The Growth Strategy Behind Goop, a Brand Owned by Gwyneth Paltrow
When thinking about successful brands that started out online goop may not come to mind. But over more than a decade Gwyneth Paltrow’s lifestyle brand has grown from a weekly newsletter into an eCommerce, media and events empire valued at $250 million in 2018.
It all began in 2008 when Paltrow sent her first weekly newsletter which focused on lifestyle advice to family and friends. A year later the newsletter had nearly 150,000 subscribers. By 2018 goop had over 8 million subscribers. goop’s newsletters are very popular with open rates of up to 40% which is twice the average for the lifestyle category. Those newsletters produced 35% of the traffic to goop’s website at one time. That growth did not happen simply because Paltrow is a celebrity. Actress Blake Lively who also has a huge following launched her own lifestyle brand and website called Preserve in 2014 but the actress was forced to quickly shut it down within a year due to a lack of interest.
goop’s success is due to Paltrow’s vision for what goop could be. Tony Florence, a venture capitalist and goop’s first institutional investor has said: “Gwyneth was super sophisticated in how she thought about the market opportunity.” While Paltrow started with a newsletter she eventually monetized that following in ways that have proven to be hugely successful. If you are trying to build your own successful direct to consumer brand here are some of the cues you can take from goop’s success.
1. Build a loyal following before you monetize. 150,000 subscribers. That’s the number of subscribers Paltrow reached in year two. If you had that many subscribers wouldn’t you start monetizing them? Paltrow had different ideas, instead she continued to focus on content. Speaking about why she waited several years before monetizing her brand Paltrow said: “I was doing something from a very real, very honest place.” “There wasn’t anything commercial about it. So when we decided to foray into commerciality, there was something to trust.”
In 2011 Paltrow published a cookbook called My Father's Daughter: Delicious, Easy Recipes Celebrating Family & Togetherness. But it was not until 2012, four years after she sent her first newsletter that goop ventured into eCommerce. The brand decided to sell a $95 t-shirt online made in collaboration with Kain Label. The t-shirt quickly sold out. After testing the waters with a single product launch goop began selling a limited exclusive collaboration between Paltrow and other brands each week. From those humble beginnings the start of larger eCommerce business was born. Today goop sells hundreds of brands on its website including its own products.
While no one likes to wait and many think waiting years while building a following is unconscionable consider the alternative, trying to sell a product when you have limited or no brand awareness or equity. The fact that someone as famous as Paltrow still felt she needed to build trust shows that for most start ups you can’t put the cart before the horse no matter how much you want to.
Blakely Lively discovered how hard it is to crack the direct to consumer space when she launched her lifestyle website called Preserve in 2014. The site was supposed to “blend commerce, storytelling and philanthropic efforts” all in one place. The launch of Preserve was even featured in Vogue with the type of exposure that any direct to consumer brand would die for. Despite Lively’s star status, after one year she shuttered the website. Speaking about her entry into and quick exit from the lifestyle space Lively said: “we have an incredible team of people who do beautiful work, but we launched the site before it was ready, and it never caught up to its original mission. It’s not making a difference in people’s lives, whether superficially or in a meaningful way.”
2. Find the white space. One of the reasons goop is so popular is because it sets the trend instead of following it. A prime example of this is the current craze around gluten free diets. Back in 2013 Paltrow not only talked about eating gluten free foods she wrote a cookbook on the subject. Speaking about that time Paltrow has said: “I wrote a gluten free cookbook like eight years ago and people wrote that Child Services should be called on me because I was starving my children.” “That was a good one. And you know, now gluten free is mainstream.”
goop also entered the clean beauty space early. Speaking about this Paltrow has said: “when we started, there was really no company doing luxury clean skincare for women, and we saw a big white space.” “I thought, ‘I’d really love a great moisturizer than doesn’t have anti-freeze in it.’”
Paradoxically, going into a crowded market can feel easier. There are established business models, you have a sense of what’s working and what’s not and thus a clearer roadmap to success. Entering a niche market is much scarier. You are unsure if your product or service is going to take off. But as the old saying goes where there is risk there is reward.
Trying to figure out what the white space is within your industry? It’s easier said than done. One of the ways goop has generated novel ideas is by analyzing its website traffic. In 2015 goop published a post about beauty products without endocrine disrupters and formaldehyde that generated a lot of website traffic. That prompted Paltrow to launch goop’s first product line, a collection of beauty products without toxic ingredients in 2016. The line called goop by Juice Beauty quickly became a hit. Within a week after the line launched one of the more expensive lines within the skin care set, the Discovery Set, which retailed for $125, sold out.
By contrast, Sephora launched Clean at Sephora in 2018 with the goal of making Sephora the place to go to for non-toxic beauty products. Clean at Sephora brands do not include ingredients such as sulfates, parabens or formaldehyde. Sephora’s launch was two years after goop moved into this now in-demand space.
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3. Consider multiple avenues for growth. To be successful and to have longevity you will need to reinvent yourself at some point. Is Amazon an eCommerce company or a cloud computing company or a media company? When most people think of Amazon they think of online shopping but Amazon makes most of its money through cloud computing. In 2022 Amazon’s cloud computing business, Amazon Web Services generated 186.5% of Amazon’s operating income while only generating 15.6% of Amazon’s revenues.
It would have been easy for goop to view itself as just a media company focused on blogs and newsletters. It could have stuck with generating revenue through advertising but that would have limited the company’s growth. Instead a key part of goop’s success is Paltrow’s broader vision for what her company is and what it could be. Paltrow has even said that she aspires for goop to be like Disney where Goop generates revenues through: “online retail, offline experiences, ad partnerships and more.”
goop is largely down the path to become the Disney of the lifestyle industry. goop has so many lines of business it’s hard to keep up. Let’s start with books. In 2011 Paltrow published the cookbook Notes From My Kitchen Table. In 2013 Paltrow published another book called IT'S ALL GOOD: Delicious, Easy Recipes That Will Make You Look Good and Feel Great and since then she has published more books.
Not content to be a just an online retailer goop went offline for the first time with a pop up store in 2014. To fund the costs of its pop ups goop often partners with brands who front the operating costs ensuring that Goop’s pop ups are profitable ventures. Speaking in 2018 about the model goop’s former chief revenue officer Kimberly Kreuzberger said: “this model covers our overall retail cost and is rare for a brand opening a pop-up.” “There’s safety for the partners because they know the foot traffic will be there, while we’re able to subsidize the overall investment.” At the time Kreuzberger revealed that on average one of goop’s pop ups will have 10 sponsors, each contributing an average of $100,000 with some paying in the seven figures.
goop opened its first brick and mortar store in 2017 and now sells its products at Sephora and several other retailers. Over the past decade the brand has also designed shoes with Christian Louboutin and furniture with CB2. By 2019 goop generated 70% of its revenues from product sales including its own branded line of products.
What business do you think your company is in? The possibilities might be broader than you think.
4. Create a strong community of fans. The New York Times says there are three Cs which are central to the digital era: “community, conversation and content”. Goop is executing well on each of these elements. While the company started with content it has effectively used that content to create a strong sense of community within its customer base. One of the ways it has done this is through live events. In 2017 goop launched In goop Health, a health and wellness summit that brings conversations about important health and wellness topics to life.
Guests at In goop Health are treated to panel discussions with industry experts, kombucha, and healthy food. The event isn’t for everyone with tickets ranging from $650 to $4,500 in the past. But the high price only adds to the cachet of the brand making attendees feel as if they are part of an exclusive community of people. This exclusivity has led to sold out events.
In addition to the summits goop now has five stores. These stores are another way to bring the brand to life and connect directly with customers. These stores often hold events (when available) like clean beauty masterclasses, Q&As with nutritionists, trunk shows and workout classes with best in class trainers.
As much as eCommerce has grown it doesn’t beat face to face communication. As former Burberry CEO and former head of retail for Apple, Angela Ahrendts has said: “I think as humans we still need gathering places.” “And when you are serving digital natives, the thing they long for more than anything is human connection. Eye contact.”
An active and engaged community of super fans is how lululemon which also holds classes and organizes events created a multi billion dollar brand and that strategy is also working for goop.