Ep 636: Inside Kiyoko Beauty's Organic Content Machine: 15 Videos a Day, Sub-$1 CPMs, 8 Figures in Sales

0:00Gillian Liu:Just a quick one before we get back into it. I want to know how deep are you planning to discount this Q4? Most brands are guessing. So we're building a benchmark report called Beyond the Discount. If you run a D2C brand, we want your data. The survey takes five minutes and your answers stay confidential. Every brand operator who completes it is entered to win a$1 ,000 gift card. We're expecting a few hundred entries. So these are probably the best odds at a grand you'll ever see. The link to the report is in the show notes. It closes August 23rd and we award the prize August 24th. All right, back to the show.

0:36If we didn't have organic, I don't think the business could be at the scale that it is now. The adage is like it takes seven touches to get a consumer to buy something. Six out of seven touches for us are probably organic. You get the followers, you get people to continuously trust you as a voice of authority in the community. And then when you get that conversion, you're just converting that last touch point.

0:56Gillian Liu:It's not vibes at all. It's actually like so engineered. It's hard to wrap your head around sometimes because you think some people just have this amazing talent to go on social media and like talk in their car and whatever. But the real pros who do it consistently, it's all structured, like hyperstructured.

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1:57Gillian Liu:Back in under two business days with no sales pitch. If you're clean, they'll tell it to you straight. They say one supplement brand they worked with was down$162 ,000 a month to foreign infringers and they helped claw back$131 ,000 of it. Grab your free brand audit report at esqgo.com slash free dash audit. That's esqgo.com slash free dash audit. The links in the show notes. Jillian, welcome to the D2C podcast. It was great meeting you in Toronto last year at Ecom North and hearing a bit more about your story. What really stood out to me was how you built Kyoko Beauty to eight figures. I know you've moved beyond this now, but while you were still working full time, what were some of the biggest constraints when you were trying to do that?

2:46I mean, obviously time. So my business is, we just hit eight figures last year. It's five years old. So we've grown very quickly. But there's three co-founders, including me, and we all kept our nine to fives throughout the entire process. and every time I tell that story, people are always like, what? Like, why? You know, et cetera, et cetera. The oohs and ahs. It's not that interesting when I actually explain it. Like, once I explain it, everyone's always like, yeah, that makes a lot of sense. But one is for cash flow, right? Like, we're bootstrapped. We've never raised. We don't take on debt.

3:21And so one of the ways to grow very quickly is to reinvest 100 % of profits back in the business and also forces you to be profitable since day one. so the longer we could just keep doing our own thing and not having to to take money the faster the company could grow and i think that that's a big reason why it got to the size it did in the years that it did and then the other is just like like risk you know when you're starting off a new thing like none of us are like super like let's just quit everything and like start a business without any backup plan that's just another type of people we are um so that was that but it was hard to have time and not just time, but energy.

3:58Like brain space was limited for sure throughout the years. It helped to have co-founders. I think one person doing that is very, very difficult. And it was also hard to build team culture because your employees, you expect them to be full-time, but as leaders, you're not always there. And that was hard as well.

4:15Gillian Liu:I just saw you took a wonderful trip with your employees and took them to a nice place near toronto yeah i took my marketing team there's five of us and i took them to a cottage over the weekend in haliburton it was actually very sweet we like we did you know cottagey things we paddle boarded and like we all cooked for each other and things like that and i had them do a presentation night where they had to choose any topic they wanted but they had to like teach the rest of us something random one girl talked about shipwrecks taught us about shipwrecks for like half an hour someone else taught us about like jade gambling which i've never even heard of it's like this Oh, I've seen the YouTube videos about that.

4:52Gillian Liu:Like if I find this rock, can I quit my job? Exactly. Exactly. She was like explaining how that works. So it's just like, it was really good bonding time. But that's only something that I could do now that I'm full time and like actually able to engage, you know, and not have to take days off. The other part with you guys is you don't manufacture, right? You curate products from the K-beauty sort of wave that's happening. Was that helpful when it came to starting it with a full-time job, like not having that product piece? Or does it just take just as much energy to curate? Maybe, I guess, less upfront costs, except you've got to buy all the material.

5:29Gillian Liu:Talk to me about the difference between manufacturing and curating. It's kind of like a completely different world, which is really interesting. And it's not like it was like a super calculated decision in the beginning. It was just we stumbled into it. We knew a distributor who was selling locally and just started. It wasn't like a super deep strategic decision, but it kind of rolled into it. There's definitely pros and cons. I mean, in the beginning, because we were buying from a local distributor, he was pretty generous with MOQ. I think we only spent like$2 ,000 the first time we ordered. And I remember in the sketchy early days, if someone ordered a product that we didn't have inventory of, we would drive to an Asian grocery store down the street, buy the product, and put it in the box just so that we could say that we had the products.

6:14It was crazy. I think being a curated sort of retailer, it's pros and cons. The con is the margin. My margin, obviously, I'm buying packaged goods that already have brand, right? So I'm paying the brand premium even as I ingest it. So the margin is not your traditional e-commerce margin. But you also get to market and you grow on the backs of other brands and their marketing budgets. Because it's like they create spillage at the top, whether they're doing huge celebrity endorsements with their products or whatever. These global things create spillage for retailers like us to catch. And so that's also been a unique advantage.

6:54We're not fighting for our own brand to be seen. We get to just harvest the demand that's generated by our brands.

7:02Gillian Liu:So take me back to your first MOQ there,$2 ,000. How did you bring these to market? We started a free Shopify theme. And one of my co-founders shipped out of her basement for the first two years. And it was terrible. First couple of years were rough. I mean, to be completely honest with you, because it was just like a fun little side hustle. We didn't take it super seriously in the first two years. And it wasn't until organic content, which I'd love to talk about, started going off that we're like, oh, this is a real thing. This is a real business and it's actually picking up traction. But I would honestly say we half-assed the first year.

7:44Gillian Liu:Well, talk to me about organic content then. What was the first piece that really hit or really made you think, oh, man, I can scale this up? Yeah, totally. In year two, I think we hired a part-time student to do content. And it was like one of those situations where you tell them, can you just like post three times a week on this like new TikTok thing? But like, I have no direction for you and just I'll send you products, just hit the quota and don't go overboard. And that was it. And we started doing that for maybe like three months. And one of our videos on TikTok hit like 3 million views. And 3 million at that time of TikTok was a really big deal because there weren't that many creators on the platform yet, but we hit 3 million views.

8:23And I remember this, it was like for this really niche product that not a lot of other retailers sold, only we did. So we saw 10X sessions the next day on our site. And it was just like a crazy anomaly. And my co-founders and I were sitting and looking at that data and we're like, okay, if we're ever waiting for a signal from the universe, from the market, whatever, like that was the signal it was so strong it was like that spike up in sessions that really signals to us like you're on to something here um and so from then on we like went all in organic content um what i say is like you know the adage is like it takes seven touches to get a consumer to buy something six out of seven touches for us are probably organic um it really just like you get the followers you get people to continuously trust you as a voice of authority in the community And then when you get that conversion, you're just converting that last touch point with them.

9:18Gillian Liu:Everyone has that dream of hiring a student and having them come hit a home run for you. I'm sure it's evolved beyond that. But just what was your criteria for finding that person in the very beginning? I think finding creative talent is done really well when you just keep an eye on it and you're chronically online yourself. It's like when you're hiring for people, you want to know, are they present online all the time? Are they scrolling on their For You page? Are they scrolling on Reels? And so I ended up finding that student on Instagram and I messaged them and they had like a thousand followers, but just, I liked the content that they were doing.

9:54And I was like, do you want a part-time job working for me? And I have friends who do a lot more organic. Like I have a friend who runs an organic agency and he always says like, you just DM them. You just, you have to kind of like be like slide into their DMs like a creepy guy. Okay. I like your stuff. Do you want to come work for me? And yeah, I think that's a requirement. When I've expanded that content team, one of my interview questions genuinely is like, what's your screen time on your phone? Like, show me your screen time. If it's not high enough, you're not a good candidate because like I need someone who understands content.

10:27Gillian Liu:That's the only time where you're maybe not ashamed of your screen time. The girl I most recently hired had a eight hour screen time every day. I was like, that's it. That's a full-time job. That's it right there. That's it. Wow, super cool. So talk to me about how the content engine has evolved. Has it been about hiring more of these people? Have you got involved more with founder content or your co-founders? What does your content picture look like now organic side? Organic content we take really seriously and it's like an entire like production process now. That first blip was a signal. But then what we do with that is we systemize it.

11:01So it's full-time content creators. It's full-time videographers and editor. and we treat it like you're shooting a production for a tv show or like a professional commercial where we um we do pre-production which means like going all the way back to like coming up with the concepts which topics which formats we're going to hit and we plan a month in advance and then once you have that ready we go into scripting so we have our best reference hook library we have a given structure and templates that we script to then we do writer's room which is you actually like cross edit other people's scripts because sometimes you're in it too much by yourself and you got to look at it and then we do a pre-production flow through which is you sit down with the talent so recently it's been a lot of me as the face of the company as the talent but we've been swapping in other faces now and you do a script read through you do a script you do hmw which is hair makeup and wardrobe you do like what are you going to wear what are you going to do here are the products we need, and we do like a full walkthrough.

12:03Then on production day, it's like we're on set. We have printed out scripts, printed out schedules, and we're like running down each line, making sure like everything's recording right. And we're shooting like 15 videos a day on those production days because you have to batch it. Otherwise, it takes too long to like get ready every single day. And then the editors go and take it away. And then we have a posting schedule. And then they make sure that like every day we're posting one to two times on organic.

12:28Gillian Liu:It sounds like SNL. It's like just the level of professionalness going into it. I think a lot of people maybe underestimate what it takes to kind of do at scale. Yeah, exactly. It's not, it's not vibes at all. It's actually like so engineered. It's hard to wrap your head around sometimes because you think like some people just have this amazing talent to go on social media and like, just like talk in their car and whatever. But the real pros who are doing it consistently, it's all structured, like hyper-structured. It's kind of like comedians who like they've gotten writing funny jokes down to a science where it's not even funny to them anymore.

13:03They just know what to say.

13:04Gillian Liu:Super interesting. And then which platforms right now are on the organic side? I guess Instagram and TikTok are the big ones. What's the biggest? What's the best platform for you guys? I think actually TikTok and Instagram are different parts of the organic funnel. what we find is that tiktok is really good for like reaching new audiences that you've never like random people from across the world will see your video but what i actually want those tiktok followers to do is to follow us on instagram because on instagram is where you can actually upsell on stories you can do like more community content you get more commenters and engagers so i actually see instagram as like where you nurture followers into sales because you can hard sell them in stories versus on tiktok it's to like just go viral and then capture those people over Surprisingly, YouTube also does really well.

13:50We repost everything on YouTube Shorts, and that has done really well. And then a couple months ago, we also started posting on Red Note, which is really interesting. It's really big in the Chinese-Canadian community, and those are very diehard fans. Sometimes people stop me on the street because they recognize me from TikTok or Instagram, but multiple instances back-to-back, once we started doing Red Note, people were like, oh, I saw you on Red Note. I was like, wow. Wow. It's amazing.

14:18Gillian Liu:When it comes to merchandising, what percentage of your sales come from a handful of products? Is it similar to the 90-10 rule that you experienced in so many other ways? Probably 80-20. 80-20? Okay. It definitely is. That's always how it is. There's the top brands who are doing really well globally in terms of marketing. So we catch that spillage from their marketing. And you can see we do have winning brands. But it's interesting. The industry is moving very quickly, one brand that was number one last year might slip to number two. There's always new competitors trying to vie for the top couple spots.

14:53But I would say 80-20 rule definitely applies for us as well.

14:57Gillian Liu:Have you ever had a product that you were really confident was going to hit and it just totally bombed? Or vice versa, a product that you didn't have a lot of faith in turned out to be a major hit? Yeah, I can talk a little bit about how we choose products. I think that's probably how we get there so it's a triangulation between multiple factors one is that we look at amazon volume in the u.s and look at canada because some of the brands sometimes sell their stuff directly on amazon sometimes not and then we'll also look at overseas right like we'll look at like the korea top products to see what's trending globally then we'll also the second factor we'll look at is the search results on our site there's a really good shopify report that we use all the time called like search queries with no results because that tells us like what are people trying to find but not finding so we look at that a lot and then because we work with these brands directly a lot of the times they're giving us the heads up like hey kyoko we're actually pushing this skew really hard in the next couple months because it's a new arrival it's a strategic product for us so like give you the heads up you should order more now um so that's been really helpful too because we get to like get a head heads up on when things are going to be strategically prioritized so to be honest like merchandising is a very database not based on personal preference sometimes like i see a product that i personally like but i'm not going to go tell my coo to buy a bunch of them because it's all about the data and it's not always correct sometimes you think well all the data points to this product should have like killed it but we barely moved any units and then there's other times where like niche little communities are really loving a particular product and you can't keep it in stock because like random people keep coming to buy it.

16:36You're like, who are you? Where did you find this?

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17:54Gillian Liu:These channels are only getting pricier and thinking our numbers are fine is costing your brand more and more by the day. Stop benchmarking against your own data and start benchmarking against real data from other brands. Go to triplewhale.com slash benchmarks and see how you stack up. Is Kyoko specifically, is it sort of curated goods from the Asian world? Is it from Japan, from China as well? Or is it mainly K-beauty products? It's Korea and Japan, and then maybe like one or two brands from China. But yeah, it's supposed to be like Asian beauty for everyone. So we try to curate from all those countries.

18:30There's like a little bit of a dynamic where like Korea's beauty industry is innovating very quickly. So it's always new brands like every single year. I think we've we heard a stat that's like 10 ,000 brands a year come out in Korea in the beauty market, which is crazy. versus Japan doesn't innovate as fast, but they also are just like, they're like drugstore products. They're like, if you're a diehard JD Beauty fan, you don't deviate. Like you always buy the same products. And so there's actually like a strong, loyal community there. But they're very different industries, but we do carry both.

19:03Gillian Liu:I lived in South Korea for a year right after university many years ago. And I don't, the Korean sort of like export trend hadn't really started back then. I would love to find like the person responsible for marketing Korea because I feel like they've done just an extremely good job of like making the beauty trends, the music trends, the fashion trends are really exploding out of Korea in a way that I feel like Japan was maybe leading the charge earlier in the 2000s or 2010s. In the 90s and 2000s. So it's like Korea's turn now a little bit. Are you sort of seeing that shift? Yeah, I think, I mean, Japan, like with their cultural exports will always be like very treasured.

19:42But I think Korea's got it down to like their science where they know where to spend their money to really boost things. And when I was in Korea this year, we actually got to speak to Korean manufacturers as well. Like they're upstream of even the brands. And they have such a different perspective on like how do we make products go viral as well at their level. And it actually flows through from the OG, like at the top of the food chains, actually the manufacturers, they flow to the brands. And then the brands are just marketing, like spending marketing money like crazy globally.

20:14Gillian Liu:I know when I lived in Korea, it was there so many giant corporations that own so many different kinds of companies like Lotte. And is there like a renaissance happening there where there are a lot of smaller manufacturers? Or is it these giant manufacturers launching new smaller companies to appear that way? It's both. I do see something like some new disruptors that are really shaking up how things are moving. And so we got to meet some of those brands in Korea this year. But also there's other like giant companies that just own a bunch of the brands. And it's actually just like a conglomerate of like three mega companies.

20:50But even within that, there's so much like fierce competition between their sub-brands. So it's a crazy industry.

20:55Gillian Liu:Is it on your radar to think about launching or to eventually launch your own product where you go direct to manufacturer? Kyoko is a pretty cool sounding brand. Is that something you want to do? Yeah, I think it's something that we want to do. So actually this year we're probably launching our first like merchandise white label product. We're going to do like an accessory, like a skincare related accessory, not like a cosmetic product right off the bat. But it's definitely something that we explored when we were in Korea talking to some of these manufacturers. The business reason to do that is obviously from margin, right?

21:26Like when you're a retailer, you have so little margin to play with that you eventually do need to white label to up your overall margin portfolio. but for us it's also like we're trying to also see where is the gap because we don't want to just be a me too kind of brand like we carry so many brands so many brands come and go what we need to do when we think about producing our first like skincare line or cosmetics line is like where do we actually play that's different and how do we stand out because we as retailers see brands come and go every year right so many brands get put onto the site they don't sell, we'll quietly archive them.

22:02That's the reality of the space. But it's definitely on the radar and we're starting to do some merchandising this year.