Selling bras like Tupperware: Ruby Ribbon reshapes direct sales
As a dozen women mingled in the Noe Valley living room and sipped Chablis from mason jars, comments wafted through the air:
“I have a gorgeous one-shoulder dress I want to wear but I’ve gained some weight.”
“I want a bra that will look chic even if it shows.”
“I need to hold everything in but I won’t wear Spanx; I’d have to take it off in the middle of the party.”
The occasion was a house party to sell intimate apparel from Burlingame startup Ruby Ribbon. Like Amway, Avon and Pampered Chef, Ruby Ribbon sells via direct sales, eschewing storefronts.
In the age of Amazon, a company whose business model harks back to the 1950s Tupperware party may seem oddly retro, but Ruby Ribbon says it has a modern take: The sales reps (called stylists) are social media mavens and about a third of sales parties happen via video chat. The in-person parties? Think of them as pop-up stores in private homes or offices.
“Certain products really, really require service,” said Anna Zornosa, founder and CEO. “Amazon will never send someone into a powder room with a woman to make sure she’s comfortable with what she’s wearing and it’s the right size.”
She points to Ruby Ribbon’s $18 million in venture backing as proof that its approach has legs.
“Venture capitalists are interested in very, very big markets that need to be disrupted,” Zornosa said. “Bra replacement and shapewear are a multibillion-dollar industry.”
Patricia Nakache, general partner at Menlo Park’s Trinity Ventures, the largest investor in Ruby Ribbon, said direct sales is ripe for technological change.
“Anna is thinking about how to turbocharge a very successful channel for reaching consumers,” she said. “She’s all about how we can apply data and analytics to optimize and improve direct sales.”
Tech also boosts the sales reps and helps with quick onboarding, such as through video tutorials. “Compared to Avon’s age, women today in direct sales have much more efficient megaphones,” Nakache said. “They can use social channels and let the world know what they’re excited about. Ruby Ribbon helps their stylists harness those tools to amplify their message.”
Despite — or perhaps because of — the rise of e-commerce, “people are craving more personal connections,” she said. “Direct sales provide those.”
Ruby Ribbon has 35 headquarters staff and more than 2,700 reps nationwide, with the heaviest concentration from Wisconsin to Texas. Annual growth over the past five years has ranged from 60 to 100 percent, the company says, though without knowing the base number, that’s hard to assess.
Tech plays a big role in the products, too. Zornosa said the company has multiple patents on its variable compression fabrics, which “smooth, shape and support a woman of any cup size.”
The top seller is a $59 to $79 “support camisole” that replaces an underwire bra; the company says it’s much more comfortable.
While Ruby Ribbon sells other clothing, including swimsuits, pants, tops and dresses, many of them with shaping built in, intimate apparel accounts for the lion’s share of sales.
Several other direct-sales companies, including Essential Bodywear, also target the lingerie market, while e-commerce companies ThirdLove and True both sell bras they pitch as being ultra-comfortable.
“This is such an intimate purchase for anyone that direct sales is a compelling business model for it,” said Moira Nelson, CEO of New York’s Bra La Mode, which consults on lingerie products. A previous client was Peach, which also did direct sales of bras but has shifted to other apparel. “Customers loved the one-on-one consultation aspect of that sales environment,” she said.
Direct sales is exactly what it sounds like: independent reps who market products directly to consumers in exchange for commissions on sales. In 2016, a record 20.5 million Americans, three-quarters of them women, did direct sales of everything from cosmetics to jewelry to health tonics, according to the trade group Direct Selling Association, racking up $35.54 billion in sales. Their median income: $2,500.
At Ruby Ribbon, the median stylist income is $500 a month, implying that most work part-time. Commissions range from 20 to 40 percent.
Like many direct sales companies, Ruby Ribbon is also a multilevel marketing company, meaning its stylists make extra commissions on products sold by other sales people whom they recruit.
Multilevel marketing’s reputation is mixed because sometimes it crosses the line into pyramid schemes, which are illegal. The Federal Trade Commission says the litmus test is: Does a company make money by selling products to end consumers (legitimate) or by enticing sales reps into loading up on pricey inventory and paying for the right to sell products and recruit others (scam)?
Leggings company LuLaRoe, which reached a stunning $2.3 billion in sales last year, is now facing more than a dozen lawsuits by sales reps who claim it’s a pyramid scheme. It required reps to spend thousands of dollars on inventory to get started.
Read the full article on San Francisco Chronicle here.