Nick Shanagher shares what you can learn from social media superstar Kylie Jenner about turning a tidy profit

On 30 November 2015, Kylie Jenner launched her first cosmetics collection. She had invested $250,000 in 15,000 lip kits that were priced at $29 each. They all sold in less than a minute. That was $185,000 profit to her. Shortly afterwards, resellers were offering the kits on eBay for $1,000.

Jenner, half-sister of reality TV star Kim Kardashian, is on track to be the youngest self-made billionaire in history. But wholesalers should check out analysis of how the numbers stack up by Natalie Robehmed in Forbes. Jenner’s business has sales of more than $300m a year with a staff of 12, only seven of whom are full-time.

Her product is produced by a manufacturer and Robehmed estimates that this business takes a 55% cut. Distribution is digital, through Spotify, which is paid $480,000 a year plus 0.15% of sales. “Pennies, compared with the cost of doing that volume at physical retail,” writes Robehmed.

She quotes Jenner on the secret of her success: social media. Jenner has 114m followers on Instagram and 25.4m on Twitter at the time of writing. “I have such easy access to my fans and my customers,” Jenner says, having lived her life in front of the camera since appearing on the Keeping Up with the Kardashians TV show from the age of 10.

Kylie Jenner Social Media
Kylie Jenner has used her vast online following to drive $300m a year in sales for her business

Social media, Robehmed writes, has weaponised fame, especially for people aged between five and 19 (Generation Z), who are turning their backs on big brands and buying quick-to-market products that they learn about on social media.

If this is the future, there are four lessons for wholesalers to learn from the Kylie Jenner business model. They are as follows:

 

1. First, social media can leverage huge sums of money, so you need to pay attention to the followers and fans that your customers have access to. Think about ways in which you can help customers monetise their friends – perhaps by organising meet-ups in your depots to share ideas on what product offers can scale. Also, pay attention to what they say is selling and check that you are stocking what they suggest.

2. The power of stories is crucial. Jenner’s fans have set up a GoFundMe page to help her reach billionaire status. Since the article, lots of critics have also lined up to challenge the ‘self-made’ tag Forbes placed on her. Good stories create a reaction. The ones you need to look out for are about what consumers in your catchment area are buying into.

Get your telesales teams or in-depot staff to ask customers what is selling really well and find out which new products are gaining traction.

Analyse social media to spot trends. Study the Aldi and Lidl playbooks, for example.

3. Think about the different margins the manufacturers and distributors take from their Jenner tie-ups.

Own-label is clearly an opportunity to tap into given the bigger margins that manufacturers can demand.

Again, consider your catchment area and see if you can have local own-label brands, which will have a stronger story than just ‘cheap’.

4. Finally, the buying vision is an absolutely crucial thing on which to place focus.

Many independent businesses are critical of the creativity of the offer from wholesale, which mostly follows what the national chains in retail and foodservice are offering. Every product success that your buyers achieve needs to be celebrated and promoted to your customers so that you have a reputation for smart buying that builds confidence and increases the chances of success for future offerings.

Be on the lookout for things that you do not sell now, and even for customers that you do not have now, because if you pick right, you will earn better margins and grow your sales.

Read similar: Can social media work for wholesalers?

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Nick Shanagher
As managing director of Newtrade Publishing Nick has over 20 years’ experience of covering retail markets, Nick helps shopkeepers and wholesalers of all sizes to think about what questions are important for themselves and their businesses, and to find answers that work in their shops.

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