes, people get discouraged by the “no’s,” but that’s life. With the amount of “no’s” you get, you’re going to get a yes eventually. So just persevere through.

KM: That’s right.

CK: And finally, what does the future look like for you?

KM: Oh gosh. Look, I’m… to be honest; I’m focused on the immediate future for the moment. I’m about thirty-seven weeks pregnant, so there’s going to be a newborn imminently. So I’m just looking forward to that… and continue the work-life integration process I guess. When you have your own business, there’s not a lot of maternity leave. I’ll have to figure that out. Moving forward, I’m still really passionate about trying to change that shopping experience for women, not just in Australia. I’ve already talked about the fact that we’re looking at China, and we’ll look at other markets as well. But I consider it, so long as anybody still has that cosmetic graveyard under the bathroom sink of thinks they felt obligated to buy but are not happy with, then I feel like I’ve still got work to do. That’s what I’m going to keep doing, trying to find new ways to help everybody get rid of that graveyard under the sink, and help everybody feel… I guess empowered and confident about their beauty purchases as I do.

CK: I love your passion for what you do, and it’s certainly led you down the right path… and it’s a tribute to your success. When you were saying about struggling in business. It is hard, but if you’re passionate about what you do, you just push through because there’s a bigger game at play.

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