Why beauty unit economics are their own thing
A skincare brand often runs a 70–80% gross margin on D2C, which makes the P&L look healthy on paper. The reality is that the gross margin is consumed by the capital intensity of getting product to market: tooling for primary packaging at £40k to £100k per hero SKU, secondary packaging, formulation cost amortisation, regulatory cost including CPNP submission and safety assessment, and the MOQ commitment on the formulation that puts six months of cash into inventory before the first unit ships.
The CFO job is to plan around this cycle, model it per SKU, and decide on launch timing against cash position rather than against marketing readiness alone.
The retail transition
Most successful UK beauty brands eventually move into specialist retail (Cult Beauty, Space NK, Sephora, Boots, John Lewis). The transition typically halves contribution margin per unit through retailer margin and listing obligations. The decision to enter retail is therefore a margin decision and a volume decision combined: how many additional units must move at the retail contribution margin to compensate for the absorbed cost of acquisition elsewhere. The maths is rarely intuitive and is usually under-modelled before the first listing is signed.