9 Trends Boosting E-Commerce Beauty Sales
Beauty is a category that has always lagged behind when it comes to e-commerce. Indeed, with just about 8% of worldwide beauty retail sales happening online in 2017, the industry is below the cross-category average of 10%. But brands and retailers alike have upped their game over the last few years, and 2019 is looking brighter than ever. Here are nine beauty e-commerce trends that are already reshaping the landscape of cosmetics and fashion online.
One thing you have to admit: most beauty brands are excellent at building communities. Communities are great; they are highly engaged customers who are willing to recommend your brand. What’s harder, though, is fully engaging these individuals and leveraging their goodwill.
A French startup called TokyWoky has come up with a great solution: have your website visitors interact with each other. Their product is a collaborative chat. While most chats let you speak to a sales rep or support engineer, this one puts you in touch with other visitors on your website. Sephora has implemented TokyWoky’s collaborative live chat experience on their US website.
Of course, not everyone has time to chat to strangers, but some people do! And TokyWoky does an excellent job at promoting great contributors and working with brands to reward them. Also, TokyWoky says that customers who interact with each other are four times more likely to buy.
E-commerce is often analyzed in terms of conversion. On that point, it cannot rival retail stores. In the online retail space, only about three website visits out of every 100 will result in a sale. On mobile phones, that conversion rate is even lower.
For many online retailers, this is a problem, but the solution can be found in a subtle combination of cohort analysis, retargeting, cart abandonment campaigns, etc.
But some brands and retailers understand that conversion is not everything. Cart abandonment campaigns can indeed increase short-term conversion, but most of the time, they are just plain annoying and hinder long-term loyalty. Some choose the opposite stance and embrace the fact that many visitors are, well, just browsing.
While most sites still feature banners, aggressive “Shop Now” mentions and display prices everywhere, you will find more and more sites that look like art galleries with beautiful, large images, bold statements, and very discreet price tags.
3. All skins matter
Women with dark skin have long lamented the little consideration they receive from mainstream brands. The major stir-up in the hornet’s nest came two years ago with Rihanna’s launch of Fenty Beauty, with the help of French group LVMH. This new line of cosmetics featured a foundation that came in 40 shades. Brands like Make Up For Ever had offered products with that many nuances in the past but were criticized for emphasizing lighter skin tones.
This move forced the beauty industry to acknowledge the demand for more inclusive shades of foundations and, to a greater extent, cosmetics companies adapted to include all types of skin, from the very darkest tones to people with albinism. Now mainstream brands like Dior (also owned by LVMH) have followed on Fenty’s heels and widened the color range of their foundations.
However, this trend is not just about e-retail; this move is also associated with the emergence of more digital tools and experiences, like online shade finders.
Beauty subscription boxes are a hit. Since the launch of Birchbox in 2010, demand for beauty boxes has skyrocketed. This article found 36 of them in the US alone. For a long time, subscription box companies worked hand in hand with new beauty brands to allow potential customers to sample their products. But today, established brands and retailers are using them not only as a sampling technique but also as a legitimate sales channel.
Subscriptions do not solely take the form of boxes. Services like Dollar Shave Club and Amazon’s Subscribe & Save let you save money on recurring purchases.
Speaking of Amazon… has there ever been an e-commerce trend they’ve missed? For most emerging e-commerce categories, Amazon has always had its finger on the pulse of emerging trends. For a while now, Amazon has sold baby care (diapers, baby food) and hygiene (toilet paper, deodorant) products as a one-off or repeat sales via the Subscribe & Save program mentioned earlier. Since the launch of the program in 2007, they have gradually added more and more personal care and beauty products.
Bestsellers in the category now include L’Oréal mascara and Maybelline eyeliner. Fragrances include brands like Coty, Axe, Adidas, and Chloe. Skincare includes Dove, Neutrogena, Bioderma, Garnier, etc. Although the assortment might not be as extensive as you would find at Boots or Sephora, the array of premium brands is still impressive.
Recent signs indicate that Amazon does not plan on simply assorting the best sellers from each brand. Lancaster, which belongs to Coty, has an e-shop with 93 products on Amazon.co.uk, for instance.
6. Augmented Reality (AR) and Artificial Intelligence (AI)
The new AR and AI are the keys to the future of beauty e-commerce, and the beauty industry has stepped up their game with this evolution.
Artificial Intelligence and Machine Learning:
Machine learning technology continually advances itself by collecting data over time. Luxury brands and big beauty retailers have adopted this technology in varied approaches. In the fragrance category, IBM has been collaborating with the fragrance producer Symrise to design the industry’s first perfume using AI technology. The perfume is expected to be released in mid-2019.
At the moment, the majority of the fragrance-matching process relies on using a decision tree with simple questionnaires. This leads to limited choice for buyers and a low rate of matching. Once big data and AI step into the ring, there will inevitably be a more diverse selection and a higher matching rate. As a result, consumers will feel more confident when purchasing a fragrance online. For instance, the UK beauty e-tailer The Perfume Shop’s fragrance-finding tool is powered by an extensive fragrance database that instead of relying on general bestsellers and broad inclinations recommends perfumes based on the individual buyer’s unique combination of preferences.
In the cosmetics category, the use of AI has created a revolution in customized products. Beauty brands based entirely on AI technology, like PROVEN, have gained significant market awareness, especially among the millennial generation. Lancome, the prestige French cosmetic brand, has also introduced its “custom-made foundation” line in 2018. The product is generated based on users’ skin data, which is analyzed by a complex algorithm to get the perfect matching shade and the correct formula for their skin type.
The use of VR and AR in the beauty industry has blossomed in recent years. Large beauty corporations and big brands are acquiring AR startups as part of their R&D. While LVMH organizes an accelerator program to foster innovation in the industry, L’Oréal has acquired Modiface to enhance the AR experience with their products and is teaming up with tech hubs like Station F and Founders Factory to nurture new startups in the areas of e-commerce, AI, AR/VR and more.
The most popular use of AR in the beauty industry is for digital try-ons, which allow users to try different products without actually going to the brand’s store. The color accuracy and face recognition these tools provide are becoming increasingly realistic. By advancing the visual experience for online shoppers, brands can boost their e-commerce sales and reduce their physical stores’ operating costs. Some current practices of AR in beauty e-commerce also include product suggestions and beauty guides, all customized to meet the specific needs of the brand’s users.
Visual search and image matching
The most popular platform leading the visual search trend is Pinterest. The platform heavily relies on the use of its app, where users can perform searches on any photos available on the platform or upload their own images to get similar results.
The increasing use of visual search has also driven the advertisement approach on this site. Brands focus on producing high-resolution photos and looped video ads that blend in nicely with the search results. Giant e-tailers, such as Amazon and Alibaba, have included the technology in their search engines, along with the world’s most significant search engine: Google.
Although voice activation gets less attention than AR and AI, the technology still receives some attention in the industry. Amazon’s Alexa app called Let’s Get Ready—created by Coty—speaks to users to give beauty advice, product suggestions, and even has an add-to-cart option. A similar practice can be seen with Google Assistant, which has collaborated with Sephora. It is believed that voice activation could work better for beauty sales than, for example, fashion, particularly for repeat purchases from consumers with strong brand loyalty.
7. E-commerce pop-up stores
The concept of a pop-up store provides a tangible element to e-commerce. E-tailers like Amazon, Alibaba, or even Facebook have opened their own pop-up stores to increase interaction between buyers and sellers. The idea of bringing e-commerce to life is a marketing strategy that helps increase brand awareness and positioning by triggering buyers’ curiosity. And this can be achieved without spending an excessive amount for an ideal location and fabulous decoration because it’s temporary!
Millennial beauty brands, such as Glossier, Huda Beauty or The Ordinary, started out with e-commerce and gained enormous popularity thanks to social media channels. These brands tend to open their pop-up stores once they have achieved a certain level of recognition in the market. The main activity at these pop-up stores is not selling but rather providing a real try-on experience, giving away samples, or offering beauty consultations. The value added by having a pop-up store is building the brand, which in turn increases e-commerce sales.
High-end beauty brands are increasing engagement with the O2O (Offline to Online) model. Chanel’s beauty arcade pop-up, Yves Saint Laurent’s YSL Beauty Hotel pop-up, and Dior Pink City are some of the most successful approaches that blur the line between offline and online; thus boosting new trends that highly favor e-commerce.
8. Social commerce
Social commerce is the latest trend that all brands are focusing on. The term is a combination of social media and e-commerce. On average, people spend two hours on social media every day, and savvy marketers see the potential in these hours. Most beauty brands, from drugstore to luxury, are using social media to advertise and push their e-commerce sales. With the non-stop rise of online product reviews and beauty influencers, the potential of social commerce is undeniable.
In recent years, popular social media platforms have included a built-in shopping feature. This supports brands who advertise, adds a price tag, sets up product shelves, and allows the consumer to make a purchase via the brand’s website without entirely exiting the app. Instagram will soon be launching their in-app checkout feature, which is currently available in beta version. YouTube is catching the trend with TrueView, a feature that allows Google shopping carts to be inserted into videos. Facebook is genuinely ambitious with social commerce, planning to take over the giant e-tailer Amazon in the future.
9. Overseas trend: QR code storms China
Big cities in China are replacing traditional cash payments with digital payments, whether it is for grocery shopping or valuable items. The three primary payment services that dominate the market are Alipay, Tenpay, and Apple Pay, which was launched in 2016. Consumers can pay by simply scanning the QR code at any store. Alibaba is strongly focused on O2O strategy, offering the option to try-on in-store and purchase online. In particular, during Chinese single day, the company opened many pop-up stores at shopping malls and popular locations for the sole reason of allowing shoppers to try-on, scan the QR code, and have the product delivered.