New TikTok Shop Spurs BK Beauty

Paul Jauregui had much to celebrate when he first appeared on this podcast in 2020. BK Beauty, the cosmetics company he co-founded with his wife, Lisa, had reached $1 million in sales in its first year. He returned in early 2022 with more good news: The company had launched a thriving affiliate marketing program and bypassed the Facebook ad meltdown from iOS 14.5.

He’s back, having surpassed a whopping $10 million in annual revenue, bolstered by early success on TikTok Shop. In this our third interview, he shares BK Beauty’s growth challenges, positive TikTok vibes, and more.

The entire audio of that conversation is embedded below. The transcript is edited for clarity and length.

Eric Bandholz: You’ve reached $10 million in annual sales in just four years.

Paul Jauregui: Yes. Three years ago, we were celebrating crossing the $1 million mark. Last week, we just crossed into eight figures. Managing that comes with challenges. We’ve learned a lot. Our business has three components at any given time — supply, demand, and delivery. Along the way, we’ve had supply-related problems, forecasting glitches, and inventory shortages.

On the demand side, paid customer acquisition was a big part of our recent growth. Going from $5 to $10 million in annual sales throws the supply equation out of whack. We’re doing fulfillment in-house, so our capacity to deliver goods and packages to our customers and get them out the door is reaching a level I never expected. Last month, we shipped over 20,000 packages. We have a daily baseline but still experience huge spikes with various events and launches.

Bandholz: You’re now selling on TikTok.

Jauregui: We’ve been on TikTok Shop for about a month and a half. These are the pioneering times. When we joined, it was before Shopify rolled out its native integration. We found some initial success. We were also onboarding into Amazon. We were midway through the process and working with Amazon’s emerging brands team. However, a few days ago I emailed Amazon to push that launch into 2024.

Instead, I need to focus on an area of the business that aligns more with our DNA. We’ve always worked with content creators on social platforms. TikTok Shop aligns well with that effort. We’re seeing a lot of success. It makes up about 15% of our total revenue on any given day, and that’s growing.

However, TikTok is spending a lot of money extending discounts to buyers on the platform — roughly 20-40%. We don’t pay for that. It drops directly to the bottom line. TikTok also offers free shipping, which goes into my pocket too. Both of those — discounts and free shipping — are helping with conversions.

There are many benefits to getting in now with TikTok Shop. We anticipate heavy promotions by TikTok during the holiday shopping period in three key areas: merchants, consumers, and content creators.

We’ve been running an affiliate program via ShareASale. That’s how we’ve compensated folks on platforms like YouTube. However, it was not easy to have an affiliate link on TikTok. There’s no description box below the videos, and not everyone goes into the comments. We would see a video on TikTok about us, and our YouTube organic traffic would surge because folks had to Google us to learn more and buy our products.

All of that now takes place on TikTok. Folks watching the videos can check us out right there. Before TikTok Shop, dozens of prominent creators on that platform talked about our products. But, again, there was no kind of clear path to buy. I looked at it as top-of-the-funnel awareness.

Now TikTok captures the actual transaction. The sales come from content creators talking about products they love. TikTok has enabled them to monetize that more effectively and share it with the consumers without leaving the platform.

One of our top videos on TikTok has about 1.7 million views. A content creator put it out a few weeks ago. It’s generated low five figures in sales and a good deal of commissions for her.

Bandholz: Is that process similar to Meta’s shops?

Jauregui: No. We’re on Facebook and Instagram shops. We have ads running on those platforms. But it’s not getting much of my attention. Ecommerce is a priority for TikTok. They have their own native affiliate program, checkout, and ability to create demand and awareness. There’s even a TikTok fulfillment. It’s all self-contained.

TikTok’s ecosystem is unique. Meta’s advertising platform is the world’s most efficient customer acquisition solution. TikTok has that, too, but it’s enabling creators to earn a commission, incentivizing them to produce more content. Meta creators don’t get commissions that I’m aware of — at least not in a straightforward way.

So our focus now is educating creators on TikTok and getting them onto TikTok Shop. Many creators have not tried it. To help, our team created a guide. We’re contacting creators already talking about us on TikTok. That’s where we see the most success.

Bandholz: Where can folks reach out to you?

Jauregui: Our site is BKbeauty.com. I’m @pauljauregui on Twitter. I’m also on LinkedIn. Reach out, and I will send you that guide.