When many people think of direct-selling, they envision Tupperware parties or pink-suited women lugging cases of cosmetics door-to-door. New direct-selling companies, however, are using social media to disrupt the industry. Chloe & Isabel is part of the new wave of startups currently re-defining direct selling, and giving people with an entrepreneurial bent–in particular young women–a way to leverage their social medial contacts into a business.
Launched in 2011 by Chantel Waterbury and based in New York City, Chloe & Isabel stands out with a strong focus on branding, a selling platform with data analytics that integrates social media networks, and a business model that gives the company’s hand-picked merchandisers opportunities to move into management roles.
Waterbury’s first experience with direct selling was during her freshman year of college when she sold Cutco knives door-to-door to pay her tuition. She became one of Cutco’s top sales representatives on the West Coast, selling almost $30,000 worth of knives in three months, and kept the gig for three years.
After graduating, Waterbury spent 14 years working in the fashion industry, developing jewelry brands for retailers including Target, Macy’s, Gap, LVMH, and Kenneth Cole. While on maternity leave, Waterbury began working on a business plan for a direct-selling startup that would target Generation Y college graduates, who were hit with particularly high rates of unemployment during the global economic crisis.
Thinking back on her own direct-selling experience, Waterbury realized that the industry could offer new opportunities for social media-savvy entrepreneurs.
“In the past 20 years, even the past 125 years, there hasn’t been any innovation within the industry. That shocked me,” said Waterbury. “I had experience building brands and I thought this is an opportunity to do something I love and, more important than that, create an opportunity for young women to become their own bosses.”
Chloe & Isabel quickly gained traction among investors. The company has raised $11.75 million so far. That amount includes $3.25 million in a seed round led by First Round Capital, Floodgate Fund, and angel investors including SV Angel Ron Conway, Founder Collective’s Caterina Fake, Felicis Ventures’ Aydin Senkut, The Consigliere’s Mike Duda, Red Swan Ventures’ Andy Dunn, Forerunner Ventures’ Kirsten Green, and Ashton Kutcher, and a $8.5 million Series A round led by General Catalyst Partners.
Chloe & Isabel finds its merchandisers by interviewing potential sellers, and only selects 10 percent of the people who apply. The company gets 70 percent of an item’s selling price, while the seller gets 30 percent cut.
Each seller gets access to a proprietary platform that helps them set up an online storefront, and leverage and monetize their online social capital with real-time data analytics that look at click-throughs from their blogs, Twitter, Facebook, and Pinterest. Chloe & Isabel’s strong emphasis on branding helps merchandisers attract buyers. The company is named after the two kinds of consumers the company wants to reach: “Chloe” is a fashion-forward trendsetter, while “Isabel” represents the brand’s more classic and timeless side.
Another way the company sets itself apart from traditional direct-selling models is by moving away from multi-level marketing.
“There is a pyramid multi-level marketing compensation structure where you refer your friends, but then you no longer have a business because they’re also selling merchandise or getting it at a discount,” says Waterbury. “So that industry is plagued with incredibly high turnover in their sellers and it’s become a massive recruiting game.”
For consumers, the advantages of shopping with a Chloe & Isabel merchandiser include getting exclusive designs (the company does not purchase ‘open-line’ products from suppliers, meaning all jewelry is unique to the brand) and savings off retail prices because there is no middleman. Some sellers make almost all of their sales through their online boutiques, while others host Chloe & Isabel events that they promote through their social networks.
“At the end of the day, I see it as an omni-channel approach: offline, online, social retail,” says Waterbury. “However you want to sell it, it can happen in any channel.”