In its 72,800-square-foot facility in Brooklyn’s Sunset Park neighbourhood, hair care brand Prose pumps out shampoo, conditioner and hair masks — and rarely are any two bottles exactly alike.

On an automated line, empty bottles personalised with customers’ names move on a belt where dispensers programmed with chips that identify individual customers’ orders and fill them with custom products, featuring ingredients like silk protein, eucalyptus and grapefruit. By the day’s end, the facility will have produced 26,000 units of unique products, which run at $34 each.

Prose’s manufacturing set-up is unique for any hair care brand, let alone a seven-year-old start-up. Few digital brands make their own goods, and even less are able to grow while offering personalisation.

But Prose has done just that: In 2023, it generated around $135 million in sales. The brand also has a 60 percent repeat purchase rate, against a beauty industry average of 26 percent, according to data from Shopify.

That loyalty paid off when it launched customised skincare last May, promoting the line of cleansers, moisturisers and serums exclusively to its 250,000 pre-existing members. In 2023, skincare ended up accounting for around 10 percent of total sales, but in part because the brand didn’t have to run ads to boost the new products, it ended up generating more than $1 million in profits on the basis of earnings in the second half of the year.

This year, however, Prose will ramp up its skincare marketing in order to attract a wider audience. The company projects sales will grow more than 10 percent to $150 million, and is chasing its first full year of profitability. The brand hopes that in the next few years, skincare will account for 50 percent of annual sales, said Prose’s co-founder and chief executive Arnaud Plas.

The skincare push will be a test of how Prose evolves beyond its retro direct-to-consumer playbook. As DTC players have inked wholesale partnerships and embraced new ad channels, Prose still sells exclusively on its own site and primarily advertises its products on Meta, TikTok and Google. Given the personalised nature of its product, it’s sticking to DTC for sales, but this year it will invest in more non-digital marketing tactics, like in-person events, to promote its skincare offering.

It will also prove if the brand can bring personalisation to the broader beauty market, since skincare is a highly competitive category where customers are more knowledgeable and discerning than in hair care, said Cyrille Deschamp, a principal in the consumer practice at global strategy and management consulting firm Kearney.

“On one hand, it makes it very hard to prove yourself in this market because you have a lot of competition and you have a lot of sophisticated consumers,” said Deschamp, who was previously vice president of strategy at Prose. “On the other hand, if you are actually delivering, consumers are going to be incredibly loyal to you, and you’re going to be able to increase your share of wallet significantly.”

A Commitment to DTC

Founded in France in 2017 by former L’Oréal executives Plas and Paul Michaux and technology expert Nicolas Mussat, Prose launched in the US in 2018 so it could train its algorithms on a diverse population.

Those algorithms are fed by online quizzes, which ask new customers about their skin and hair types and goals; its formulation algorithm then combs through its ingredients to identify the best mix for each customer. It also has a customer feedback tool so customers can receive improved formulas when they reorder items.

It took the brand seven years and $90 million in funding from investors like Forerunner Ventures, which backed brands like Warby Parker and Glossier, to get this made-to-order model to where it is today. Early investors were attracted to the technology. In 2018, Insight Partners, which typically invests in software start-ups like e-commerce giant Shopify, led Prose’s $18 million Series B round. Before writing a cheque, the company toured Prose’s Industry City manufacturing plant, and its chief technology officer met with Mussat, Prose’s chief technology officer, to discuss the start-up’s algorithmic capabilities. At the time, Prose was already generating around $800,000 in revenue a month, and Insight Partners saw that offering personalisation led to high repeat rates in an already high-margin category.

“From a back end supply chain perspective, we loved that this was going to be complex,” said Rebecca Liu-Doyle, managing director at Insight Partners. “Complexity to us means defensibility, especially in consumer [brands] when you have to execute with such clarity and conviction in order to fight in the [customer] acquisition market.”

The consumer data Prose is able to collect — and use to improve its products — is why the company continues to sell its goods exclusively on its online storefront. The company’s primary competitor, Function of Beauty, which raised $150 million from LVMH-backed investment fund L Catterton in 2020, has presumably broadened its reach by selling pre-made items in Sephora and Target. But while Plas says retail could be part of Prose’s future, new categories will remain its biggest growth driver in the short-term.

Remaining solely DTC is also a way for Prose to keep its competitive edge. Oddity Tech, which collects and uses consumer data to develop brands like makeup seller Il Makiage and hair and skincare start-up Spoiled Child, is valued at $2.4 billion and is expected to have generated nearly $500 million in sales and more than $100 million in EBITDA profits in 2023.

“When you have to be so integrated, both having manufacturing tech software, a brand, a distribution, all of that, you have to own it yourself because it is the technological stack that makes you different,” Deschamp said. “If you try to do too many things at once, then you tend to dilute your capital and probably lose your focus.”

A New Skincare Competitor

Being DTC only may be a differentiator, but for Prose to grow its nascent skincare line without the help of wholesale distribution, it has to convince new audiences it’s an authority in that category — without overspending on paid ads.

For the last six years, Prose has driven the majority of first-time purchases through social media ads where influencers demonstrate how to use its products. The company won’t fully abandon that approach, especially as Prose saw its Meta ad costs come down by more than 10 percent year over year by the end of 2023. But it will also introduce new strategies such as campaigns that highlight the brand’s research and hosting more in-person experiences.

Last August, the company put on an in-person event in Los Angeles to launch skincare, with 100 influencers — with a follower count ranging from 500,000 to those with more than 1 million — who produced content around the consultations they received from experts and the formulas they tested. It will likely open these types of events to the general public in 2024.

Megan Streeter, Prose’s chief marketing officer, says the brand recognises that “hair content is different from skin content.” Prose will create social media content that promotes its personalisation process and feature dermatologists and aestheticians who can talk about the science behind Prose’s formulations, Streeter said.

There are more well-known brands that sell custom skincare — including Curology, Pure Culture, Proven Skincare and Function of Beauty’s burgeoning skincare line — then those that produce custom hair care. Establishing its expertise with a wider range of potential customers can increase Prose’s chances of breaking through in the skincare market.

“The number one criteria is delivering a superior product and that is really what’s going to either make them or break them because the consumer in skincare respects and recognises product superiority, which is at the core of what Prose claims to do,” Deschamp said. “Having the right advocates, having the right consumer messaging … is going to be incredibly useful.”