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The beauty ecommerce business is booming. In 2021 alone, the beauty industry was estimated to be greater than $510 billion. And that’s a low number, given that the pandemic caused an estimated 25% decline in consumer spending.
Much of that decline is likely tied to brick and mortar stores closing in response to local lockdown rules or general consumer fear of populated spaces. Before COVID, in-store shopping accounted for 85% of beauty and personal care sales. In 2020 alone, there was a marked 25-35% decline in beauty-product sales compared to 2019:
Beauty ecommerce businesses have major opportunities to line their pockets, now that customers are forced to find other ways to get their beauty products. After all, smaller and newer ecommerce stores are able to act quicker with more flexibility and precision to reach their target customers in the ecommerce beauty industry.
Businesses using email marketing doubled their conversion rates in 2020 compared to 2019, according to Omnisend’s Ecommerce Statistics Report 2020:
Other omnichannel marketing channels, like push notifications, saw conversion rates leap from 4.86% to 28.1%:
The opportunities are there, even in a pandemic. But that doesn’t mean it’s easy. A successful beauty-related ecommerce business hinges on recognizing worthwhile beauty ecommerce trends most likely to drive profit.
Sustainable products and packaging for environment-conscious consumers
Despite the ongoing debates about climate change, beauty industry statistics show that consumers care about the environment and are willing to spend extra for sustainable products and packaging.
A 2018 Nielsen report showed that sustainable products could generate anywhere from $140-$150 billion in the U.S. alone. According to industry estimates, the global market for natural and organic beauty products will skyrocket 158%, from $34.5 billion in 2018 to $54.5 billion in 2027. Online beauty sales are set to catch a sizable portion of that revenue.
So where does that put you? If you’re thinking about opening a beauty ecommerce store—and really, now is a great time to do it—then you should consider creating or selling products that place sustainability and naturalness at the heart of your business.
Not only will you help the environment by reducing harmful ingredients, but you will improve your bottom line. For example, cosmetic sales grew 2.3% in 2020 when eliminating parabens.. Cosmetics company Kiehl’s removed parabens from its face cream and saw a $5 million sales bump. This trend is not only limited to the skincare industry.
Do note, though, that it is not enough to simply claim that your products are “natural” or “sustainable.” Consumers are eagle-eyed and demand to know the specifics behind this sustainability and naturalness.
This is most likely due to the difference in cosmetic ingredients banned in the U.S. compared to Europe. While the United States has banned a mere 11 ingredients from cosmetic products, Europe’s list includes 1,328—with strict policies regulating another 500 ingredients.
Due to such wide differences, consumers are educating themselves on the ingredients included or processes used to create beauty products.
Hyper-personalization to make your customers feel appreciated
“Personalization,” in terms of online shopping, was the decades-old practice of inserting a first name in a mass email. However, improvements in data collection, automation, segmentation and artificial intelligence (AI) have created opportunities for enhanced personalization, or hyper-personalization.
If personalization is akin to using the name of the person when talking to them, hyper-personalization is using their name and talking to them at the right time, armed with the right product or recommendation. In truth, this is less personalization and more individualization—the company recognizes the customer’s place in their journey and recommends the most timely product or information.
This pays off for both the customer and company. Omnisend’s Ecommerce Statistics Report 2020 showed that personalized automated messages led to nearly one-third of all orders, with the most popular being the “happy birthday” email.
This is also reflected in beauty industry insights. Beauty brand INGLOT Canada, for example, boosted revenues by a whopping 4,798% by using various hyper-personalization techniques, as illustrated in the diagram below.
The reasoning is simple: hyper-personalization makes customers feel more appreciated, which helps in influencing them to buy your products over the competition’s.
In fact, a 2017 Epson survey showed that 80% of respondents expressed willingness to buy from a business that offers personalized experiences.
Because of the nature of beauty products, hyper-personalization allows you to engage with customers at any point during their journey, including when they:
- Are shopping for a good brand
- Are narrowing down their choices
- Need to replenish their products
- Seek recommendations for related products
Here’s the kicker: it takes some effort to know where your customers are in their journey. Doing it manually or with a few disconnected tools takes time and money.
Good news: there are tools that can help you to multitask, on time. Omnisend, for example, helps you divide your customers into a few different groups with its segmentation features. You can group them based on customer behaviors (think recent purchases, pages or products viewed, etc.) or demographics (such as age, gender, location, etc.).
Once you’ve placed them into different groups, you can use Omnisend’s automation to reach them at the right time with the right product recommendations or information they need.
Sounds complicated? It is, if you don’t know your business or customers. But if you have a good grip on that, then it’s relatively straightforward.
Try it out for yourself with your own free plan (three-minute setup) and see how you can create your own segmentation and automation for your beauty ecommerce business.
AI, AR, and virtual try-on to boost engagement
Speaking of hyper-personalization and individualization, AI and augmented reality (AR) are making it easier for businesses to individualize the online customer experience.
AR is certainly the talk of the beauty ecommerce industry, as customers can virtually try on products with a little help from AI. The product—such as lipstick or a hair color product—is typically overlaid on the customer’s picture or live video.
This is exactly what Chinese giant Alibaba did when it partnered with Perfect Corp to create the YouCam Makeup AR. People were excited to play around with the new tool, and it led to a 300% increase in conversions. It was so successful that the major global brand MAC used the same Virtual Try-On technology for its own products.
Other major brands like Avon are harnessing AR beauty technology as a critical sales tool. L’Oreal is even announcing plans to transform from a beauty company to a “beauty technology” company.
So what does this mean for you? Although big names like Alibaba and MAC are using this makeup AR, the YouCam Makeup tech is available to businesses of all sizes.
At the moment, it’s still in the $400/month price range, so it may be a better fit for more established beauty brands. But other options are on the horizon. Virtooal’s Decorative cosmetics try-on app works with Shopify and other ecommerce platforms.
As with all technology, continual development and new competitors will eventually drop prices and improve affordability.
Influencer marketing is critical for branding and reach
The reign of the Instagram influencer continues, even if some influencers lost business amid the initial pandemic scare. Companies have not only loosened their marketing purse strings, but have nearly doubled their influencer marketing spend.
Think about it. More people are at home and stores are shuttering, sending consumers online. Influencer marketing, on popular platforms like Instagram and YouTube, is the perfect avenue for capturing browsers’ attention.
Influencer marketing can have immense power when done right. The result is an endorsement from the very people your potential customers trust. A 2019 study from the Harvard Business School demonstrated that influencers are the major source of information for customers in making a beauty purchase decision.
A 2019 study by Mediakix found that 80% of marketers who utilized influencer marketing found it to be an effective strategy, with 35% claiming it “very effective.”
This explains why major beauty brand Estee Lauder spends roughly 75% of its marketing budget on influencers.
It’s important to choose the influencer that best fits your beauty ecommerce brand. The choice may be an in-demand, high-budget top influencer. Or perhaps it is a micro influencer with limited reach but strong conversion potential.
Brand partnerships to unlock audiences
The beauty of business partnerships is that you can utilize each other’s already-existing audiences to boost your brand and sales.
Major brands are doing this on a regular basis. For example, fashion brand Eddie Bauer partnered with Ford nearly 30 years ago. More recently, MAC collaborated with the popular Chinese game Honour of Kings. Coca-Cola partnered with the eyeshadow company Morphe.
In each of these partnerships, brands partner with companies that are far outside of their own industries. The connection is an overlap between their audiences.
There are a few ways to do brand partnerships in the beauty space:
- Collaborate with brands from a different industry considered to be at a similar or higher level, ensuring there is some overlap between customers. Fashion and beauty always work well together. Beauty can also align with home decor and electronics.
- Contemplate partnerships with non-traditional brands like influencers. Instead of simply using influencer marketing—often a short-term campaign—create a longer-term relationship that involves utilizing each others’ brands and audiences.
- Partner with other organizations, such as schools, charities and local businesses. Tweak your marketing message so they are appropriate for the audience.
How to use beauty ecommerce trends effectively
Embracing cosmetic and skincare ecommerce trends goes a long way in boosting your store’s relevancy. Success depends on a sturdy ecommerce marketing foundation. Here are the essentials before deploying any of the tactics above:
- Create your online store. If you haven’t yet launched your beauty ecommerce store, find a platform that works for your business. Shopify is generally the most recommended, but other Shopify alternatives such as WooCommerce or BigCommerce might work for your niche.
- Choose your products. Identify product lines focused on sustainable, natural beauty ingredients that put your customers’ minds at ease.
- Use an ecommerce marketing automation tool. The word ‘automation’ is important here. It allows you to schedule automated messages for the right time, so you can focus on other parts of your business. Play around with a free Omnisend plan and see how it can help your business.
- Get viewers, subscribers and buyers. Use the tips from above, such as influencer marketing, to reach your audiences. Don’t forget social media and Facebook ads (arguably the most accessible) to fine-tune your marketing messages. Once traffic starts flowing, use a marketing automation tool like Omnisend to build an email list with features like exit-intent popups.
- Follow up with buyers to turn them into repeat buyers. Again, your automation marketing tool will do the heavy lifting. With Omnisend, for example, you can use segmentation (customer groupings) to locate those who completed a purchase 30 days ago and may need a refill.
- Improve your business and scale. Concentrate on pinpointing the processes, products and messaging that work. Improve your strengths and minimize your weaknesses. Once you’ve figured that out, you are ready to scale your business. Rinse and repeat.
Ready to begin your journey, or elevate your status, in the ecommerce beauty industry? Get your hands on a free plan of Omnisend to jumpstart the possibilities.