A few years ago, men’s hair care products were mostly limited to 2-liter containers of five-in-one, multi-purpose formulas that were meant to serve as shampoo, conditioner, body wash, face wash and deodorizer. Bottles were relegated to a forgotten corner of store shelves. Packaging was red or black, and messaging was hyper-traditional and masculine.

For Hilary Coles’ fiancé, her coworker Andrew Dudum and all of their friends, none of it gelled with their self-image or lifestyle. Coles and Dudum realized there was an opportunity there, and market research has continually confirmed their suspicions that existing men’s products weren’t catering to everyone. In fact, Coles points to a survey from research firm Kantar Group in which 9% of men in Generation Z recently described themselves as “very” or “somewhat feminine” compared with an average 2% of men across the previous four generations.

“That’s an unbelievable seismic shift,” says Coles, who co-founded men’s beauty brand Hims with Dudum after connecting over wellness topics while working at another consumer startup. “We wanted to establish a spectrum of options. There are men who are ready for a Vitamin C serum and reading up on it to try to optimize their skin, and then there are men who don’t really know where to start, but they aren’t happy with the way their hairline looks.”

Launched as a digitally native brand in November 2017, Hims gave guys a modern, nuanced alternative to drug store products typically geared toward men of the lumberjack variety and bad, embarrassing Rogaine commercials. Coles and Dudum set out to debunk the myth that men aren’t interested in self-care regimens and sought to normalize issues like hair loss and erectile dysfunction, or ED, that often are uncomfortable to discuss. ForHims.com publicizes statistics aimed at destigmatizing touchy topics: “You’re not alone. Hair loss affects 50 million men in the U.S.” and “40% of men by age 40 struggle with ED.”

The brand’s strategies allowed Hims, ranked No. 450 in the 2020 Digital Commerce 360 Top 1000, to more than triple its sales in 2019 versus the prior year and snag placement in Target Corp. stores. This week, the company announced it will merge with a special purpose acquisition company (SPAC)—an accelerated alternative to an initial public offering—sponsored by Oaktree Acquisition Corp. The combined company, valued at $1.6 billion, will go public once the transaction is completed.

Coles, who now serves as vice president of merchandising, says the brand’s success stems from its ability to create a culture that grants permission for men to consider their personal wellness needs beyond just regular trips to the gym. Caring for their bodies also includes addressing stubborn acne or adding preventative anti-aging measures.

Hilary Coles, co-founder and vice president of merchandising at Hims

Although Hims also sells over-the-counter items, the “vast majority” of its consumers buy products that require a prescription, Coles says, and a doctor’s green light lends the brand credibility. As a telehealth company, Hims has a network of licensed medical providers in each state and facilitates a virtual evaluation—either in real time or asynchronously—for men shopping for prescription-strength shampoos, creams and pills. Hims takes the friction out of the purchase process by removing the need for a doctor’s office visit and the associated annoyances of waitlists, copays and other deterrents, and offering remote appointments that help guys understand the safest and most effective options for them, Coles says. The company has facilitated more than two million remote consultations to date.

Market research suggests men also tend to be particularly brand loyal and don’t explore as much as women once they find something that works for them, Coles adds.

Within skin care, women try new items every one to three months while men check out different products every three to six months, according to focus groups and consumer surveys, a company spokesperson says. Overall, men are less adventurous within the beauty, grooming and wellness space while women enjoy shopping across a lot of different brands.

“Even if women have a few tried-and-true products that they are loyal to, they will still continue to experiment,” the spokesperson says. “Men tend to like a one-stop shop where they can get a variety of products from one brand due to convenience.”

That paired with the replenishable nature of the products means a recurring revenue stream for Hims. 90% of the brand’s consumers also set up recurring deliveries, and as of June, the company boasted roughly 260,000 subscriptions.

Redesigning men’s products and marketing with humor

Another key move was redesigning the look and feel of men’s products. When Coles’ fiancé ordered items online from other retailers, the delivery was typically one “sad” box rattling around in a bigger box.

“When I order a [women’s self-care] product, it looks beautiful. Everything is placed intentionally, I have samples, I practically have rose petals in there,” Coles says. “It feels purposeful and considered. That’s one of the pieces we thought was missing in the men’s space.”

To combat the lackluster unboxing experience for many men’s products in this category, Hims didn’t skimp on anything. The brand uses high-end New Zealand craft paper for the boxes, items are packed so they don’t roll around when boxes are opened, and the retailer’s third-party logistics company sprays every order with perfume before it ships. The reds and blacks of stereotypical men’s packaging were replaced with shades of neutral tans, and even the products themselves were formulated to give a softer finish in the shower.

“We made these products that historically have been so hard to talk about, something that you didn’t need or want to hide in the back of your cupboard but rather were proud to showcase,” Coles says. “We strongly believed that there was that flywheel there, and it paid off.”

Within weeks of launching, the startup’s Instagram account was flooded with men sharing unboxing videos of them opening Hims’ hair kit, talking about the results, and sending before-and-after photos. This sparked a viral, organic marketing campaign that relied on word of mouth, Coles says.

Hims’ tongue-in-cheek voice also has served the company well from a marketing perspective, she adds. The brand found humorous messaging allows Hims to break the ice on subjects men are self-conscious about, making them more willing to talk, shop and even share those before-and-after photos or other user-generated content.

Perhaps the company’s most memorable campaign featured phallic cacti ads plastered over New York City subways and other areas—a nod to erectile dysfunction. Hims also orchestrated a “urinal domination,” or a takeover of toilets at Oracle Park (formerly AT&T Park) in San Francisco, triggering social media posts from baseball fans. Additionally, the brand hired rapper Snoop Dogg to narrate an animated commercial naming Hims as a way out of erectile dysfunction. There is even a fair share of suggestive eggplant emojis sprinkled throughout messaging on ForHims.com.

“We’re willing to go there to break through and let people know we don’t have to take it so seriously,” Coles says. “No one in the history of ballparks ever wanted to advertise in a urinal, but we looked at it as a creative marketing channel that let us have a captive audience for 90 seconds. And images like the cacti are these instantly recognizable symbols for the health topics we’re addressing.”

Strategies for growth

The startup has built a cult following, and it’s showing in the financials. Hims grew web sales by 222.6% in 2019, reaching a Digital Commerce 360-estimated $100 million in annual revenue in just over two years in business. The brand was the second-fastest-growing online retailer among 55 merchants tracked by Digital Commerce 360 that sell cosmetics, skin care and hair care to U.S. consumers.

Hims says its compound annual growth over the last two years passed 100%, and that it more than doubled gross margins to more than 70%. According to an investor presentation viewed by CNBC in late 2019, Hims expected to hit $250 million in recurring revenue by the end of 2020. And that was before COVID-19 boosted sales for personal care products.

Of the 55 cosmetics/skin care/hair care retailers studied, just three are devoted to the male demographic: Hims; Thirty Madison (No. 1277 in the 2020 rankings of the Next 1000), the parent company of hair-loss treatment brand Keeps; and Tiege Hanley (No. 1677), which bills itself as “uncomplicated” skin care for men. Collectively, these men’s brands represent just 1.0% of the total 2019 ecommerce revenue from the group of 55 beauty retailers. But the three men’s brands increased collective online sales by 153.1% in the same year, with Hims pulling up the group’s results, compared with 30.7% growth for the remaining 52 retailers outside of the men’s space. Even when Hims’ outsized growth is less heavily weighted by looking at median year-over-year jumps, the group of men’s brands still outperformed the other 52 retailers analyzed: 34.5% versus 23.1%.

The recent success of men’s brands signals a major opportunity for a relatively untapped market, says Eric Roth, managing director at investment firm MidOcean Partners.

“There are interesting personal care/beauty businesses totally focused on men with a higher price point and premium product, and that’s a trend people have been waiting for and watching,” he says. “From our perspective, it’s starting to really take off. There’s some pretty good scale there.”

There are no signs of slowing down particularly for Hims, which added a women’s line called Hers to its inventory in October 2018. In late March 2020, the brand launched both lines at Target (No. 12), selling hair care, skin care and supplements in all stores. By September, Hims expanded its Target offerings to include sexual wellness products as well, and consumers can now find lubricant, urinary tract powder, collagen powder and other items.

Gaining a store presence has been imperative for Coles since before the company even launched. The brand’s goal of democratizing affordable health and beauty products requires some sort of brick-and-mortar footprint, she says, and Target was the perfect “front door” for introducing the brand to new audiences.

Hims is one of 20 digitally native vertical brands, or DNVBs, among the 55 retailers analyzed, and its entry into Target makes it the twelfth personal wellness DNVB to branch out into other retailers’ stores. With more than half (60.0%) of these DNVBs opting to sell wholesale through big retail chains, this group largely still understands the power of physical stores in a world where more than 90% of purchases in the subcategory happen offline.

The COVID-19 impact

Yet, during a time when in-store shopping is less than ideal, DNVBs have benefitted from more consumers turning to the web, and Coles says the pandemic helped Hims reach new demographics. People haven’t been able to shop in person or comfortably make routine salon and doctor’s appointments like usual, but they likely have more time to finally commit to beauty regimens such as hair regrowth while stuck at home.

Additionally, consumers are noticing their normal skin care routines aren’t cutting it while fighting “maskne,” the recent phenomenon of acne caused by mask wearing, and turning to prescription-level products in increasing numbers, Coles says. In May, Hims even started selling an at-home COVID-19 saliva test in partnership with a Rutgers University lab, which was granted emergency-use authorization from the FDA. Results are available online in three to five days after a consumer’s sample is shipped to the lab.

While the company declines to comment on Hims’ ecommerce growth during the pandemic, Coles says it has been “sustained and significant.” With consumers shifting more of their retail and healthcare experiences online during COVID-19, digitally native brands are presented with a huge opportunity, she adds. And Hims is particularly well-positioned given its telehealth background and the digital infrastructure it has built.

Hims’ bold moves and explosive growth have attracted the attention of investors. The brand has raised $197 million to date, and much of that capital has gone into creating the healthcare framework needed to run its ecommerce operations where products require prescriptions. The Hims team set up medical entities in every state; created the company’s own electronic medical records system, or EMR; and recently opened a 300,000-square-foot pharmacy in Ohio.

ForHims.com also already has medical questionnaires and instructions in place for its free online hair, skin and erectile dysfunction consultations. The brand’s use of interactive online quizzes is a common tool employed by retailers selling beauty products as it aids site personalization efforts by collecting data and helping retailers improve individualized product recommendations. Researchers visited the ecommerce sites of the 55 retailers in the subcategory and found nearly two thirds (65.5%) offer shoppers a quiz to guide them to the right product. The share of the 55 cosmetics, skin care and hair care retailers with sites that feature quizzes is roughly double that of any other subcategory tracked by Digital Commerce 360 across 14 major merchandise categories.

At ForHims.com, site visitors looking for hair loss treatments, for example, are asked to identify their current hair: receding hairline, thinning at the crown, overall hair loss/thinning or full head of hair. A follow-up question also inquires about preferred results: regrowing hair, preventing further hair loss or both.

Consumers are required to enter their birthdate and email address and later even upload a photo of their ID for proof that they are eligible to receive treatment. After that, visitors are given a 12-question survey for the system to collect information on their health, medical history and lifestyle that then goes into the patient’s file and is sent along to a licensed healthcare provider, who reviews it and responds to complete the consultation. Visitors then are asked to submit photos of the front and back of their hairline as well as their face to help the doctor make a diagnosis.

Once consumers are matched with a treatment, they select a subscription plan and are given a results timeline of what to expect once they start their new hair care routine. They can also message their provider and receive continued support from the Hims’ care team. Items ship for free if and when a doctor authorizes the prescription.

Using telehealth infrastructure to expand offerings

With that infrastructure and process in place before the pandemic hit, Hims was able to quickly add more services to help alleviate the overburdened healthcare system this spring, Coles says. A few weeks after people widely started to work from home in March, the brand launched primary care visits through its platform. For a $39 fee, which isn’t covered by insurance, consumers can set up a virtual visit where providers can treat symptoms and have prescriptions sent to local pharmacies for pickup, where insurance picks up the tab.

While Hims doesn’t sell goods in this broader space, Coles says the intent is to give consumers the ability to stay home and keep their families safe by avoiding doctors’ waiting rooms but still be able to treat more common health issues that crop up like sinus congestion, urinary tract infections, rashes and bug bites. Hims even added Spanish-language and mental health services to accommodate more households.

“As a telehealth company, we’re working to seamlessly merge the ease, convenience and affordability that consumers—particularly millennials and Gen Z—have come to expect with the rigor and safety of a direct relationship with a medical provider,” Coles says. “We want to build this long-term relationship with our consumer versus having a one-off, and these services add to our ecosystem and give us tremendous firepower.”