Fresh off a $75 million funding round, skincare line Rodan and Fields has announced a new business model that will result in the elimination of around 100 positions.
Starting September 1, the company will be transitioning from a multi-level direct sales model to a new affiliate program that will be supported by more extensive marketing and advertising through 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, according to the company. Commissions received through product sales by customers recruited by consultants will no longer be included in R+F’s model.
“We are one of the companies most likely to be recommended, but as the world evolves and changes, and customers look for information in different sources and different marketing outlets, we believe we need to evolve as well,” R+F CEO Dimitri Haroulos said in an interview with WWD.
Asked whether the failure of Beautycounter, which also distributed products through independent sellers in a multi-level marketing model, had anything to do with the decision, the answer was a firm no.
“Beautycounter has no influence on this at all. This is all about changing consumer trends,” he said. “This allows the majority of our consultants, over 90 percent, to earn more per sale and helps get the brand into the hands of more consumers.”
Recently, the MLM model has struggled with competition from TikTok shops, indie brands, Amazon, etc. In May, credit rating agency Moody’s downgraded R+F, once a $1 billion business, to its lowest rating of C, citing a decline in the number of consultants and a change in consumers’ shopping habits.
As part of its evolving business model, R+F also restructured its corporate structure, eliminating approximately 100 positions. This is in addition to 76 layoffs that took place at R+F’s Bay Area offices, according to a WARN notice filed with the state of California in September 2023.
R+F said it has reached an agreement with current minority shareholders to provide up to $75 million in new financing to strengthen its capital structure and financial position. The transaction is expected to close later this year. The company did not provide further details.
The anti-aging skincare line was launched in 2000 by Proactiv founders and practicing dermatologists Dr. Katie Rodan and Dr. Kathy Fields. It was subsequently acquired by Estée Lauder, but was 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 the products. In spring 2018, TPG made a strategic minority investment in R+F.
The brand expanded into hair care about 18 months ago and recently launched a lip plumping oil that has been well received. Haroulos said the new products will be unveiled later this week, but declined to say what category they will be in.
