March 01, 2016
Jamberry: Three Sisters Turn Nail Wraps into Direct Selling Dream
by Courtney Roush
Headquarters: Lindon, Utah
Executives: Christy Hepworth, Keri Evans and Lyndsey Ekstrom
Products: nail wraps, lacquers and gel enamel
Picture this: You’re a new direct selling company with a set of challenges unlike any other in the channel.
You’re not reaching far and wide to get the word out about your products; you don’t have to. From the moment you hang out your shingle as a direct seller, your customers are waiting. Instead of pounding the pavement to make a name for yourself, you’re just trying to keep your head above water with the tremendous volume of orders already coming at you left and right. That’s the envy of every new direct seller, right? Well, yes and no. If you take a page from the story of Jamberry, that kind of demand is extraordinarily challenging to accommodate. When this Utah-based company launched in 2010, it started from scratch with no capital in the business. Its small staff, including a teenager recruited from down the street, ran operations from a residential garage, and it was all hands on deck each day fulfilling and packaging orders, then taking them outside to wait for the UPS truck to arrive.
“At first, we were the ones doing everything. Packaging, shipping, answering phones, posting on social media. You name it, we did it,” Keri Evans says of her involvement with Jamberry along with her co-founders and sisters, Christy Hepworth and Lyndsey Ekstrom.
There’s a compelling reason as to why Jamberry enjoyed a robust customer base right out of the starting gate. The company initially launched in 2010 as an online retailer of nail wraps, or adhesives, applied to fingernails and toenails and featuring a variety of colors and designs. The story of Jamberry’s transition to direct selling is one for the books, and, in a strong sense, it points to our channel’s growing notoriety as a viable path to financial independence for millions.
|Chief Performance Officer Jared Richards (far left) and CEO Adam Hepworth (far right) attend Jamberry’s ribbon cutting with co-founders and sisters, Keri Evans, Lyndsey Ekstrom and Christy Hepworth.|
A Little History
During a visit to a Utah County nail salon in 2010, the sisters ruminated about the time and expense associated with getting a manicure or pedicure, not to mention the low return on their investment. Like many women, they’d hardly made it out of the salon before dings, bumps and life’s daily activities chipped away at their nail color. While some salons did offer nail wraps as an option, those products weren’t something that could be purchased outside the confines of a salon. The sisters decided to investigate the possibility of creating their own nail wraps. Christy’s husband, Adam, was then CEO and co-founder of a ski manufacturing company. Because decals were applied to his skis as part of the manufacturing process, he had the equipment on hand for the sisters to experiment with a product of their own. From the beginning, he says, he was on board with the idea his wife and sisters-in-law presented to him. But he had no clue this quirky product would develop such an enormous following so quickly.
The sisters were equally surprised. “When we started Jamberry, we just thought it would be a fun way to make a little extra cash to spend on something like cute clothes or a girls’ night out. We didn’t expect it to become what it has,” says Ekstrom. The website went live, and the women began selling their nail wraps at trade shows. And then Groupon came on the scene. This group buying site, advertising daily deals, spawned several knockoff sites. Jamberry participated in several of them at the rate of two to three times per month, selling a “couple of thousand units each time,” Adam Hepworth says. “It helped us gain a national audience.” Though repeat business was relatively low, “we still managed to eek out a little profit,” says Chief Performance Officer Jared Richards.
With customer acquisition came emails. “It was almost comical. At least once or twice a week, we’d get an email saying ‘I have the best idea for you,’ ” Hepworth says. That idea was direct selling. Jamberry customers loved the nail wraps so much, they wanted to sell them. Although the small leadership team Jamberry had in place didn’t come from the direct selling world, they listened to customers and began researching this business model with which they were relatively unfamiliar. In 2011, following a series of test parties, they took a leap of faith by rebranding Jamberry as a direct sales company. And it was fortunate timing; the Groupon bubble was starting to burst.
The Challenges of Success
The transition ushered in a mad scramble. “Most companies are trying to create demand; they have a totally different set of problems. Our challenge was accommodating demand. We had too many orders,” says Matthew Hoffman, Chief Commerce Officer. “We had a do-it-ourselves mentality,” Hepworth adds. While preparing a mailing for new consultants, the team suddenly ran out of bags in which nail-care supplies were being packaged. Hepworth made a frantic run to as many stores as he could find to round up an alternative.
By 2013, the company realized its manufacturing equipment was poorly equipped to handle the overwhelming demand. In short, it wasn’t scalable. “We invested a ton of money on new equipment,” Hepworth says. “But on the first run, we had a high failure rate. Things were falling apart. So we ran three shifts a day using our old equipment. This was a make-or-break moment for us.” He and the team went back to work, eventually ushering in a new manufacturing process—one machine running eight hours a day—that could meet the company’s standards of quality, accuracy and volume. “If this hadn’t happened, we wouldn’t be where we are today. The demand created by direct selling would have outstripped our capabilities,” says Jonee Woodard, Vice President of Operations. Within six months, Jamberry had outgrown its facility.
|CEO Adam Hepworth (far right) works with Jamberry employees as they manufacture the company’s nail wraps.|
The next bottleneck was shipping. The company was shipping products as fast as it could, but its systems were error-prone. “With speed comes mistakes,” Richards says. “It was hard to keep up without missteps. We had stock-outs and sell-outs, and our events ran out of room when we underestimated attendance. But what we could control was making it right by providing good customer service.” Handed down from Hepworth, that “Make it Right” mantra was quickly adopted by the rest of the executive team and woven into the very culture of the company. Eventually, Jamberry got the technology in place to improve shipping speed and accuracy.
Customers were becoming consultants at a rapid rate. Further, those consultants were jumping with both feet into the digital space, using social media to spread the word about Jamberry products and holding Facebook parties, and the conversion rates were incredible, Hoffman says; at that time, “Facebook algorithms allowed you to reach a lot of people.” In late 2013 and early 2014, online parties were a relatively new concept for direct selling. Jamberry was an early adopter. Despite the channel’s rich history of home parties, social media proved to be an enormously successful platform to share products and the business opportunity.
Wraps presented a fun, easy and less expensive approach to nail care, appealing both to women who traditionally visited salons and those who didn’t. “Online parties allowed us to reach people on an unprecedented scale,” Richards says. “They created the perfect storm.” The wraps originally were adhered to the nails using heat from a hair dryer. Soon, however, consultants brought to the executive table another idea: a mini heater. After a period of research and development, Jamberry introduced its own branded mini heater to the product lineup. “It was the first tool that diversified our concept,” Woodard says. Eventually, the company would expand into lacquers and gel enamel in an effort to capture potential customers who preferred traditional nail-care products, or those for whom nail wraps with bold colors and patterns were verboten in the workplace. However the tide is turning now as the years march on, with more women using their nails as a means of self-expression. In fact, one of Jamberry’s customized product lines is its Nail Art Studio, which allows customers to design their own custom nail wraps.
The co-founders have fun demonstrating how to apply Jamberry nail wraps.
Lessons in Growth
While social media was propelling the Jamberry brand forward at breakneck speed, it began to dawn on executives that consultants’ compensation structure needed tweaking. From the beginning, Hepworth’s paramount objective was to make the Jamberry opportunity as financially lucrative as possible for women. “But it seemed like our plan wasn’t right,” Richards recalls. “Some consultants were working 40 to 50 hours a week, and they’d hit the ceiling in terms of what they could earn from their business.” For six months, the company worked on a redesigned compensation plan, and then introduced a new plan in which consultants’ income could be scaled up or down more responsively, in accordance with their efforts. At that point, the rubber really hit the road. The company began to see more leaders emerge. Mobilization and inspiration of the salesforce became more important, as did training and leadership development. Once existing and potential consultants realized what they could do with a Jamberry business, the company entered a hypergrowth stage.
Also in 2013, Jamberry entered its first international market: Canada, going into the country with its full product lineup. While the executive team was confident that nail wraps, color and accessories would have broad-based appeal throughout the globe, they anticipated that Canadian women would require some time to get acquainted with the Jamberry brand. They were wrong. Even though the launch was limited to select provinces, “we significantly underestimated market acceptance and growth of the consultant base,” Woodward says. “During the first 90 days, we were just trying to get enough product in there to meet demand.” Additional provinces were added later, on a slow but steady pace.
By 2014, in both Canada and the United States, “we were on defense,” Hoffman says. The company made a huge investment in staffing that year, finding people who could help Jamberry further refine existing systems and introduce new tools, like a new website that didn’t “melt under pressure,” as Richards describes it. “Adam very quickly realized he had a tiger by the tail and hired quality individuals to fulfill that,” Richards adds.
That same year, the sisters scaled back their involvement to focus more on product development, design and consultant-facing activities. They still come into the office weekly, but work on a more remote basis while they raise their children.
“It has been amazing to see so many people love and embrace this company that we feel so passionately about,” says Christy Hepworth. “We feel very lucky to have been able to find such amazing team members to run the business so that we can still have that balance of being business owners and stay-at-home moms.”
Evans adds, “We are in the office every week working with each of the teams at Jamberry. We try on every nail wrap that goes into the catalog, every lacquer color that we sell, and all of the products in between. Staying true to ourselves and our brand is important to us, and we love being involved in the creative processes that help us create the very best products for our consultants and customers.”
In a little more than two years, Jamberry has experienced a massive change: In 2013, 80 percent of parties were held in person, typically at home. By 2015, more than 85 percent of parties were virtual. That mirrors a broader phenomenon taking place across the direct selling channel. Social media has become a noisy place, meaning the digital space is less effective than it used to be. Among younger demographics, Facebook popularity has decreased, and the organic reach on Facebook is much more difficult. Consultants have to become better at marketing themselves in a sea of chatter. And how do they do that? Bring back personalized service. Home parties are on the upswing again.
At the same time, with a consultant base of women—many of them busy mothers and working professionals in their 30s and 40s—training is online with a social media component to encourage accountability. Initially, “we had consultants who had never called a customer, and they were top performers,” says Holly Ennis, Director of Training and Development. Today, however, “we teach consultants to spend 70 percent of their time on one form of communication and 30 percent on the other. I believe we need a balance between in person and the Internet.” That message seems to be getting through to the salesforce; over the past six months, Ennis says, the company has seen a 10-fold increase in the number of participants in weekly training conference calls.
Worldwide, the company has approximately 120,000 independent consultants, including 4,000 consultants in Australia/New Zealand, the company’s second international market, which launched in October 2015. While the company continues to research additional markets, an effort led by Chief Growth Officer Brick Bergeson, future expansions will be executed with a deliberate hand, not with a scorched-earth approach. Jamberry’s approximately 400 employees are based at four distribution centers, a corporate headquarters and a manufacturing facility, all in Utah.
Today, the company’s systems have caught up to its runaway demand. Outsourcing has been in part key to creating sustainability. “We asked ourselves, ‘What’s our core competency? Are we a fulfillment organization?’ No. Our manufacturing and direct selling capabilities are key,” Woodard says. “We’ve made a concerted effort to focus our company on manufacturing and direct selling and significantly outsourced other functions, like domestic and international fulfillment.”
“We have outstanding products, a great compensation plan and we’re free from the bottlenecks,” Richards says. “Now we’re finding additional ways to identify new customers in channels that aren’t noisy. If one customer acquisition channel becomes crowded, you continue to do what’s tried and true while seeking innovation. Our products are the best way to acquire new customers. It’s a product business much more than an opportunity business.”
Jamberry’s culture can be described as understated, quiet, even humble. This isn’t a company striving to make the Inc. 500. In keeping with its very beginnings as a company, the approach is “Let’s get to work. Let’s do something for the people who are building their businesses,” Hoffman says. “That’s such a profound difference from corporate America, and it’s done very quietly here. There’s no preaching, very little turf fighting. Our executives aren’t flashy. There are no Ferraris in our parking lot. When they walk in, there’s no pomp and circumstance.”
While Jamberry retains an outside public relations firm, has established relationships with fashion bloggers and participates in such events as New York Fashion Week, Director of Marketing Sarah Griener says the priority isn’t on garnering media impressions. “Our approach is purely to support our consultant base with beautiful visual materials, both for social media and in print,” Griener says. “The focus is on building a brand our consultants are excited to share.” Jamberry’s support of causes, including autism awareness and women’s heart health, have generated additional name recognition for the brand, but you won’t find those partnerships advertised on the company’s website. “We’ve tried to stay out of the limelight as much as possible,” Hoffman adds.
The next chapter of the Jamberry story remains to be seen, but it appears that, at least for now, there’s a bit of calm after the storm. “Now we’ve got better systems in place, and we can scale up and down,” Hoffman says. Looking ahead, “One of our biggest goals is to expand our U.S. demographic; there’s a lot of untapped potential, including a huge Latina market. And we’ve identified quite a few potential international markets. That’ll be a big initiative over the next five to 10 years, and those markets could eventually eclipse U.S. sales. There’s no reason why we can’t sell Jamberry products in 100-plus countries; it’s applicable across cultures.”
“We’ve really won the lottery when it comes to a product that markets itself,” he continues. “We’re all just kind of pinching ourselves that this is happening.”