Dive Brief:
- Hair and skin care brand Rodan and Fields on Monday announced changes to its business model, according to a company press release.
- The company will move away from a multi-level direct selling model starting Sept. 1. Current Rodan and Fields consultants will become part of a new affiliate program. Commissions made through product sales via recruitments will no longer be part of the brand’s business model.
- Additionally, the brand has reconfigured its corporate structure and has eliminated around 100 roles.
Dive Insight:
Rodan and Fields has pulled back from its multi-level marketing model because it wants to streamline operations and reach new customers, according to the company.
Instead, the brand will support its consultants through marketing and advertising across traditional channels and social media. Consultants will receive increased commissions on sales and product discounts, resulting in over 90% having “higher earning potential based on their current sales performance,” per the company.
“We are confident these changes will enable us to meaningfully expand the lives we can impact and — importantly — allow us to continue to provide our passionate Consultants with a modern and meaningful earning opportunity,” Dimitri Haloulos, CEO of Rodan and Fields, said in a statement regarding the changes.
The company and its founders recently faced a class action lawsuit in California regarding the classification of its consultants. The filing claimed that Rodan and Fields exploited its California sales force by misclassifying them as independent contractors instead of employees. The lawsuit also alleged that in 2022 one-third of its consultants did not receive a commission check during the year. Rodan and Fields declined to comment to questions regarding the lawsuit or further questions regarding the change in business model.
The brand was founded by dermatologists Katie Rodan and Kathy Fields in 2000 and was acquired by Estée Lauder Companies three years later. The founders bought back the company in 2007 and by 2008 relaunched it with a direct sales model with independent consultants. In 2018, private equity firm TPG Capital took a minority stake in the brand.
Rodan and Fields employs over 500 people and has more than 300,000 independent consultants, according to the company’s website.
