Wrinkles Schminkles founder Gabrielle Requena (right) on Shark Tank. Photo/News.com.au
Wrinkles Schminkles founder Gabrielle Requena (right) on Shark Tank. Photo/News.com.au
The creator of an anti-wrinkle mask that made a splash on TV shows including the Real Housewives of Sydney has struggled to win over the Shark Tank judges due to a worryingly low number of repeat purchases.
Gabrielle Requena entered Tuesday night's episode seeking AU$300,000 (NZ$327,000) for a 17 per cent stake in her business Wrinkles Schminkles — a range of silicon patches that women can wear overnight — valuing it at AU$1.73 million.
"We have a product that women find out about, use, repeat buy and tell their girlfriends," the digital marketer said. "We are a non-surgical, non-invasive method of treating wrinkles at home endorsed by plastic surgeons and dermatologists globally."
The product is now sold in Australia and the US by retailers including Neiman Marcus, Nordstrom and Macy's. Ms Requena said the non-surgical cosmetic treatment market in Australia was now worth AU$1.1 billion.
"It's a big market and it's growing," she said. "As the social acceptance for these treatments like lasers, peels and cosmetic injections continues to grow, so can the demand for a home-care product like Wrinkles Schminkles that delivers exceptional results and is more affordable to the masses."
The investors were not impressed by what was pitched. Photo/News.com.au
Requena said the business had sales of AU$53,000 in 2015, AU$335,000 in 2016, AU$649,000 in 2017 and was forecasting sales of AU$693,000 in 2018, with a net profit margin of 38 per cent and a gross profit margin of 75.5 per cent.
Tech entrepreneur Steve Baxter was impressed with her profit margins. "You're making bloody good money," he said.
But Greencross founder Glen Richards was concerned that the strong growth appeared to be levelling off. "So what's happened? You've gone into stagnation mode," he said.
Boost Juice founder Janine Allis added, "Normally if you get AU$150,000 in sales, people go, 'Oh my God', they tell all their friends because you look 10 years younger, and then it just goes nuts. So it's kind of done that, and then not."
Ms Requena blamed it on a number of big PR events that were "difficult to replicate". "We had a huge piece of PR in the US on the Today show, which drove $150,000 in sales in week," she said. "We also had an appearance on the Real Housewives of Sydney, so that drove a reasonable spike in Australia."
Glen said customers should "be buying from that point forward". "You've managed to get some incredible publicity, so what's happened to the follow-up engagement with digital or social?" he said.
Ms Requena said Wrinkles Schminkles had a "really good repeat purchase rate" of 19 per cent of its database — but the Sharks said 19 per cent was anything but good.
"Nineteen per cent repeat should be 90 per cent repeat if they've bought it once and loved the product," Glen said. "The issue I have, it's sitting at 19 per cent repeat business and that bothers me after so long."
The product is sold in the US and Australia. Photo/News.com.au.
Janine agreed with Glen. "You've got great gross margins and great net profits so you've got a great business," she said.
"But I see business as like a bucket — you put your customers in, then if people love it the bucket gets filled, then you need another bucket. At the moment you've got a bucket with holes. There's something you've got to find, customers are going, 'It's good but …' You haven't found the 'but' answer."
Investor Andrew Banks and RedBalloon founder Naomi Simson had different concerns. Andrew said the business was "very tempting".
"I like the size of the market and I like the way you're addressing it, the problem is people copying," he said. "I think you're going to educate the market. The big guys will see that and they will start copying the product."
Naomi said there was a "lot of risk involved here". "You're at the beginning of many relationships, of which some will work and some won't," she said.
That just left Steve, who said Gabrielle's future looked great if she could follow through, but in order to make an offer he would need to take at least 40 per cent of her business. "They're the ones who bottom feed, I don't," he said.
