Sep 21 2017
beauty and cosmetics brands

4 Ecommerce Challenges Beauty Brands Continue to Face

As retail slows and new brands emerge, nobody should be surprised that the resulting industry growth is shifting online. For beauty brands, the same trend can be seen, which is backed by a Fung Global Retail and Tech study that was produced in 2015. According to their study the beauty industry saw just under an 8 percent or $6.2 billion of the beauty industry’s sales done online.

By comparison, the cosmetics industry, while growing slowly on a global level, is set to increase by 4.3 percent or reach just under $430 billion by 2022. Over the next few years beauty and cosmetic brands will grow even more rapidly online, but beyond an increase in competition, they too will have their own unique set of industry challenges to face. A decade ago brands could get by with a simple site that allows consumers to purchase products at a great price; however, the world is now more informed and connected than ever before.

Customers More Connected, Informed

As you’re reading this on a device connected to the internet, be it your phone, computer, or tablet, we’d be preaching to the choir when we detail just how connected our world has now become. As a result of this connectivity, consumers now have more access to information than ever before, which means they will be able to better price shop, learn about products, what products are made from, and the results of using them.

Showrooms and Experiential Retail

nordstrom localAs retail stores continue to close, some brands are beginning to experiment with the gap being left in its wake. For beauty brands, information is readily available about their products, many many consumers still want to see it first-hand or try the products for themselves. Even Nordstrom, a company more than 100 years old, has embraced the Tesla style showroom concept and will be launching a test store in California that doesn’t sell products, but let’s consumers try and interact with them. It will also double as a pickup point for online orders and drop off point for returns. Like Nordstrom, there are many changes impacting the way consumers stay informed, and physical retail stores are no longer in focus.

Rejuvenating Effects of Ecommerce

“Having closely monitored trends in the beauty industries for years, I knew that H2O+ Beauty could not return to relevance without a focus on e-commerce,” stated H2O+ Beauty’s chairman and CEO Joy Che in an NBC report.

H2O+ Beauty

On H2O+’s product detail pages one of the front and center items are the ingredients in their products, which adds to the transparency that consumers now seek when making cosmetic purchases. Not only that, but they also use social media to show how their products work, specifically with Instagram. In fact one of the biggest changes and challenges to the beauty industry is the creation of content. With so much of it being produced on a regular basis, from regular consumers to influencers, creating a brand voice that aligns and appeals to customers is only the first component. Even after the content is produced, being able to monetize it and turn viewers into buyers is even more challenging.

Search Engines

Regardless of conversion rates, consumers are driven to online outlets when first searching for new products. Between the recommendations from friends and peers, to reviews on websites and details regarding ingredients, Google is commonly the first place people start. The second? YouTube. Even now YouTube is considered the second most used search engine in the U.S. (yes, even over Bing), and the amount of beauty related content on there is staggering. Though much of the beauty video content and tutorials are now fueled by and paid for by beauty brands, the rise in the concept has led to one of the biggest marketing challenges in recent years, influencers.

Tapping Into Influencers

For ages celebrities have been paid to slap their name on a product or service and recommend it. These paid endorsements are one of the oldest marketing concepts around; however, with the rise in technology and social media has resulted in the shift to influencers. While celebrities certainly can retain the influencer moniker, they also include everyday consumers who market their name as a brand, have developed huge followings, and produce content that speaks to specific niches. Beauty and fashion brands are quite possibly the two largest areas for influencers, which in turn makes it a large challenge for beauty brands. Not only is there a large demand for influencers (aka cost a great deal of money), there is also not a lot of transparency around the concept.

Many social media sites still lack the necessary features to create a branded relationship between influencer and product, which in turn means you either rely directly on what information is readily available for the influencer or if you’re lucky, an agent. Article after article shows examples of where brands have been fooled or could be fooled by would be influencers, only to find out that their follower numbers are fake, the influencer may not even be a real person, and when it comes to results you may not even get direct access to analytics.

Over the next few months and years social networks, such as Facebook, will add tool sets to ensure brands are tapping into influencers that help bring awareness and attention to their products, but until then it can still be a risky approach.

Instant Gratification

Free two-day shipping? Thanks Amazon. Even if Prime Shipping isn’t technically free, Amazon has set a precedent regarding shipping times, and as a result beauty brands too will have to face the growing need for instant gratification. For cosmetics, hair supplies, and everything in between, it’s easy to walk to your local retailer, grocery store, or big box brand to get a product, so where does that leave ecommerce brands? Typically you have two options: compete head-to-head with Amazon’s shipping approach or offer some sort of in-store pickup, just as Nordstrom is testing out. Sometimes it’s just about the illusion of it all, or in other words giving the appearance of free shipping while increasing prices site-wide.

Being Able to Compete With The Big Brands

With so much content, influencers, and competitors already online, where does that leave new brands trying to enter the industry? The short answer is that their online shopping experience needs to be quite simply better than the big brands.

In a recent Think With Google article Aurelia Probiotic Skincare Founder Claire Vero stated, “The challenge is getting the customer to discover us and then really want to become a part of our story. Our website is our shop; it has to be as good as the bigger brands.”

Better doesn’t necessarily mean the latest tech, but personalization and being able to customize it to your customer’s needs is a good start.

Elliot Volkman

Digital Marketing Manager

Elliot is Blue Acorn's Digital Marketing Manager. He hold a master's degree in communication from Gonzaga, and has several awards for journalism and digital marketing. In his spare time he is a long-distance runner and triathlete.

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