Reinventing Beauty: The Evolution of a Local Tech Startup

DanielleMcdowellIt’s no secret that I love just about anything that combines fashion and technology — and I’m not alone. With Juniper Research estimating that the wearable technology market is on track to be worth at least $19 billion by 2018, wearables can definitively claim buzzword status this year. However, there’s much opportunity to be had in fashion tech outside of the wearables market, and locally, as far as I’m aware, there’s a distinct lack of startups attempting to take advantage, something I hope will change based on the rapid growth and success of Loxa Beauty.

First conceived in 2010 by co-founders Janell Shaffer and Danielle McDowell, Loxa (known then as My Best Friend’s Hair) began as an online marketing tool for hairstylists. Since then, their initial mission has expanded rapidly, first with the 2013 launch of their e-commerce platform Jada Beauty, and now, with their acquisition by BSG (Sally Beauty Holdings) in February, which has strengthened their relationship with suppliers and stylists alike, and successive rebrand into Loxa Beauty.

The initial concept grew out of a need to find a good hairstylist, but a lack of reliable resources. For several years, McDowell had been driving back and forth to Valparaiso, Indiana, to see her longtime stylist because she couldn’t find a decent recommendation online. The resources she did have were frustrating and failed to include important information, like stylist experience levels, price points, or specialties. So, McDowell and Shaffer founded My Best Friend’s Hair, as a sort of Angie’s List for hairstylists and clients.

“As we began to grow, one of the things we identified was that we needed to make the connection between the stylist and the consumer,” McDowell said. “Having this directory tool was one thing, but what salons really cared about was getting clients in their chair.” Their solution was to start a blog, with a goal of being the central location for anything and everything hair-related. Despite having virtually no marketing budget, it started seeing incredible organic traffic, with hundreds of thousands of visitors checking out their hair care tips. “We started out writing about trends and how-tos, like how to choose the right color for your skin tone, how to identify a good hair cut…and after that, the next logical step was product,” she said.

The introduction of product reviews and discussions led to the next phase of growth: e-commerce. “A woman from Iowa was dead set on getting this particular product featured on the blog, but the manufacturer was new, and wasn’t heavily distributed. But she was in Iowa, so there wasn’t any distribution near her, and so we debated about how to help her get it,” McDowell said. “Could we send it directly? Would the manufacturer just ship it to her? And then the light bulb kinda came on: what if we became the middle man?”

The idea of introducing an e-commerce component led to a new series of challenges. At their core, hairstylists are artists, and retail is an add-on, even though a significant source of a stylist’s revenue (about 20 percent) comes from product sales. “This industry is slow to adopt technology, which hurts both the stylist and the connected, online consumer,” McDowell said. Stylists didn’t have a way to compete online because most manufacturers have very strict policies for product sales, a problem in the age of mobile and digital shopping. “Janelle and I believed that we could deliver better marketing tools and better technology solutions to benefit all three: the manufacturer, the stylist, and the consumer. So, we came up with up with this idea of being a connection agent for all three of these key audiences. We can drive consumer awareness for manufacturers and brands, and we can deliver a commission to salons and stylists.” Enter Loxa’s second incarnation, Jada Beauty, which boasted a brand new, built-from-scratch e-commerce site, and delivered a commission to their existing database of salons and stylists after every purchase. With the technology piece in place, the next step was to develop strong manufacturer relationships.

“Looking back, unbeknownst to us, we didn’t realize how deep seeded the existing manufacturer-distributor relationships were,” McDowell said. “As entrepreneurs, we saw a business opportunity, but for manufacturers, most of their distribution agreements go back years and years. So it was definitely a challenge making inroads.”

Because Jada Beauty was an e-commerce site, but couldn’t get an in with a distributor, they were commonly (and falsely) accused of promoting diversion. “It’s very controversial, what we do,” McDowell said. “We used to fulfill orders by literally, physically going to Ulta or a salon where the product was available and buy it because with Jada Beauty, we really wanted to develop proof of concept, to show that we could build a technology platform that sold professional beauty products and deliver a commission to the stylist. So we took a loss, after buying product at the suggested retail price from authorized vendors, in favor of giving a cut to a salon or stylist.”

But their distribution issues were resolved when, in April of 2013, BSG, the largest distributor of professional salon products in the US, approached them. “They basically said that what we were doing with Jada Beauty was exactly what they had been thinking and talking about doing. It’s a perfect example that, sometimes it just takes entrepreneurs and people who are gutsy to say ‘I’m going to roll this out.’” And it’s even more gutsy when taking on an industry that is slow to adapt to change.

“The acquisition of Jada Beauty and the launch of the Loxa Beauty e-commerce platform is probably the largest structural and strategic change BSG has ever made,” McDowell said. “The timing was right, the platform was right, and then they had these key, longstanding relationships with manufacturers. We built the tech and marketing arm, and BSG became the fulfillment.”

With their nationwide network of stylists and salons, BSG helps to expand Loxa’s audience of stylists. “We’re using a combination of social media, the blog, and key influencers in the industry to help tell the story about how we can benefit salons and stylists. Key for us is letting them know that Loxa is an extension, not a replacement, of in-salon sales.” (It’s important to note that any stylist with a cosmetology license can sign up and benefit from Loxa’s commission model.)

Today, Loxa is the sole authorized online retailer for all BSG brands, including Joico, American Crew, CHI, and Paul Mitchell, and they continue to deliver a commission to a local salon or stylist on every sale. Their main goal is to capture the millions of dollars in online sales that are going outside the industry through places like Amazon, Drugstore.com, and Walgreens. “100 percent of our marketing budget is dedicated to bringing in that consumer who already has an intent to purchase online. We want to bring it back into the industry, and we want to deliver a commission to local salons and stylists,” McDowell said.

The various stages of Loxa’s evolution still play a vital role in the company’s operations. Their website maintains a salon and stylist finder called Loxa Local, which is reminiscent of the old My Best Friend’s Hair database, and the blog continues to feature trends and product reviews, although now with a new perspective: that of the manufacturer. And although their e-commerce offerings have expended vastly, with over 3,500 products available for purchase, the foundation is strong.

True to form, however, expect Loxa to continue to evolve (although you shouldn’t expect a fourth rebrand) as they focus on strategic technological investments. “Mobile is really high on our priority list — it’s where people are going and shopping, and that’s where we need to be relevant. We’re also working on some tools that will allow us to create highly specialized target offers just for you, based on hair type, concerns, styling methods, favored tools, etc.,” McDowell said. Hairscription is one example of this, a soon-to-be-launched tool for stylists that sends their recommended products straight to the client’s inbox. Loxa then can use the recommendations to market to the customer on the stylist’s behalf, expanding the client-stylist relationship from interacting every few months, to year-round communications and sales. They’re also building out a loyalty program and have been discussing some sort of sampling or box program, although no direction’s been decided for sure.

It’s all part of the big picture. “Everything we’re working on now, it’s about developing that long-term lifetime value for the customer, the stylist, and the manufacturer. Like, ‘Here’s a product that’d be great for you because you’re a brunette, and we know you color your hair.’ Tell us who your stylist is so that they can benefit anytime you make a purchase. We want to bring the customer to the store, but also engage and really build a relationship with them,” McDowell said. “We want to be able to help you identify a problem, find a solution, and then fulfill the order for you. And then we want you to come back and leave a review.” Sold.

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