Fresh from a $75 million funding round, skin care line Rodan + Fields has unveiled a new business model, resulting in the elimination of about 100 roles.
Starting Sept. 1, the company will move away from a multilevel direct-selling model to a new affiliate program, which will be supported by a broader array of marketing and advertising across traditional channels and social media.
Under the new affiliate program, existing R+F consultants who continue to sell R+F products will receive increased commissions on customer sales and product discounts, it said. Commissions that consultants received through product sales by those they have recruited will no longer be a component of R+F’s model.
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In an interview with WWD, Dimitri Haloulos, chief executive officer of R+F, said: “We have one of the highest likelihood to recommend. But as the world has evolved and changed and customers have looked to find information in different sources and different marketing vehicles, we believe we have to evolve.”
When asked if the failure of Beautycounter, whose products were also distributed through independent sellers in a multilevel marketing model, had anything to do with the decision, the answer was a firm no.
“Beautycounter did not impact this at all. This is all about changing consumer trends,” he said. “This allows the bulk of our consultants, over 90 percent, to earn more on every sale, and helps us drive the brand into more consumers’ hands.”
Recently, the MLM model has been struggling with competition from the likes of TikTok Shop, indie brands and Amazon. In May, Moody’s, the credit ratings agency, downgraded R+F, once a billion-dollar business, to C, its weakest rating, on the back of a dwindling number of consultants and the evolving consumer shopping landscape, among other reasons.
As part of the evolution of its business model, R+F has also reorganized its corporate structure, resulting in the elimination of about 100 roles. This is in addition to 76 layoffs that were made at R+F’s Bay Area office, according to a WARN notice filed in the state of California in September 2023.
R+F said it has reached an agreement with its current minority investors that will provide up to $75 million in new funding to strengthen its capital structure and financial position. The transaction is expected to close later this year. It declined to provide further details.
The antiaging skin care line was started by Proactiv founders and practicing dermatologists Dr. Katie Rodan and Dr. Kathy Fields in 2000. It was later acquired by The Estée Lauder Cos., but repurchased by Rodan and Fields in 2007 and relaunched the following year with a direct-sales model, building a network of independent consultants to sell products. In the spring of 2018, TPG made a strategic minority investment in R+F.
The brand ventured into hair care about 18 months ago and recently launched a lip-plumping oil, which has performed well. A new product will be unveiled later this week, according to Haloulos, who did not reveal the category.
