Case Study: How Merit Beauty Built a $100M D2C Brand Organically

Brand Overview:
Merit Beauty was founded in 2021 by Katherine Power with a focus on providing a limited range of makeup products that meet clear consumer needs. The brand grew organically by reducing product complexity and targeting specific customer pain points. This case study outlines the concrete actions taken by Merit Beauty and the measurable results achieved.

Founder Background

Katherine Power is a seasoned entrepreneur with a track record in consumer brands. She previously co-founded Who What Wear (a fashion media brand) and Versed (a clean skincare brand sold at Target). Her experience in digital media, brand-building, and product development shaped Merit's clear positioning and go-to-market strategy.

Product Development and Launch

Merit Beauty launched with a curated selection of makeup items that emphasized ease of use and skin compatibility. Instead of a wide assortment, the brand introduced a limited lineup—such as the Flush Balm cream blush, The Minimalistcomplexion stick, and Clean Lash mascara. Each product was developed using vegan, cruelty-free ingredients and designed to meet both EU and “Clean at Sephora” standards. This product focus allowed the brand to allocate resources effectively, reduce production complexity, and provide quality control from the start.

Key Actions:

• Product Focus: Launched with 3 core products to simplify the makeup routine.

• Quality Standards: All products adhered to strict standards, meeting two major international benchmarks.

Results:

• Achieved high customer satisfaction, reflected in a customer retention rate of approximately 40% in the U.S.

• Contributed to building a loyal customer base that favored repeat purchases.

Digital Engagement and Customer Interaction

Merit Beauty placed strong emphasis on building an online community. The company invested in social media channels to engage directly with customers, sharing behind-the-scenes content and customer testimonials. Regular updates on product development and real-life usage scenarios helped build a transparent narrative. Online channels were used both for customer education and for acquiring new customers.

Key Actions:

• Social Media Campaigns: Used daily posts and customer interaction on platforms such as Instagram and Facebook.

• Customer Feedback Loop: Monitored online reviews and direct messages to inform product improvements.

Results:

• A notable increase in website traffic and social media engagement, with metrics indicating a steady monthly growth rate.

• Customer-generated content played a role in driving word-of-mouth referrals, reducing customer acquisition costs.

Retail Partnerships

Although fundamentally a D2C brand, Merit Beauty entered strategic retail partnerships to broaden market reach. The company secured a deal with Sephora, allowing its products to be available in physical stores in North America and in the UK. This step did not alter its direct-selling model but provided an additional channel to reach a wider customer base.

Key Actions:

• Retail Expansion: Partnered with Sephora, initially in the North American market and later in the UK.

• Controlled Distribution: Maintained exclusive product presentation and pricing strategies in retail outlets.

Results:

• Reached a milestone of $100 million in retail sales by 2023.

• Increased brand visibility by positioning products in over 1,400 retail locations, contributing to steady revenue growth.

Financial Milestones and Investments

Merit Beauty’s growth was supported by external investment at a critical time in its development. In September 2021, the company secured a $20 million Series A funding round led by L Catterton's Growth Fund. This capital was used to expand production capacity, invest in research and development, and enhance the digital marketing infrastructure.

Key Actions:

• Fundraising: Raised $20 million to scale operations and diversify the product range.

• Resource Allocation: Invested in technology for data collection and analysis to understand customer behavior better.

Results:

• The investment accelerated the company’s ability to scale, with measurable increases in both revenue and market reach.

• Enabled the launch of additional products such as the fragrance Retrospect in October 2024, after a two-year development cycle.

Takeaways for Aspiring D2C Founders

Merit Beauty’s journey underscores several actionable lessons:

• Focused Product Strategy: Launch a small number of high-quality products to build customer loyalty.

• Digital and Social Media: Use online platforms to create transparency and gather customer insights.

• Strategic Partnerships: Utilize retail channels selectively to extend market reach without diluting the brand’s core message.

• Investment in Data: Leverage customer data to continuously refine the product lineup and marketing strategies.

By adhering to these specific actions with measurable outcomes, Merit Beauty demonstrates that a clear focus on quality, customer engagement, and strategic expansion can lead to significant organic growth in the competitive U.S. D2C market.