Exclusive Interview with the Global President of The Ordinary: After Being Acquired by Estée Lauder, How Did We Manage to Be "Disobedient" but More Profitable?

Text by He Zhexin

Edited by Qiao Qian

In the 1990s, a foreign beauty company launched its first facial cream in China. The promotion claimed that this product could solve problems such as fine lines, rough skin, and large pores. To promote this cream, they invited a popular movie and TV star at that time. Slogans like "One bottle solves multiple skin problems" and "Radiate youthful glow in 24 hours" were repeatedly broadcast during prime time on various TV stations.

Before China, a similar advertising style had been popular in the Western world for nearly a century. Italian writer Maura Ganciatano wrote in her book "The Beauty Trap": "Cream advertisements always seem to make illusory promises. They (referring to creams) are full of various nutrients. You can't eat them because you'll gain weight, but you can apply them on your skin... God knows how they work."

The Ordinary might be the first brand to question this "illusion".

Different from beauty products at that time, The Ordinary's sales staff will recommend a certain product (not a set!) according to your skin condition, or clearly advise you to "see a dermatologist". Most of the brand's skin - care products are packed in semi - transparent dropper bottles. The bottle is so simple that there is almost no redundant decoration, and the label clearly indicates the main ingredients and concentrations. Without catchy names, they don't look like delicate beauty essences, but more like semi - finished products in the glass cabinets of a laboratory.

What's more revolutionary than the minimalist packaging is its price tag - the cheapest single product is only sold for $6 (about 42 RMB). The price of The Ordinary's 10% niacinamide essence is 98 RMB, which is less than 1/4 of its competitors with the same concentration. The positioning of "price butcher" has quickly accumulated a large number of loyal fans for it. In 2021, The Ordinary entered more than 430 Sephora offline stores in North America to sell its 24 skin - care and hair - care products, and achieved an annual revenue of $500 million that year, which confirmed the founder Brandon Truaxe's concept: "What we sell is not only skin - care products, but also a revolution against the industry's excessive profits."

In 2017, Estée Lauder Companies made its first - round investment in DECIEM, the parent company of The Ordinary. In June last year, Estée Lauder Companies officially completed the acquisition of DECIEM, with a valuation of about $2.2 billion. After the acquisition was completed, the founder retired. The new global president of the brand, Jesper Rasmussen, comes from Estée Lauder Companies. He has worked at DECIEM for many years and also has regional management experience in several multinational companies before.

At the beginning of this year, The Ordinary officially entered the Chinese mainland market (previously mainly through cross - border platforms), was listed on Sephora, launched on Xiaohongshu, and started live - streaming. The background of this series of actions is that Estée Lauder Companies launched perhaps its largest - scale recovery plan ever in February this year, called "Beauty Reimagined". The new CEO, Stéphane de La Faverie, hopes to achieve the goal of sustainable growth through measures such as expanding the brand layout, putting consumers at the core of the business, and increasing explicit advertising spending, and achieve double - digit adjusted operating profit margins in the next few years.

Not long ago, 36Kr conducted an exclusive interview with Jesper Rasmussen, talking about the timing of entering the Chinese market, whether the future of beauty will be more scientific or more luxurious, how to deal with the current challenges in domestic and foreign markets, and how to "grow independently and rapidly" in a large group after the acquisition.

Jesper Rasmussen, Global President of The Ordinary

On the brand: Pricing, positioning, and timing

36Kr: The trend of efficacy - based skin care is not new. What are the considerations for entering China at this time?

Jesper Rasmussen: This is an interesting question. Why now? Why not 5 years ago (oh, we hadn't entered the market 10 years ago), or why not earlier? I think it's related to China's opening up to animal testing for imported beauty products.

The Ordinary is a cruelty - free brand. This is a very important principle for us and we will never compromise on it. This is also the main reason for our choice to enter the Chinese market at this time [1]. Then you also need to produce some new products because some products cannot be sold in China, perhaps due to regulations or because they are not suitable for the Chinese skin type. So you have to make further adjustments - all of which take time.

36Kr: How long did it take to prepare?

Jesper Rasmussen: More than a year. In fact, we've been quite fast - look at our competitors around. Their reaction is like "How did you do that?" Go to Sephora and count the number of SKUs of those international skin - care brands. You'll find that they usually only have 8, 10, 11, or 12 SKUs. It's not because they only want to do this, but because they can only do so much.

36Kr: Can you give an example of better adapting to the Chinese market?

Jesper Rasmussen: For example, our glycolic acid essence product is one of the best - selling items in our global product line, but it couldn't be registered in China. We faced a choice at that time: what should we do? Lower the product concentration or create a better product? Finally, we added antioxidant ingredients to the glycolic acid - this is an example of our customized products for the Chinese market.

This is not just about "how many products can be launched". The key is to create a product portfolio that is truly suitable for Chinese consumers. Currently, there aren't many brands that can do this for Sephora China.

36Kr: But obviously, this isn't the best time to enter China. The Ordinary is already cheap, but there are plenty of even cheaper brands in the market.

Jesper Rasmussen: We don't think The Ordinary is a mass - market brand in the traditional sense. In fact, this is a question we often encounter in the industry, but consumers don't ask - what are the definitions of "mass - market brand" and "high - end brand"? So, it actually gives us, as a part of the industry, an opportunity to define ourselves. We really think the boundary between mass - market and high - end brands is very blurred.

36Kr: But there must be a way to define it.

Jesper Rasmussen: Actually, the key lies in channel selection, not just price. Brands at different price points have their own space in the market - whether they are luxury brands, mid - range brands, or budget brands. We position ourselves as high - end, and the core is to strictly control the distribution channels. For example, we won't enter mass - market retail channels like Carrefour and Walmart. However, the boundaries of channels are indeed blurring. Take Amazon as an example. By establishing a high - end zone, it has successfully attracted many brands like ours to settle in - even though there are also pharmacy and supermarket brands on the platform. The difference mainly lies in the way the stores are operated, but ultimately, channel selection determines brand positioning.

36Kr: So you're very cautious when choosing shelves.

Jesper Rasmussen: That's true, but it doesn't mean we're slow to act. We won't spend ten years deciding where to be shelved. Of course, we need to consider "where we want to be", but more importantly, we need to understand "where consumers want to find us".

Our pricing is very competitive, which is also an advantage when we choose channels. We ensure absolute transparency between efficacy and price, which is also an embodiment of our "honest skin - care" concept. But we won't conduct any price promotion activities. You can always buy The Ordinary products at the most reasonable price.

Image source: The brand

36Kr: How do you achieve the price advantage?

Jesper Rasmussen: Take the ingredient niacinamide for example. Everyone knows it's a star ingredient in the skin - care industry. Seriously, we don't need to spend hundreds of thousands of dollars on efficacy verification - there are already more than 4,000 studies globally confirming its effects. You can just check the literature - that's the first point.

The second point is very practical: Niacinamide has a market price as a raw material. No matter which brand uses it, the raw material cost is there. The reason we can lower the price of the 10% niacinamide + 1% zinc product is that through large - scale global procurement, we got a better price for the raw materials - and we directly passed on this cost advantage to consumers. This is our principle of "pricing based on reality".

Of course, we didn't slack off at all in formula research and development. Take this product as an example. The laboratory conducted countless batch tests, adjusted the texture to the most suitable state for the face, and directly scrapped unqualified formulas and started over. Affordable price doesn't mean compromising on quality.

36Kr: How can efficacy - based beauty brands do well in market communication in China? What are the differences compared with foreign markets?

Jesper Rasmussen: In the US and European markets, we rely entirely on word - of - mouth, a self - spreading model. Only when the community starts to spontaneously discuss a certain product do we consider placing paid advertisements. Compared with brands that traditionally spend a lot of money on advertising, our model is indeed more difficult to predict sales - after all, paid advertising can accurately calculate the exposure conversion rate. The past seven years have proven that this "organic" way is particularly suitable for us.

But you're right. The Chinese market is an exception - you can't completely do without paid media. So we've figured out a way: to maximize local marketing while maintaining the brand's core, without relying on traditional advertising. Regarding social media promotion, we focus more on quality rather than quantity and hope to establish a deeper relationship with content creators. At the same time, we attach great importance to direct communication with consumers. We will reply to every message on Xiaohongshu to help everyone choose the most suitable skin - care plan.

On taking over: Today's brands need different leaders

36Kr: Tell us about your work experience.

Jesper Rasmussen: I've been working in the beauty industry for more than 25 years. It's really a long time. I'm Danish. In the first 10 years, I lived and worked in several Nordic countries. I started in the food industry and then joined L'Oréal. I've worked in L'Oréal's efficacy - based beauty department, luxury goods department, and mass - consumer goods department. I left L'Oréal about 17 years ago and joined Estée Lauder Companies. I worked in Denmark for the first three years and then went to Germany and stayed there for three years. Later, I transferred to Clinique and was in charge of the brand's EMEA (Europe, the Middle East, and Africa) regional business.

36Kr: Will it be a bit uncomfortable to move from a large company to a startup like The Ordinary?

Jesper Rasmussen: Denmark only has a population of 5 million, so we're used to constantly adapting. Although I just took office last year, I've been at The Ordinary for three years. I still remember the first time I met the founder of DECIEM seven years ago. So I've had enough time to get familiar with the cultures of DECIEM and The Ordinary.

36Kr: But your temperament and experience are quite different from those of the two founders.

Jesper Rasmussen: To be honest, I think the company chose me not so much for my ambition as for these three qualities: a deep understanding of the essence of the beauty industry, the decision - making ability to take on responsibilities, and the ability to be inspired by DECIEM's wild creativity. Just like a jigsaw puzzle, our qualities fit perfectly. It's not about who is better, but about who is more "compatible" - someone who can lead the team forward and at the same time protect the brand's rebellious genes.

36Kr: After the acquisition, is The Ordinary still a 100% independent brand?

Jesper Rasmussen: I don't quite agree with the statement of "100% independent" - in fact, we don't need such absolute independence. The support from Estée Lauder Companies is exactly what we need. However, in actual operation, we do maintain independent decision - making power: all decisions such as new product development, product listing and delisting, and marketing activities are made independently by us, and the group is usually not informed in advance. This is not to keep it a secret from the group, but is determined by our independent operation model.

In the process of brand globalization, a large amount of resources need to be invested in each regional market, and it's difficult for us to bear it alone. This is where the advantages of Estée Lauder Companies come in. Our entry into the Chinese market is thanks to the localization capabilities of the excellent teams of the group. Only in this way can we succeed in the global market.

36Kr: As the CEO, how do you coordinate all this, especially between the group's standardization and the brand's tone?

Jesper Rasmussen: I'm the only one in the entire DECIEM company who reports directly to the group's CEO, and there are no other reporting relationships. This design not only guarantees our decision - making autonomy but also doesn't prevent strategic collaboration when necessary.

I want to say that I really enjoyed working with the former CEO, Fabrizio Freda, and now I also really enjoy working with the current CEO, Stéphane de La Faverie - I've been reporting to him for the past three years. Our cooperation relationship is very independent. Of course, it doesn't mean I can "relax". He has high expectations and requirements for me.

We're a brand that wants to disrupt the industry and pursue innovation. But as the global president of the brand, I need to consider practical factors. Many employees need to earn a living every month, and I must respect this and shoulder the corresponding responsibilities, maintaining a certain sense of rules and structure in the company. This delicate balance is very important, right?

36Kr: In your opinion, will there be more brands emphasizing scientific efficacy in the future beauty market, or will luxury make a comeback?

Jesper Rasmussen: The market will always provide development space for various brands. The current market pattern is far from being finalized. Consumers' demand for truly effective products will continue to grow - this trend is not only reflected in the skin - care field but is also affecting the makeup industry. When communicating with users, I find that they have rich product knowledge. This professionalism prompts us to conduct more systematic product education, including the working principles of ingredients, pricing basis, and packaging design concepts. But it's certain that the trend of pursuing the actual efficacy of products is still in a stage of rapid development and far from reaching its peak.

36Kr: What are your expectations for the Chinese market?

Jesper Rasmussen: First, become the No. 1 skin - care brand in Sephora China. We're already one of the top three best - selling skin - care brands in Sephora globally.

36Kr: Finally, give me a figure. How close is The Ordinary to achieving $1 billion in revenue?

Jesper Rasmussen: Very close.

36Kr: 70%?

Jesper Rasmussen: Even closer than that.

[1] Note: Since May 1, 2021, imported ordinary cosmetics have been exempted from animal testing. Special cosmetics are not included in the exemption.