From Digital Demand to Physical Growth: What rhode and Sephora Can Tell Us

For years, the growth of e-commerce and DTC brands raised questions about how important physical retailers would remain. Why share the customer relationship with a third party if a brand can build an audience through social media and sell directly through its own website?

The recent growth of rhode suggests the answer is more complicated. Rather than digital replacing physical retail, the two can play very different roles in the same growth strategy.

Founded by Hailey Bieber in 2022, rhode was already an impressive digital success before appearing on a retailer's shelves. In the 12 months to March 2025, the company generated $212 million in net sales, while selling its products directly through rhodeskin.com.[1]

The next challenge was how to take that demand further.

Taking digital demand into stores

On 4 September 2025, rhode entered permanent physical retail through Sephora, launching online and across Sephora stores in the United States and Canada.[2]

Even before the launch, the signs of demand were remarkable. During the previous year, consumers had made more than two million unique searches for rhode across Sephora's website and app, despite the retailer not yet stocking the products.[2]

Those were customers already looking for a product Sephora couldn't sell them.

Once that demand finally met distribution, the response was significant. The North American rollout became Sephora's biggest-ever brand launch in the region. When rhode entered Sephora UK in November 2025, it also became Sephora UK's largest ever brand launch.[3]

The financial results following the launch provide further context for how quickly the overall business was scaling. Rhode entered Sephora on 4 September 2025, meaning the following October to December period was its first full financial quarter operating with the retail partnership in place.

According to e.l.f. Beauty's SEC filing, rhode generated $128.2 million in net sales during those three months.[4] For comparison, the brand had generated $212 million during the entire 12 months to March 2025, before entering physical retail.

Put another way, in its first full quarter with Sephora as a retail partner, rhode generated in three months the equivalent of around 60% of the sales it had generated during the entire previous 12-month period.

It would be wrong to attribute the increase entirely to Sephora. What the figures do show is that rhode's move into physical retail happened during a period in which the overall business was scaling very quickly.

Retail didn't create the demand. It unlocked it. That distinction is important.

rhode already had enormous consumer awareness before arriving in Sephora. Social media, its DTC business and a highly engaged online community had created that demand.

What Sephora provided was something different: access.

A consumer might discover rhode on TikTok or Instagram, see its products being used by creators or repeatedly encounter its distinctive branding online. But awareness is not the same thing as availability.

Physical retail helps close that gap. A customer who has seen a product repeatedly online can now see it in person, test the texture, compare shades, ask a member of staff a question and decide whether it is right for them. And importantly, they can do all of that somewhere they may already be shopping.

There is another advantage too. Customers do not necessarily have to enter Sephora specifically looking for rhode. Being positioned alongside hundreds of other beauty brands creates opportunities for discovery among consumers who may have entered the store with a completely different purchase in mind.

That changes the role of the retailer. The store is no longer simply the final place where a transaction takes place; it becomes part of the discovery and brand experience itself.

The infrastructure that already exists

There is also a question of scale. Imagine trying to achieve the same physical reach without a retail partner.

A digital-first brand wanting a presence across the United States, Canada, the UK and Europe could begin opening its own stores. But doing so at scale would require property, leases, employees, logistics, local knowledge and significant capital. It would also take time.

Sephora already has that infrastructure. At the time of rhode's initial launch, the retailer operated more than 3,200 stores across 35 markets, alongside its e-commerce platforms and an established global audience of beauty consumers.[2]

That is perhaps one of the most valuable things an established retailer can offer a growing brand: not simply shelf space, but immediate access to an existing audience in an environment where that audience is already prepared to discover and buy products.

For rhode, that reach continued to expand. Following the record-breaking launches in North America and the UK, the company announced that Sephora would become its retail partner across 19 additional European countries in September 2026, including France, Germany, Italy, Spain and Portugal.[5]

By that point, rhode described itself as the number one beauty brand at Sephora in North America and the UK.[5]

Digital and physical are not competing for the same role

Perhaps the most interesting part of the rhode story is that there was no need to choose between digital and physical retail.

rhode did not abandon its own website when it entered Sephora. Its DTC business, online community and social-media strategy remained fundamental to the brand.

Physical retail added something to that ecosystem rather than replacing it. Digital can create awareness at enormous scale. Social media can turn a product into a cultural moment almost overnight, while DTC channels allow brands to control how their story is presented and maintain a direct relationship with customers.

Retailers can provide something different: reach, convenience, discovery and physical experience.

The different channels solve different problems. And when they work together, the result can be powerful.

Retail as an amplifier

The success of rhode at Sephora does not mean every digital brand needs thousands of stores, nor does it prove that physical retail alone was responsible for rhode's continued growth.

What it demonstrates is something more nuanced. A successful digital strategy can generate enormous consumer demand without making physical retail redundant. In fact, that demand can make the right retail partnership even more valuable.

rhode spent its first years building a community and proving demand online. Sephora then provided an established physical network through which that demand could reach more consumers, in more locations and in more markets.

For retailers, that highlights a role that goes far beyond processing transactions. Physical stores can provide brands with infrastructure, visibility, product discovery and access to audiences that would be costly and time consuming to recreate independently.

rhode created the demand digitally. Sephora helped give that demand somewhere physical to go.

Sources

[1] e.l.f. Beauty - Acquisition of rhode, 28 May 2025 Confirms that rhode generated $212 million in net sales during the 12 months ended 31 March 2025 and was operating primarily as a direct-to-consumer business before its first permanent retail expansion. https://investor.elfbeauty.com/stock-and-financial/press-releases/landing-news/2025/05-28 2025-210536607

[2] e.l.f. Beauty / rhode - Sephora launch announcement, 4 September 2025 Confirms rhode's expansion into Sephora in North America, more than two million unique Sephora searches for the brand prior to launch and Sephora's international physical footprint. https://investor.elfbeauty.com/stock-and-financial/press-releases/landing-news/2025/09-04 2025-153709225

[3] e.l.f. Beauty - Sephora expansion announcement, 30 April 2026 Confirms that rhode became Sephora's biggest-ever brand launch in North America and subsequently its largest-ever UK brand launch. https://investor.elfbeauty.com/stock-and-financial/press-releases/landing-news/2026/04-30 2026-170109367

[4] e.l.f. Beauty - SEC Form 10-Q, quarter ended 31 December 2025 Reports $128.2 million in rhode net sales during the three months ended 31 December 2025. This was the first full financial quarter after rhode's Sephora launch on 4 September 2025. The figure includes rhode's total business and is not presented by e.l.f. as Sephora-only revenue. https://www.sec.gov/Archives/edgar/data/1600033/000160003326000007/elf-20251231.htm

[5] e.l.f. Beauty / rhode - European rollout announcement, 31 August 2026 Confirms expansion through Sephora into 19 additional European markets and states that rhode had become the number-one beauty brand at Sephora in North America and the UK. https://investor.elfbeauty.com/stock-and-financial/press-releases/landing-news/2026/08-31 2026-140024924