Fresh off a $75 million funding round, skincare line Rodan + Fields has launched a new business model, resulting in the elimination of about 100 roles.
Starting September 1, the company will shift from a tiered direct sales model to a new affiliate program, which will be supported by a broader marketing and advertising suite across traditional channels and social media.
Under the new affiliate program, existing R+F consultants who continue to sell R+F products will receive higher commissions on customer sales and product discounts, he said. Commissions consultants receive through product sales by those they have recruited will no longer be a component of the R+F model.
In an interview with WWD, Dimitri Haloulos, CEO of R+F, said: “We have one of the highest likelihoods of recommendation. But as the world evolves and changes and customers seek information across multiple sources and multiple marketing channels, we believe we have to evolve.”
When asked whether the failure of Beautycounter, whose products are also distributed through independent sellers in a multilevel marketing model, had anything to do with the decision, the answer was no.
“Beautycounter has absolutely no influence on this. It’s all about changing consumer trends,” he said. “This allows the majority of our consultants, over 90 percent, to make more profit on each sale, and helps us market the brand to more consumers.”
Recently, the MLM model has struggled with competition from companies like TikTok Shop, indie brands, and Amazon. In May, Moody’s, the credit rating agency, downgraded R+F, once a multibillion-dollar business, to C, its weakest rating, citing a decline in consultants and a changing consumer shopping landscape, among other reasons.
As part of its business model evolution, R+F has also restructured its corporate structure, resulting in the elimination of approximately 100 positions. This is in addition to the 76 layoffs that occurred at R+F’s Bay Area offices, according to a WARN notice filed with the state of California in September 2023.
R+F said it has reached an agreement with its existing minority investors that will provide up to $75 million in new funding to strengthen its capital structure and financial position. The transaction is expected to close later this year. The company declined to provide further details.
The anti-aging skincare line was started by Proactiv founders and practicing dermatologists Dr. Katie Rodan and Dr. Kathy Fields in 2000. It was later acquired by The Estée Lauder Cos., but was bought back by Rodan and Fields in 2007 and relaunched the following year with a direct sales model, building a network of independent consultants to sell the products. In the spring of 2018, TPG made a strategic minority investment in R+F.
The brand began its foray into hair care about 18 months ago and recently launched a lip-enhancing oil, which has proven successful. According to Haloulos, who did not disclose the category of the new product, the new product will launch later this week.
