The beauty and cosmetics online retail industry is growing rapidly online. Many emerging beauty ecommerce businesses continue to invest more money in online efforts to increase their online presence. However, the industry can be tricky to conquer.
Whether it’s smelling a shampoo fragrance, testing the feel of lotions, or seeing if a lipstick complements your coloring, online cosmetic shoppers sacrifice the luxury to sample products before they purchase. However, many savvy beauty and personal care companies know that a switch to ecommerce is essential. The new post-coronavirus ecommerce landscape accelerated the shift to ecommerce mediums. Brands that invest in a robust online presence and create a satisfying shopping experience will continue to drive customers to their websites and convert new visitors. More importantly, they can cultivate a strong relationship with their customers, nurture their relationship, and create brand-loyal enthusiasts.
“Beauty products are a great thing to buy online. They have a long shelf life, you use them regularly, so you buy them often, and once you’ve chosen a brand and product you like, you get the same thing every time,” says Skylla Jones, Nogin’s director of sales for health, wellness, and beauty.
Now, more than ever is the perfect time for beauty brands to develop their online ecommerce channels. Jones mentioned, “Before Covid, online sales of health, wellness, and beauty products totaled more than $53 billion in 2019, up almost 19% from 2018.” In fact, it’s the second-fastest growing online category, behind food and beverage.
Learn the latest ecommerce trends in the beauty and cosmetics industry and how to dominate your niche to sell more online.
Why is the Beauty Industry Growing and How Is It Changing?
The beauty industry is booming, and in 2020 alone, the beauty and personal care market is valued at $483 billion worldwide, and it’s predicted to grow to $511 billion in 2021. The industry is booming for a multitude of reasons. Beauty vloggers on YouTube and social media influencers allow visitors to discover new products and engage with brands. Cosmetic and beauty companies have continued to invest more in direct-to-consumer approaches, including targeted social media advertising to reach potential customers that fit their ideal audience demographic.
Social media platforms have also made it easier to purchase products directly from the app for an efficient ecommerce marketing funnel that attracts impulse buying. Brands can also leverage celebrity collaborations to help promote their products. Cosmetic brands spend millions on celebrity influencers to post on their social media channels to hype their products, and it’s especially effective for luxury ecommerce brands.
Beauty brands also have access to informative marketing analytics from their website traffic, social media campaigns, and PPC ads to better understand which visitors are most likely to convert. They can leverage retargeting campaigns and email marketing to re-engage with visitors to build rapport and increase the likelihood of repeat purchases.
Many customers in the cosmetic and beauty industry often are extremely brand loyal compared to other sectors. Once they find a brand they like, they tend to purchase various products from the same brand. More importantly, smaller ecommerce brands are continuing to emerge and challenge major brands. Similar to the music industry, many indie brands can start a company from scratch and begin to cultivate a following on social media. They can also create their own Shopify store without much web knowledge.
The younger generations are also more concerned with the ingredients that go into the products they purchase. They want organic, non-toxic, cruelty-free products. Customers are willing to pay a premium for cosmetic products that align with environmental consciousness and sourced from responsible mediums. They are also willing to expose brands that don’t. Negative online reviews can tarnish a brand’s reputation, so it’s crucial brands invest in greater transparency into what goes into their products.
Cosmetic and beauty brands can capitalize on these trends by developing long-form content and informative collateral that discusses why their ingredients are superior to the competition. They can qualify potential customer concerns and answer common questions on their products to help reassure of their market superiority.
For instance, if the main ingredient in your face cleanser is turmeric, you can develop a blog discussing the benefits of turmeric for skin. It will answer the visitor’s question and educate them on why turmeric face cleansers are better than other face cleansers.
Stay ahead of the competition and start your shift to ecommerce before it’s too late.
How is the Beauty Industry Changing: 5 Beauty Retail Trends and Strategies for Your Cosmetic Ecommerce Business
Capitalize on the ecommerce boom in the beauty and cosmetics industry and follow our five essential strategies to improve your online operations.
1. Don’t Focus on Your Brick and Mortar Store. Shift Your Focus to Ecommerce to Reach Your Customer Base
There was a time you had to go to the mall or a department store to buy your makeup, but that’s changed as brick-and-mortar retail sales have declined and consumer shopping habits are trending online. Instead of building a brand with a store and then moving to the Internet, companies such as Glossier and Billie earned devoted customers via ecommerce and then added brick-and-mortar locations as needed.
“Discovering new products used to never happen online, and that’s changed dramatically,” Jones says. “A brand is also much more profitable. The margins are much higher when they sell products from their online store.” For brands that already have a presence in stores, Jones says a smart omnichannel strategy would be to make an initial sale in-store, then drive future purchases online.
You can also easily create urgency and scarcity to increase sales online. Promote your sales using social media campaigns and drive qualified leads to your site. Check out our retail pricing strategies and product listing strategies to maximize your paid media efforts and increase your ROAS.
2. Create Loyalty Programs and Dynamic Online Experiences
Brands carried by large chains such as Sephora and Ulta can benefit from those mega-retailers investments in online shopping and advertising. “They take extraordinary measures to make sure their loyalty programs and unboxing experiences make the online experience just as much fun as the in-store experience,” Jones says. “Their loyalty programs and unboxing experiences are fun.”
However, it is just as essential to get customers to visit a brand’s own ecommerce site to increase profitability and increase customer loyalty while still keeping big retailers happy. Some ways brands can get traffic include offering gifts with purchase or small discounts that don’t dig into profits too much. This has the added bonus of preventing customers from being lured into buying other brands while shopping at a third-party site.
3. Have Stellar Cosmetic Fulfillment Services
Beauty products are quite different from many other online products. Each cosmetic product has a unique expiration date and compliance requirements. Some even may require hazmat shipping and storage.
When scaling a cosmetic brand, it is essential to have an optimal inventory management system. Nogin provides comprehensive outsourcing services for ecommerce, including 3PL fulfillment, warehouse storage, and continuous R&D to ensure your internal costs are low and your profit margins are maximized.
Our ecommerce business platform and enterprise managed services ensure you have superior intelligent commerce solutions to scale your business. We leverage predictive analytics, machine learning, and have the expertise to ensure your business is more profitable while saving you on expensive internal oversight costs.
4. Have a Smart Digital Marketing Strategy
Ideally, when someone searches for your brand, it pops up first, before the big retail sites also carry your products. Getting to that ideal point can require a high-level, multifaceted approach that may include Facebook ads, a vibrant social media presence, and a robust customer data collection system, which can then be used to send targeted emails for sales and promotions that take customers directly to your site.
Social media is vital; Jones calls it one of the most important for brands in this day and age. Influencers and celebrity collaborations can pay dividends in sales, but brands need to beware they aren’t spending too much on these partnerships from their marketing budgets. In essence, Jones adds, “The better relationship you can build with your customer, the more likely they will go directly to your site, as opposed to a third-party site.”
“Online shopping is the new normal,” Jones says, so this is an excellent opportunity to build and enhance ecommerce sales.
If you have a beauty business that needs the resources to grow and strengthen your online channel, partner with Nogin. Our team can supply you with customized solutions that can include logistics, creative, marketing, back-end technology, strategic services, and much more, depending on your specific goals.
5. Have a Story to Tell and a Mission Your Brand Embodies
Your website should not only sell your products. It is also a hub for new visitors to learn about your story, mission, and why they should purchase from you. Younger generations are more concerned about the ethics of a company. They care about sustainability, environmental impact, and other factors that could influence their purchase of a product.
Have a mission statement and a story to tell. Talk about what you believe in and build a relationship with your audience. If your products are more expensive since you choose to work with local farmers to source your ingredients, tell your audience. Help them understand why they should shop with you. Talk about any charitable work your business pursues and your mission for something bigger than just profits. People want to support organizations that aren’t just about the profit margins but about helping their communities and their planet. Give your visitors something to believe in and spread messages that resonate with their core beliefs.
Beauty and Cosmetics E-commerce FAQ
How to start an ecommerce beauty business?
To start an ecommerce beauty business, begin by researching the market and identifying a niche. Develop a business plan, secure funding, and source quality products. Create a professional website, implement SEO strategies, and establish a strong social media presence. Utilize digital marketing techniques like influencer partnerships and email marketing to attract customers.
How much does it cost to start an ecommerce brand?
The cost to start an ecommerce brand varies widely based on factors like product sourcing, website development, marketing, and inventory. On average, starting an ecommerce business can range from $5,000 to $30,000, but it can be higher depending on the scale and complexity of the business.
Is the beauty niche profitable?
Yes, the beauty niche is highly profitable. The industry is growing rapidly, with a strong demand for skincare, cosmetics, and personal care products. Consumers’ willingness to spend on premium and niche products further boosts profitability in the beauty sector.
Can I resell beauty products online?
Yes, you can resell beauty products online. You can source products from wholesalers, manufacturers, or use dropshipping models. Ensure you comply with regulations and quality standards to maintain customer trust and satisfaction.
How profitable is the beauty industry?
The beauty industry is very profitable, with global revenues reaching hundreds of billions of dollars annually. High consumer demand, brand loyalty, and the popularity of premium and niche products contribute to its profitability.
What is the future of beauty ecommerce?
The future of beauty ecommerce looks promising, with continued growth driven by increasing online shopping habits, advancements in technology, and consumer demand for personalized and sustainable products. Innovations like AI-powered recommendations, AR for virtual try-ons, and subscription services will shape the industry’s future.
What is the biggest trend in the beauty industry?
One of the biggest trends in the beauty industry is the shift towards clean, sustainable, and ethically-sourced products. Consumers are increasingly seeking transparency in ingredients, cruelty-free testing, and eco-friendly packaging. Personalized beauty solutions and tech-driven experiences like virtual try-ons are also gaining traction.
What percentage of beauty products are bought online?
As of recent trends, approximately 30-40% of beauty products are bought online, and this percentage is expected to grow. The convenience of online shopping, coupled with advancements in digital marketing and ecommerce platforms, continues to drive this shift.
