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02 Mar 2020

The Impact Of eCommerce On The Cosmetics Industry

Over the past decade, e-commerce has touched every industry sector, from airlines to engineering. This isn’t surprising considering the overall societal shift now leans towards the ease of buying pretty much anything online, at anytime.

Autofulfil Order Fulfilment - Cosmetics Online Sales

In the last few years, there has been a spike in online sales in the health and beauty sector, such as cosmetics. In fact, new cosmetics brands are emerging at an incredible rate here in Ireland and Natural Cosmetics leads the way.

Autofulfil Ecommerce Fulfilment - Cosmetics Revenue Growth

Statistica.com indicates that Sales revenue in Ireland alone will increase from $120.4m (€107.32m) in 2012 to $162.4m (€144.76m) by 2023. So in just over a decade the annual spend has increased by 35%.

What’s interesting is the growth in Natural Cosmetics, out performing other niches by a huge margin, averaging over 9% from 2019 onwards compared to other product segments that range from 1.4% to 2.47%.

The natural cosmetics appeal is evident considering that an Irish startup, Bia Beauty, was recently acquired by Codex Beauty, a global player in the cosmetics space.

Tracey “Ryan was a new mom and college student. She describes herself as “absolutely broke” at the time, but she managed to get the brand off the ground with a credit union loan of 5,000 euros. Early on, investors also supported Bia. However, Ryan promptly bought them out because they didn’t share her vision for the brand. She says, “Basically, we survived off our profits. We ran Bia on a shoestring from day one right up until we were bought out.” - Beautyindependent.com

Many loyal customers already know what cosmetics brand they want to buy from. For those who seek innovative new products, cosmetic brands utilise trusted beauty influencers to promote and recommend their products and allow customers to see their products in action via channels such as Vlogs and YouTube.

 

Is Ireland a Hotbed For Emerging Cosmetics Brands?

With the Bia Beauty acquisition in mind, Ireland seems to have a wealth of entrepreneurial brands popping up countrywide. Kinvara Skincare, SoSu, and Blank Canvas are some examples of brands that successfully compete with Global players online today.

Furthermore, Irish Beauty marketplace, Cloud10Beauty.com, offers consumers a one-stop shop to buy multiple brands in one transaction. What’s more, Cloud10Beauty also offers cosmetics brands a niche alternative to Amazon and EBay for brand awareness exposure to a pre-qualified audience segment.

To describe the Irish cosmetics scene, Cloud10 founder captures the sentiment very well:

“There’s a real entrepreneurial spirit here in County Monaghan – there is a legacy of many companies doing amazing things in business here and quietly getting on with it in an unassuming manner. It definitely rubs off on you! With our location, close to the border & without the same pull as other more densely populated regions in the country, you have to be innovative & customer focused to succeed,”

- Blanaid Johnson, Cloud10 founder.

 

Fulfilment, Kitting and Shipping for Cosmetics Brands

Most cosmetics brands sell bundles, hampers or gift sets via their online store.  These sets tend to offer customers better value for money and in most cases achieve the minimum spend for free shipping. That said, these sets must be kitted via the supply chain (at source) or by a fulfillment partner. Autofulfil specialises in cosmetics gift-sets with the agility to change or add new kits on demand. In fact, Personalised kits can only be done through a fulfillment company.

A lot of brands require special packaging or presentation to enhance consumer experience upon delivery of each order. Inserts, gifts, wrapping, samples and promotional material enables online retailers to convert repeat business through this array of offline tactics, a feature that’s tangible to the consumer.

Shipping is an important feature for cosmetics brands and their consumers. Pymnts.com state that “women spend $3,756 a year (around $313 a month), for a lifetime cost of $225,360” on cosmetics, so retention is vital for cosmetics brands therefore fulfillment and shipping is key to achieve this objective. Most industry brands seek track and trace service to enhance CX while protecting the value of what is normally a high-value order, up to €313 a month per consumer.

 

How Technology Influences Buyer Behaviour of Cosmetics Online

Online retailers have adopted various marketing channels to drive sales. These technologies enhance the multi-channel shopping experience for customers.

So what are the tools that online cosmetics brands adopt to increase awareness and ultimately Sales?  

SOCIAL MEDIA:

Instagram has allowed brands to interact directly with their customers in a visual manner, allowing customers to shop directly from a post. The ability to instantly purchase a product has improved conversion for all brands, including cosmetics brands.

HOT-TOPIC: 

Online brands like Glossier and Kylie Cosmetics have become some of the top beauty brands in the last few years, with phenomenal growth. Celebrities have the reach to create a “buzz” even before products are launched, generating huge revenues before a product is even shipped with pre-order discounts. From a pure business perspective this significantly enhances cash flow and value as a result.

Such brands also market themselves, their celebrity persona, differentiating from traditional beauty lines. This strategy and word of mouth through social media has created a hype that exposes consumers to products more frequently than ever before. 

SPECIALIST COSMETICS:

Through the specialisation of skin types, skin pigments, and types of cosmetic products, customers can narrow their search and get recommendations just like they would in-store. This product-led personalisation approach empowers customers to feel supported throughout their entire shopping experience.

One brand that springs to mind is Alabaster Skin from New Zealand. Alabaster Skin offers a niche proposition to consumers. I’m no expert in skincare so I’ll refer our readers to this article for some insight.

PRODUCT INFORMATION:

Autofulfil Ecommerce Fulfilment - Makeup Brushes

Autofulfil Ecommerce Fulfilment - Makeup Brushes

Consumers prefer to shop for their cosmetics online because they are able to see the ingredients, recommended skin type, customer reviews, and blogs written on the product within seconds of a search and conduct their own research thereafter.

This consideration time differs from the offline experience where comparison is more time-consuming. Shopping at a store cannot offer the same speed and access to product information, which is instantaneous online.

Customers that buy cosmetics online often feel more informed on the product than they would if they bought it in-store; or research online and purchase offline (ROPO).

AUGMENTED REALITY (AR) IN ONLINE RETAILING:

AR has only recently started to be implemented into cosmetics brands online stores. This innovation allows customers to see what a product would look like on them, realtime. This is great way for brands to introduce new products to a customer and engage with the user for longer. With AR brands can tailor and recommend products to fit a customers’ complexion and skin type.

This technology is in its infancy and can be complex and expensive to implement. Despite this, AR offers a new dimension to further revolutionise the cosmetics and fashion industry online.

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