Rhode wasn’t just selling skincare; every product launch felt like a limited-time cultural event, a moment that rewarded those “in the know.” This rhythm of anticipation created value beyond product formulas; it built a sense of belonging, using the Drops selling model.
This approach thrives on scarcity, generating short, powerful bursts of demand and emotional engagement. Consumers line up digitally not because they need another moisturizer, but because owning it signals identity. That emotional urgency is what turned Rhode’s limited runs into sold-out statements.
Retail’s Promise and Its Price
When e.l.f. Cosmetics acquired Rhode for $1 billion, a move that promised expansion. Retail meant shelf space, visibility, and consistent cash flow, elements every scaling business wants. But retail plays a fundamentally different game, with one of convenience, predictability, and mass access.
Preparing for Sephora required Rhode to pause its drop cadence and standardize production. In doing so, it disrupted the scarcity-driven rhythm that had built its early success. The result was that quarterly sales slipped from $48 million to $40 million as hype cooled and anticipation gave way to waiting for retail rollout.
The irony is sharp—by chasing scale, Rhode diluted the scarcity that once made it valuable.
Two Models, Two Psychologies
Drops and retail operate on opposing emotional logics.
Drops create friction on purpose, combining limited supply, defined time windows, and the thrill of the chase. Retail removes friction entirely, as its success depends on accessibility, reliability, and routine.
A drop buyer feels like part of a movement; a retail buyer feels like part of the market. When a brand tries to serve both, it risks losing the intensity of one without gaining the stability of the other. Rhode’s transition became a textbook case of how merging “hype” and “habit” can erase both.
The Cost of Standardization
Acquisitions tend to promise operational efficiency, but culture rarely scales neatly. e.l.f.’s challenge was about identity. In trying to normalize Rhode for broader retail systems, it stripped away the unpredictability that made the brand magnetic.
The acquisition logic—bring the cult brand into a mass framework—can backfire when that framework depends on consistency, not charisma. In trying to protect performance, Rhode’s retail push flattened personality.
Scaling Without Losing Soul
Rhode’s slowdown isn’t a cautionary tale about failure; it’s a mirror held up to the industry’s obsession with growth. Scarcity builds early devotion but limits volume; accessibility drives sales but dulls distinction. The secret isn’t choosing between them, but knowing which one defines the brand DNA.
In addition, scaling doesn’t mean abandoning the drop; it means evolving it. Retail could have amplified the drop strategy rather than replacing it through limited in-store releases, timed capsules, or retailer-exclusive drops. The lesson is simple yet hard to execute: scale the story, not the supply.
