Following up a resilient full-year report last week, social commerce company Crowd Media (ASX: CM8) has unveiled a further deal to supplement the growth of its new Crowd Direct division, launched less than a year ago.
In a statement to the market, Crowd Media said it executed a three-year exclusive distribution agreement with US-based skincare brand MD Complete that will see the social commerce company selling MD Complete’s cruelty-free, vegan skincare products throughout Europe.
Remaining tight-lipped about the commercial specifics underpinning the deal, Crowd Media revealed the deal’s distribution margin will be between 60-75% and declared the overarching commercial agreement fits strategically with the company’s vision of selling high-margin products and complimentary services.
The agreement states Crowd Media will pay MD Complete the actual production cost of each saleable MD Complete product, in addition to a fixed percentage of that cost as a profit margin for MD Complete – with the exact percentage remaining confidential.
MD Complete’s products are expected to be made available for sale via Crowd Media’s online channels within the next five weeks, including via online retailer Amazon.
According to the terms of the deal, Crowd Media has the exclusive right to market, promote, advertise, distribute and sell MD Complete products through Amazon in the European Union, and intends to set up a dedicated storefront within the Amazon e-commerce marketplace channel as part of the agreement.
Also, the first six months of the agreement have been deemed a pilot stage with Crowd Media retaining the right to terminate the deal for no reason within that time.
According to Crowd Media, MD Complete is an award-winning, independent skincare brand committed to providing the highest standard of at-home skincare.
The company manufacturers products with an environmentalist outlook, meaning it sources all of its raw materials from verified vendors that do not partake in cruelty to animals, as well as ensuring all products are vegan-friendly, gluten-free and free from artificial chemicals.
The company’s modus operandi is to use dermatologist-formulated ingredients combined with a “proprietary ingredient delivery system” that enables it to formulate skincare products with significantly higher levels of active ingredients “for an amplified result”.
“MD Complete is, to our knowledge, the only skincare clinically proven to match the results of in-office laser treatments and includes the leading Rx anti-ageing system. The brand’s integrative approach to dermatology offers complete care for your skin, while addressing specific areas of concern to the millennial,” Crowd Media said.
According to MD Complete founder Dr Brian Zelickson, the skincare brand was formed to provide an easier, more affordable alternative to procedures and treatments dermatologists offer in their offices.
“We spent years exploring ways to achieve in-office results with non-prescriptive skincare. It wasn’t until we discovered a unique ingredient delivery system that this goal was made possible,” he said.
New Crowd channels
As part of a “three horizon” growth strategy and a parallel bid to diversify its revenue channels, Crowd Media is actively pivoting towards a more scalable business model, including the creation of a new consumer-facing division, Crowd Direct, a distribution business that directs various consumer goods to online customers.
According to Crowd Media, the rationale behind exploring new horizons is to “sell exemplary products integral to the lives of European-based millennials” with the company keen to leverage its digital presence to distribute premium brands to customers across the EU.
The newly signed deal with MD Complete is, therefore, another milestone in Crowd Media’s drive to diversify away from existing revenue channels towards a more consumer-focused approach that includes re-selling premium products in territories with high demand.
Within skincare and healthcare more generally, the impact of COVID-19 has shifted consumer demand towards a greater focus on health, vitality and becoming more health-conscious.
By its own admission, Crowd Media has quickly turned its focus to homecare, hygiene and health products over the past six months due to COVID-19. Previous agreements that substantiate the company’s focus on its added consumer vertical include a deal with Teadora last month and Vital Group in June.
Going forward, Crowd Direct’s strategy is to target millennials and Gen Z consumers in the most lucrative European countries across 12 different languages and using influencer marketing strategies to drive MD Complete sales.
“We are excited to have executed a deal with MD Complete. A market report from Grand View Research has projected the global vegan cosmetics market will reach $20.8 billion by 2025, propelled by millennials. We will be leveraging our existing influencer network and the ubiquitous Amazon e-commerce marketplace to grow our MD Complete business in Europe,” Crowd Media chief executive officer Domenic Carosa said.