Ugly Duckling

Our Traffic Is Back to Peak Levels And We Expect To Grow 30% in 2024 [Update]

save

Ishan Dutta

Founder, Ugly Duckling

$60K

revenue/mo

Founders

Employees

Ugly Duckling

uglyducklingcolor.com

from Los Angeles, California, USA

started January 2016

$60,000

revenue/mo

Founders

Employees

Discover what tools recommends to grow your business!

platform

Amazon

Prestashop tool-icon

Digital Ocean

Klaviyo

G Suite

reviews

Trustpilot

social media

Facebook

Instagram

Twitter

YouTube

Tiktok

productivity tool-icon

Google Suite tool-icon

Asana

payments

Stripe

analytics

Google Analytics

freelance

Upwork

Discover what books Ishan recommends to grow your business!

Traction: How Any Startup Can Achieve Explosive Customer ... Gabriel Weinberg

Want more updates on Ugly Duckling? Check out these stories:

1. The 13 Most Important Things I’ve Learned About SEO Over The Last Year (2022) ➜

2. How I Started A $50K/Month Professional Haircare Products Business (2019) ➜

3. How We Focused On Email Marketing And Grew 30% YoY (2021) ➜

This is a follow up story for Ugly Duckling. If you're interested in reading how they got started, published about 5 years ago, check it out here.

Hello again! Remind us who you are and what business you started.

I’m Ishan Dutta, Founder and Owner of Ugly Duckling Color. We sell professional color online to stylists and hair colorists. We are particularly well known for the quality of our bleaches, blonding products, and toners, as well as our acid-based sulfate-free haircare. We’ve been around since 2015.

ugly-duckling-441de4e8-474c-44b6-94c5-a9e4bcf8c8a9

Tell us about what you’ve been up to. Has the business been growing?

We hit our peak in 2020 when COVID hit. After that business has been down.

We had a big decrease of around 35% in 2021 and another 20% decrease in 2022. Then a further 10% decrease in 2023, although sales have stabilized now. I am expecting a positive year in 2024.

Our daily run rate in January this year so far is now well above our run rate in January last year. We have set our budget for a 30% increase, which will take us back again to 2021 levels.

Our focus throughout these last 3 years has been internet traffic. This was for us the key issue post-COVID. Traffic is always the single best barometer for an e-commerce business, and it’s where you can see where consumer demand is versus the competitiveness of your offer.

The chart below shows how our traffic has fared over the past few years.

Unbelievably, traffic in 2023 is now back to the same level as it was in the peak Covid year of 2020. So this gives us great hope that sales will also follow. As I said, I am expecting a 30% increase for this year.

When the world opened up again after COVID-19 in 2021, traffic suddenly went soft, as one would have expected. The decline was around 30 percent overnight, which is pretty huge.

Of course, sales dropped along with traffic.

However, we never stopped working on traffic, conversion, and SEO. This was I would say our no 1 action item when sales and traffic started to go down.

We doubled down on content creation. In 2022, for example, we wrote more than 50 blogs, created another 50 pieces of new video content, and wrote another 50 articles. That’s kind of an objective that we have set for ourselves: produce 1 piece of each type of content every week. So around 150 new pieces of content in a year, give or take. 1 every other day.

Incidentally, none of this was written by ChatGPT or by an SEO agency. Everything was created by our team, thinking up ways to showcase our products to our consumers in a problem-solving way.

I don’t have the exact figures for 2023, but I can tell you that our content creation was at a similar level as in 2022.

We didn’t just rely on content creation, however.

In addition to content, we worked on various other features to improve our organic rankings.

Let me give a few examples here:

We installed user-generated content in the form of product reviews
We created new self-consultation tools
We rewrote our website code to make our website run faster: we are now on the latest generation of php and Ubuntu code, and all our images are in webp format.
We took a whole series of other initiatives to improve our page load speeds.

I think it was as a result of all this that traffic started growing again from 2022 onwards.

We’ve narrowed our focus to around 50-60 products which we believe we have a real point of difference in. These are our established stars and also our rising stars.

What have been your biggest challenges in the last year?

So several things have happened ever since COVID.

There was phase 1, when internet traffic went through the roof, and fulfillment companies and outbound freight companies had real difficulty keeping up. We managed to weather these changes by simplifying our transport offers. No more overnight or expedited shipping, for instance, because we simply could not guarantee these.

This was followed by phase 2, a very significant increase in costs. Product costs from our suppliers, freight costs to ship our products into the US (we manufacture mainly in Europe, which is where the best producers and formulators of professional hair products are located).

And lastly and most significantly, outward bound fulfillment and shipping costs.

And just so that readers realize, fulfillment costs are our most significant costs. They represent around 40% of sales. Whereas product costs are less than 20% of sales.

So now we are in phase 3, where we have been forced to adjust our own prices, which we have done very significantly.

Just to give you an idea, when we first started out in 2016, we sold a tube of color for $10.50 and shipping was free anywhere in the US.

Now, in January 2024, a tube of color costs $14.00 and there is a $6.95 handling charge on orders under $40.

So in other words, for small orders, our prices are double what they were back then. For larger orders, our prices are around 40% higher.

Not only that: we used to have a free tube offer for a first purchase. This was a sweetener to get customers in, signing up, and ordering with us. Well, we got rid of this offer, it was costing us way too much.

When I look around at our competitors, and also on Amazon, I can see that many people have done pretty much the same. So that’s been a pretty harsh increase in prices for our customers, but it has been a necessary step. It has enabled us to stay in business and be profitable once more and also be able to invest in the future.

What have been your biggest lessons learned in the last year?

I think we have made 3 errors which we have been trying to correct for this year.

First, our pricing was way too low. And as I said, we needed to make a bold decision to increase our prices quite significantly.

People do ask me how our customers reacted to these price increases. I have to say that there has literally been zero reaction from them. Now that it has been done I regret not having had the guts to do it way, way earlier.

It would have made a big difference to the cash I could have taken out of the business for my family. I think this was my no 1 learning: don’t be too scared about putting up prices, in any case, we were never a discount brand selling discount products. Customers bought from us because they liked our products.

I am glad to say that our company's profitability is better now. It’s probably better than most e-commerce businesses. I would have to wait until the end of 2024 before pronouncing definitively on our progress in this area, however.

Second, we have been out of stock on key products way too often. Actually, if we had not been out of stock on key products, we would have had a positive year in 2023. We are trying to correct this now and focus on the products that sell well, where we have already established a reputation, as well as other new products that we believe offer unique solutions to customer problems.

Thirdly, the post COVID disturbances made us slower than we ought to have been with our new product launches. We are fixing that now. We are bringing new products much quicker to the market. I am glad to say that some of them have been real winners.

An example of such a product is Blondify toners. These toners are liquid based, ammonia-free, contain Bond Protect, and work in under 10 minutes. They mix with developers well and they also smell excellent.

So they represent new technology. The products are unique, they do what they say they do, and sales have been excellent since we launched them last year. They are contributing to our growth in a really meaningful way.

Through all this, it came back home to me that the cosmetic business is all about launching star products. Customers aren’t naive, they won’t just buy Ugly Duckling products with their eyes shut because they think the brand is cool. They will browse, they will search, they will research their problems and their requirements, they will look at reviews and then they will make a decision product by product.

So this year, we’ve narrowed our focus to around 50-60 products which we believe we have a real point of difference in. These are our established stars and also our rising stars. This may sound like a lot of products to focus on, but we have put more than 150 products on the market, so 50 products means we are effectively focussing just on the top third of our portfolio.

So what have we done concretely here?

Most importantly, we’ve worked to improve the quality of our product listings for these top 50 SKU’s. Each listing has accurate result shots - our result shots are all user generated content, by the way, and never faked. The details about what our product does, how it works, and how to use it have all been reworked. We try to communicate consistently every week about these products and the problems they solve.

We have also worked to improve our forecasting and product re-ordering cycle. We have started bringing in up to 6 months - 9 months of product. Sales can be variable and we don’t want to get caught short. In any case, for our top 50 SKU’s there’s no risk. These products will sell anyway, and we won’t get left with dead inventory. Plus, as I already said, product costs only represent 20% of our sales.

Make sure that you get into unique products. Something which cannot be made by someone else for half the price. You will need to invest to create a unique brand, have a unique customer experience, and offer unique products.

What’s in the plans for the upcoming year, and the next 5 years?

Our basic traffic generation strategy has not changed. So content creation, user generated content, and quality of product listings, images, and videos. Speed of loading of our pages, another big area. These are all things that we look at in great detail and that we are continuously working on. We have a whole team working on this, by the way. My personal involvement is quite limited.

These are not things that are going to double your sales overnight. But done day after day they add up, and make the brand stronger. It’s like compound interest. It builds up. If we can take our internet traffic to around the 5 million mark annually in 5 years I believe that would be a respectable achievement. So that’s our first objective.

Our second objective sounds stupid but if you knew the out of stock situation we had this year you would understand. Our objective is to never be out of stock on our top 50 SKUs - our established stars and our rising stars. Our sales and marketing manager tells me: “just do that, and we will be fine”. And she’s right.

Thirdly, we plan on being much more aggressive with launching new products, both in our current categories and also outside these. We have been deep and narrow up to now, and I believe that has served a purpose in building up a committed (though fairly small) user base who get what we are trying to do in terms of ultra white blonde hair, and very professional hair care with very specific results.

But now we want to start adding to our range by launching more products. We have budgeted that these new products need to contribute to at least one third of our growth. Being back in stock of key products plus internet traffic growth will I believe take care of the rest. I can’t be too specific on what we will be launching, because a launch has to remain confidential until it is out. But we will continue focusing on our user base, and try to produce very unique innovative products which will please them and also bring in new users to our site.

What’s the best thing you read in the last year?

I would recommend The Almanack of Naval Ravikant. It’s an inspiring read for anyone who wants to be an entrepreneur and a business owner. Naval breaks down the success factors and the leverage tools you need to use as a business person well. Plus it does help you in terms of thinking about who you are and what you want to be.

Secondly, I would recommend Profit First by Mike Michalowicz. If there’s anybody out there like me who is in business and finds that they have done a less than optimal job in getting the business to generate cash for themselves, this is the book to read.

Lastly, a book I would recommend to anyone interested in learning the basics of company P&L management would be this one: SCORE: The fundamentals of building a financially successful business by Amol Maheshwari. Amol is the director of a consultancy company, the Growth Idea for which I also work.

In general, I think that if you are an entrepreneur in what has become a fairly uncertain world (who would have thought that there would be 2 major wars being fought simultaneously in 2023), the skill of not just managing a business, but managing a business profitably has become super important.

Advice for other entrepreneurs who might be struggling to grow their business?

Firstly, a few words about business profitability. Business is essentially an arbitrage. It’s about developing a product or a service whicthatts you less to bring to the market than what someone is prepared to pay for. In this current business climate, I would say pay great attention to the basic model of your business and make sure that the arbitrage genuinely exists. Try to make the amount of the arbitrage as big as possible.

By that I mean if your product cost plus the cost of customer acquisition is greater than the margin you are getting from your sales, you don’t have a business. Fix that first before you do anything else.

Secondly, I have this advice for e-commerce entrepreneurs. The world is getting much more competitive. If your business model involves you bringing products in from China, white labeling them, and putting them on Amazon.com, I would gently suggest that you don’t have a good business.

Take the case of Temu and Shein. These 2 online platforms are taking the US by storm and did not exist 2 years ago. They offer an amazing range of products with very cheap shipping. If you’re willing to wait for standard shipping, shipping is free. So whereas Amazon.com is investing a fortune offering express shipping, here we have Temu saying to the customer, just wait a few days, be patient and you can save some money!

So my advice to any e-commerce entrepreneur in the US or anywhere for that matter, isto make sure that they get into products that are unique. Something which cannot be made by someone else for half the price. You will need to invest to create a unique brand, have a unique customer experience, and offer unique products. And if you can’t do that, and you’re relying on wholesaling someone else’s products, life is going to get very tough.