Alan Osetek: Tell us a little bit about the history of Dermatone and how you first got involved with the brand.
Doug Metchick: Dermatone was founded in 1981 by a former executive of Colgate-Palmolive who found a way to build better skin protection and sunscreen products for the outdoor set. He was a mountaineer himself. His daughter was a professional skier, and they needed skin protection. They were outside a lot. I came online with Dermatone—about 2000 or so is when I met the founder—when I had a job with a consulting company. And so did some project work with them in the early 2000s, and had followed the brand ever since. The founder retired. He sold the company about ten years ago, and when that company looked to divest the brand a few years ago, I was able to buy it.
AO: What are the Dermatone unique differentiators, or simply put—what do people love about the brand?
DM: I think first and foremost, the products work. They work really well in outdoor environments, but what separates Dermatone from its competitors are really two things. First, all of our products are made for a high-UV environment, and the way we define a high-UV environment is two ways. One is you are outside for a long time. Think activities like a triathlon or a round of golf or a marathon.
Another form of a high-UV environment is either at altitude or in an environment—say, on the water or on the snow—where you’ve got direct UV rays on the body, but they’re also reflecting off the water/snow onto the body. So that’s really what separates Dermatone apart, is it’s made for those high-UV environments. And then the other thing about it is all of our products are multifunctional. So, for example, a sunscreen wouldn’t just have broad-spectrum protection. It might also have moisturizer in it. Or a lip balm wouldn’t just have SPF protection. It would also have healing properties to help with cracked lips or chapped lips.
AO: You got involved with Dermatone more in the last couple of years. What were some of the first things you tried to implement from a go-to-market strategy and an overall marketing strategy to help grow and build the brand?
DM: Believe it or not, when we bought Dermatone in 2020, the company didn’t have a functioning website, and there wasn’t a DTC [direct-to-consumer] business. So the first thing we did was build a website. In fact, we had this like “oh my gosh” moment, because we were announcing the transaction and putting out a press release, and realized we didn’t have a place to send somebody. So that launched us into a process of not just a branded site, but also ecommerce using the Shopify platform. In terms of the business behind that, though, the first things we focused on were really stabilizing the supply chain, putting inventory management controls in place, hiring customer service. And then most importantly, really, working with distributors, working with retailers, working with end users to make sure that we could get them excited about the brand again.
AO: Is it true you have done some deals with some pretty well-known groups, such as the U.S. ski and snowboarding team and the U.S. surfing team? Are these some of the ways in which you get the word out about the brand and also have brand advocates who can represent the brand?
DM: Yeah, we are an official sponsor and supplier to the U.S. Ski & Snowboard team. So we support all of their athletes, their coaches, their photographers, their trainers. That entire group spends a lot of time outside in pretty high-UV environments. We’re also a partner with USA Luge. So that was fun—the Olympic Games just concluded, and we had lots of athletes that were over there on the ski side and the luge side. And in addition to those properties, we also work with many of the athletes directly.
Selling Dermatone on Amazon
AO: Tell us a little bit about getting involved on the Amazon channel, how Amazon is working for you right now, and what your plans are with Amazon in the coming year.
DM: I should have mentioned it before, when you asked about first things. Right after we launched our own website, we launched on Amazon, which was really one of the first things that we did. Amazon has been an amazing growth-driver for this business. So in terms of how we went about it—first, we went through the process of getting the brand registry sorted out and up and running, and then getting our listings up and created and optimized from photography and keyword search and all the research that we did behind it. Now we’re really driving pretty well on Amazon, and we’re focused on trying to take advantage of more of the tools that they have at their disposal. So in addition to Sponsored Products, also Sponsored Display, Sponsored Brands, video ads, A-plus content, our storefront. That’s really the next way for us with Amazon.
AO: Do you see different competitors in the Amazon channel versus the offline storefronts you’re selling in?
DM: For sure. We definitely do. We compete with a lot of different types of companies because our product line ranges from lip balms to sunscreen lotions to skin protection. But in the traditional bricks-and-mortar world, we have a couple of key competitors in each segment. Basically, folks that we’re fighting for shelf space with. In Amazon, the set of competitors is much broader. They range from smaller companies and startups, to retailers who are resellers, to anybody who’s got a product that might have sunscreen and moisturizer in it.
Expanding Dermatone into other digital marketplaces
AO: A lot of our brands are starting to plan move into other marketplaces, places like eBay, Target, Walmart, and some of these other online retailers who have a very similar goal and objective to Amazon, which is to basically make their products available, especially via search, in these marketplace channels. Have you started to explore any of these channels? If you think about where your next best channel might be—how do you think about that?
DM: Our product is available on some other marketplaces today, mostly through retailers or resellers who are largely throwing it out there and, I think, not making a proper go of it, but trying to find some incremental sales. Our first priority has been Amazon, as I said, because it’s just been such an amazing growth driver, especially with the onset of Amazon through the pandemic. This year in 2022, we’re starting to map out how we might look at other marketplaces like eBay, like Walmart, like Target, going forward. We’re also starting to map out how to expand ourselves into other Amazon marketplaces, other geographies, basically.
AO: You hit my next question—I was going to ask you about geographies. Are the majority of your online sales in the U.S.A. today? And then secondly, what other marketplaces might you target?
DM: Our online sales are almost entirely in the United States today. In an offline sense, we’re distributed into some other territories—some of the Scandinavian countries, New Zealand, Australia, other countries in Asia. On the online platforms, we’re really just with U.S.A. today. We’re starting to work through this year, in 2022, on how to get ourselves into those marketplaces in 2023. The marketplaces themselves are ready to accept us, but because our product is considered an OTC [over-the-counter] product, there’s a government regulatory aspect to it. So there are some hoops we need to jump through to get the product sorted for those markets.
AO: So correct me if I’m wrong, but that might mean focusing on one or two larger markets from an expansion standpoint, as opposed to going after five or ten or 15 or 20 new markets all at once. And my guess would be, without giving away any trade secrets about your future plans, you’d pick markets that maybe are heavy into skiing, for example, in some European countries, or maybe they’re heavy-sun countries like Australia.
DM: You’re right on with that. In fact, the debates that we’re having internally are how do we weigh markets that are heavy with outdoor activities, say surf or ski or run, versus markets that are just plain large economies. So at the moment, we’re looking for penetration in markets that have outdoor-active folks, more than just a large economy. And to your earliest point, we’re not going to go at it 25-wide or 20-wide. We’re going to be very selective initially, and go after just a few markets, and put our foot in the water that way.
Differentiating the Dermatone brand on Amazon
AO: When I think of the Dermatone brand, I definitely think quality product, higher end of the market. You’re targeting users who have a need to protect themselves with a lot of exposure to the sun, as an example. How do you view the differences? How do you tactically look at the Amazon channel from the perspective where it is, for premier or premium brands, a little bit harder to differentiate vis-a-vis your traditional offline channels. How do you work through that scenario?
DM: It’s a really interesting point. We are really trying to work through that scenario right now by being very selective in how we’re targeting our strategies in terms of ads and things like that. We recognize we can’t boil the ocean, and we also recognize that if we try to boil the ocean, we’re going to get into diminishing returns on our spend because we’ll just be too broad with what we do. So we’re setting up very specific campaigns against certain markets. An interesting example would be even recently, gardening came up as a segment for us. Where there’s a lot of sun, direct sunlight, there’s a lot of sweat, customers want good protection of product going in their eyes. It’s a pretty far cry from things like triathlon and skiing, but a very interesting market that we can effectively target in Amazon through keywords and other activities.
AO: That’s very cool. That’s a market that, from what you describe, completely makes sense, but wouldn’t have been necessarily intuitive. How did you figure out that this is a target market? Did you figure this out through doing analysis on your Amazon or online channel, or is it something that came from the offline world?
DM: It really came through analysis on Amazon, and it didn’t come through our proactive research, either. It really came by seeing some of the words on some automated campaigns that we were running that people were clicking on. We found some brands and some words in that area, and so have started to chase it.
Using other digital channels to market on Amazon
AO: Finding a new persona or a targeted segment based on keyword research and data analysis is certainly one of the powers of Amazon and the other online marketplaces. So what am I missing? What other questions are going through your mind related to Amazon and online marketing as we cruise into 2022 here?
DM: One of the things that I think is interesting, and we’re really just trying to figure this out as a newer brand on Amazon—remember it’s a 40-year-old brand, but it’s really only been on Amazon recently—is how we can start to use other digital channels to drive traffic on Amazon. It’s very interesting to me. We’ve got a very big initiative right now on building community and engagement and awareness on social platforms like Instagram and Facebook, as you could imagine.
But we started to tie, very specifically, some of our Instagram activity to movement on Amazon, both organic and paid. And so when we first got started on Amazon, it was really—I’ll call it kind of an inside by Amazon for Amazon program, but we’re starting to see now the power of off-Amazon programs driving sales and traffic on Amazon. That’s an interesting one that we’re watching pretty closely.
AO: When I think about people who are quote-unquote my age and my friends, if I mention Dermatone, you have great brand recognition. And quite honestly, a lot of people who have known the brand forever, they have nostalgia about the brand. Compare that to my kids, who are in their late teens or early twenties, they didn’t necessarily know about the brand. So how do you tackle messaging by age or by demographic?
DM: We really have a couple of different strategies for that. When I think about my generation, for example, sun protection and skin education was not something that I was familiar with growing up. I grew up in a time where we were putting on Hawaiian Tropic oil and really trying to get tan. And now my kids’ generation will put on sunscreen or skin protection on themselves before even going outside.
So we really have kind of an inverted strategy. There’s a segment of our audience that we really need to focus on the importance of—we call it skin education, the importance of skin protection, and that it’s not just by appointment for a big ski trip or a vacation on the beach. It’s an everyday thing, if you’re outside. There’s even some emerging research about the impact that screen time and computers are having on the skin.
And then with the generation behind us, there’s an implicit understanding of skin protection. But we need to bring them into the brand tent and franchise, and get them thinking about the activities that they would use us for and why it’s important to have something that would fit in the pack or be long-lasting or have some of the other functions that the products have.
AO: I was spending some time on Amazon last night researching the Dermatone products, and if you read the comments that people are saying about the products, they very much mirror what you just said. So clearly you’re onto something there. Anything else to add as we wrap up here?
DM: I think the only other thing that I would say is from our outlook as it relates to Amazon and the category itself, we saw a real shift in behavior with the pandemic of people going outside more often, being happier going outside more often. Shifting their buying behaviors from maybe going on vacation, where they would have bought something at a local retailer or resort, to now buying on Amazon and bringing it to the house, or maybe even staying somewhere four weeks, six weeks, eight weeks at a time, and therefore purchasing their goods through Amazon that way.
We’re still pretty long on that trend, for whatever it’s worth. Now that we’re starting to see really changes in the macro-environment, at least as it relates to the pandemic, we still expect to see people continue to go outside and be active, the way that they are, and continue to work remotely and therefore have access to other activities. So the one thing I would say is even though we’re seeing the marketplace change a little bit, I think some of what we’ve seen with Amazon and buying behavior is going to continue for a little while, at least with the outdoor segment.
This interview has been edited for clarity and length.