The company raised $1.8 billion in an IPO in September 2021 with a valuation of more than $15 billion, with net sales increasing 81 percent year-over-year in its third quarter. In November 2021, the brand said it expected to end the fiscal year with at least $580 million in net sales.
Coming off of its IPO, Olaplex is hoping to build on its current momentum, betting that it can translate the consumer enthusiasm for its hero product into a multi-step hair care routine, all featuring the brand’s patented technology.
But with rapid growth challenges await: increasingly, competitors, both old and new, are employing a similar science-fuelled approach to hair care. To be successful going forward, the brand will have to grow its product lineup without cannibalising sales and retain customer loyalty in a crowded environment — all while creating an internal infrastructure that can support this high-level growth.
“[An] IPO is not the end, it’s the beginning,” said chief executive JuE Wong. “You’re under more scrutiny but you also have more opportunities.”
Behind the Rise
Dean Christal and Eric Pressly founded Olaplex in Pressly’s garage in Santa Barbara, Calif. in 2014. They initially created the brand for hair care professionals, launching three products called No. 1 Bond Multiplier and No. 2 Bond Perfector, for professional salon use and No. 3 Hair Perfector for at-home care. Olaplex patented that product’s star ingredient, bis-aminopropyl diglycol dimaleate, which is meant to repair and reconnect broken bonds in hair, a year later. It’s still found in every Olaplex product.
Olaplex gained a following in salons, but it was landing in the hands of celebrity hairstylist Tracey Cunningham, whose clients included Jennifer Lopez, Drew Barrymore and Jennifer Garner, that was a game-changer for the brand. Christal and Pressly credit Cunningham’s influence as a major driver behind the brand’s early successes, which helped to open up interest in ‘bond repair’ as a subcategory in hair care. The brand’s first consumer treatment, called the No. 3 Bond Perfector has since become the brand’s hero product.
“There’s so little innovation happening [in the beauty market],” said Jenna Rosenstein, beauty director at Harper’s Bazaar. “Their patented technology is really unlike anything else and it’s what sets it apart from competitors.”
Olaplex kept ramping up its consumer products division, and by 2019, private equity firm Advent International acquired Olaplex for an undisclosed amount and hired Moroccan Oil executive JuE Wong as the brand’s new chief executive.
At the time, the brand only had five products, and professional products accounted for 47 percent of its business. Eager to grow Olaplex’s consumer-facing business, Wong invested in the brand’s digital presence and direct-to-consumer e-commerce offering, revamping the website, investing further in social media strategy and expanding further into China through partnerships with Amazon. Doing so ended up serving the company well once the pandemic hit, which forced salons to close and put the company’s professional business — which still accounts for roughly half of all sales — on pause.
“In hindsight, it made me look like a genius,” said Wong.
Even with salons closed, Wong found a way to keep the brand’s professional business going as well: it launched a 90-day affiliate programme for stylists, which generated close to $400,000 in commissions and well over a million dollars in sales.
But it was the company’s DTC business that thrived during the pandemic, as consumers focused on hair care in lockdown. The growth of Olaplex’s DTC and retail categories, including Sephora and Ulta, now outpace its professional offering. Speciality retail and DTC net sales grew 128 percent and 87 percent from 2020 to 2021, respectively.
Revenue for hair masks and scalp treatments, in particular, has doubled since 2019, according to data from NPD. Olaplex is outpacing the overall hair care category, which saw revenue grow by eight percent in 2020 over the year prior, as well as the rest of the US prestige beauty market, which declined. That momentum has also continued past lockdowns: from January through August 2021, hair product sales increased by 55 percent versus 2020, according to NPD.
Wong credits the brand’s growth in part due to a trend she calls “skin-ification of hair.” Consumers’ approach to hair care is increasingly resembling their approach to skin care, creating multi-step routines that go beyond shampoo and conditioner. Those customers are particularly desirable for brands because they aren’t swayed by a heftier price tag — as long as they see results.
“When prices go up, they’re willing to pay a premium,” said Wong.
Olaplex has been building out its product offering to cover more steps of that routine, launching two products over the past year to bring its total offering to eight. Demand has followed: the average customer on Olaplex’s website buys approximately three to five products in a single transaction, according to the company. For the brand, it’s been a demonstration of interest in what the company is doing beyond its hero product, the No. 3 Bond Perfector.
“What’s very impressive is none of the new products cannibalises sales of the existing products,” said Joanna Kim, an analyst at Cowen.
TikTok also deserves some of the credit for the brand’s growth, with its No. 3 product earning viral status on the platform: the hashtag “Olaplex” has approximately 567 million views on the platform alongside hair transformation and tutorial videos. The brand mainly relies on user-generated content to populate its own channels, from which there is an abundance to choose. On average in the last 90 days, Olaplex had 400,000 posts about its products across channels, according to the company.
Olaplex’s IPO will allow it to manage demand and maintain sustainable growth, building out research and development as well as marketing and distribution channels. Wong added that the recognition from its offering has opened the brand up to a new pool of talent it intends to scale quickly this year.
“We want to stay very focused, very structured, very disciplined,” said Wong. “Newness not for the sake of newness … we will formulate until it is the right formula.”
Wong is wary of supply chain constraints and has ensured the team has a cushion against the timeline they’ve set for themselves. It helps that Olaplex carries a relatively small number of products, most of which come in the same bottle, which makes for a simpler fulfilment process.
For the next three years, the company is on pace to launch one professional and two retail products a year. Currently, Olaplex’s R&D team is working on a production schedule for 2025 to 2029. It’s also looking at expanding its retail presence, inking a new partnership with Ulta last year.
There are still challenges ahead, mainly in the form of increased competition. Bond building has become a category in its own right, with competitors ranging from Amika to Bumble and Bumble. Barbara Sturm, Augustinus Bader and other prestige skin care brands have also entered the hair care category, hoping to build on the loyalty they’ve built with consumers.
“It’s inevitable that others are going to want to enter, but I do think [Olaplex is] very well positioned,” said Manola Soler, an analyst at consulting firm Alvarez & Marsal. “At the core, their strategy is to have a really good product, and it seems to work.”