Watch Out for these Ecommerce Trends in the Beauty and Wellness Industry
In recent years, there has been a lot of movement in the beauty and wellness industry. Not only is it continuing to grow and attracting more patrons, but it is also adjusting to meet everyone’s needs and wants and making itself more accessible to customers. Among the biggest moves it’s done is going online. In fact, it has been forecast that beauty and wellness ecommerce will be dominated by four giants in the industry—one American and three Chinese. The ecommerce business is booming, where the beauty and wellness industry is estimated to be bigger than $510 billion in this current year alone. This is actually a low number considering the impacts of the pandemic, which has caused a 25% decrease in consumer spending.
Beauty and Wellness at a Glance
Consumers are becoming more conscious of their beauty and wellness, which is why the industry keeps growing. However, it’s worth taking a look at its current status with these data.
1. The US currently has the largest beauty market in the world with an estimated 20% share. It is followed by China with 13% and Japan with 8%. Given that projections for growth can vary, experts agree that a 5% to 7% compound-annual-growth-rate can bring the industry up to $800 billion in the next 4 years.
2. Pan-Asian beauty products and culture are popular as ever in North America; however, awareness is low here with only 18% of the Americans surveyed being aware of K-beauty or the 10-step South Korean beauty routines. Meanwhile, only 11% of Canadians are aware of it.
3. The younger respondents in these countries, on the contrary, specifically those aged 18-34, say that they take their beauty advise from K-pop (47%). A good 50% of them like k-products, while 58% like J-beauty.
4. Even with famous influencers everywhere, including Kylie Jenner and James Charles, mothers remain to be the most influential in the way beauty routines are shaped around the world. In fact, 49% of the global respondents see their mother as a huge influence in building their personal beauty routine.
5. Adding to mothers as the top beauty influencers are friends and family, which account for 48% and 45%, respectively. Other sources of influence are Instagram with 31%, print media with 33%, and online videos with 34%.
6. In contrast to the popular idea that people are always constantly looking for new products, most customers are loyal to their current beauty products. More than 80% agree that their current beauty products meet their personal grooming and beauty needs. Also, about 55% of consumers are more likely to choose their trusted brand over a new brand that they haven’t tried using before. This is why it comes as no surprise that Estee Lauder had its net sales up by 9% and L’Oreal by 5.5% in the past year. Both brands are known for their myriad of established products.
7. It is obvious that half of North Americans are loyal to their currently used beauty products. However, “natural ingredients” is one of the strong triggers for users to switch to a different product. Specifically, 66% of American respondents as well as 57% of Canadian respondents are willing to try new products if they were labeled as natural.
8. Personal and health care retail sales have accumulated total ecommerce revenues of about $22.54 billion in the United States, which accounted for 6.17% of that year’s retail ecommerce sales total.
9. Customers are drawn to clean, natural, and sustainable products. Two-thirds of the respondents expressed their interest in trying new products from other brands that claim to be natural, while half of all respondents are willing to try other brands that are clean.
By saying clean, it means products that are free from ‘bad’ or artificial ingredients. Sustainable products are those that are produced with the least impact on the earth’s resources.
10. When it comes to influencer marketing, the beauty industry is always at the forefront.
How Did Covid-19 Impact the Beauty and Wellness Industry?
The past year was truly a difficult time for almost every person, industry, and business. It has impacted economies and their every facet as well as people’s day-to-day lives. In fact, spending changed as rising unemployment rates gripped every corner of the globe. Consumer behavior also greatly changed no thanks to lockdown restrictions and social distancing. There have been recorded losers and winners in the area of beauty and wellness, but the most impacted are the sub-sectors who have a physical retail store but no digital presence. Because of this, there has been a rapid shift to digital to meet consumers’ wellness, health, and sustainability needs.
Let’s have a closer look at how Covid-19 affected retailers and consumers.
With this, it is seen that the companies that will survive the challenges of the pandemic will have implemented rapid and bold interventions to keep their business stable.
When the pandemic started in 2020, it slowed down discretionary spending as consumers focused on the essentials in beauty and wellness as well as personal care.
The beauty and wellness industry is also expected to experience the steepest decline it has ever faced in the past six decades. The cosmetics and toiletries sector is seen to have an estimated decline of 2.5% in 2020, with 8% as the worst-case scenario and 1.5% as the best-case scenario. This is a huge difference from what was experienced in the Great Recession, which was only 0.8%. After the pandemic ends, only 30% of consumers say that they are going to spend more, while the rest of the 70% intend to spend less or the same.
Trends in Beauty and Wellness Ecommerce
One thing is for sure. Despite the pandemic and other challenges thrown at the beauty and wellness industry, it will stand up and continue to grow. As it is resilient, the industry will continuously evolve and adopt various ways to survive. Here are the forecast trends to happen in the coming years.
Inclusivity has become a strong word recently. It means including everyone—all races, colors, ethnicities, and religions. Market research company Nielsen conducted a survey and found that beauty aisles in America are already showing diversity. There are already more unique color ranges, with the colors of foundation sold having grown 3x faster.
Several brands that advocate for inclusivity are experiencing higher turnovers, including Two Faced and Illamasqua. Two Faced, which prides itself in its innovative makeup products and wide range of lines, saw an annual turnover in 2019 of $350 million. Illamasqua, on the other hand, whose tagline is ‘Express your individuality’, saw their largest profit yet of $50 million.
2. Virtual Reality and Augmented Reality
These two technologies are growing more popular by the day, which is not surprising since Perfect Corp has teamed up with the Alibaba group in October 2019. Perfect Corp is a leading company in AR, while the Alibaba group is owned by Chinese billionaire Jack Ma. The former incorporated its YouCam Makeup virtual try-on technology into the Tmall Alibaba and Taobao shopping platforms. This allowed shoppers in China to virtually try out their make-up, bringing the shopping companies’ conversion rates 4x higher in just the first six months.
This move encouraged other brands such as L’Oreal, NARS, and MAC to do the same with their brands.
3. Consumers that are conscious of sustainable products and packaging for the environment
The discussions about climate change are becoming a regular part of human life. Believe it or not, there are consumers who care about the environment and are more than willing to spend extra on products that are sustainable and have environment-friendly packaging.
It is seen that sustainable products have the potential to generate an income of between $140 and $150 billion in the States alone. In fact, natural and organic beauty products will zoom from $34.5 billion to $54.5 billion in 2027, which is a 158% increase.
This means that if you are looking at building an ecommerce website or online store for your beauty and wellness brand, then, you should make it about naturalness and sustainability. However, it’s important to note that simply claiming that your products are sustainable or natural won’t work. You need to be able to explain to consumers how it is made and provide them with the intricate details of the process.
Personalization is about sending mass emails to subscribers, with each email being inserted with the recipient’s first name. However, this is a trend from long ago, which has been replaced by hyper-personalization or using the recipient’s name in the email—plus sending the email to them at the right time and with the right product or recommendation. It could also be called individualization since it recognizes the place of the customer in their journey.
It’s been proven that this trend is beneficial for both the company and the customer through Omnisend’s Ecommerce Statistics Report 2020. It showed that personalized automated messages resulted in nearly a third of all orders, with the ‘happy birthday’ email being the most popular.
5. Gender-neutral beauty products
This trend is somewhat related to inclusivity as younger generations are moving away from stigmas and traditional gender norms. A good number of Generation Z believe that gender encompasses a spectrum and is binary. Because of this, more brands are rolling out products that are not designed for just one specific gender and are ditching gendered marketing to give way to unisex products that tackle particular conditions and skin concerns instead.
6. Use of big data for product development
Big data in the beauty and wellness industry is becoming more and more popular. Such data is collected through search term data, questionnaires, and spending habits. Olay, a household name in beauty and facial care, implemented digital strategies and developed a deeper understanding of the needs and wants of their customers. As a result, and in association with Procter and Gamble, it launched the Olay Skin Advisor, which is a web-based, data-collecting tool, for helping people understand what their skin needs. With this, consumers no longer have to spend time visiting a dermatologist to have their skin tested.
7. Banking on influencer marketing
If there’s one thing ecommerce businesses can bank on, it would have to be the use of influencers. It’s been found that influencer marketing has given the industry a notable economic boost, specifically allowing for a return of investment of $11.45 for every $1 spent on such type of marketing.
And it’s not only macro influencer marketing that’s working but so does micro, which refers to influencers with a smaller fan base of usually less than 100,000. In recent studies by the Harvard Business School, this type of marketing has gone up to be worth $8 billion in 2019 from just $2 billion in 2017. Despite the global challenges, this number is expected to go up to $15 billion in 2022.
These findings are supported by Estee Lauder’s move of spending 75% of its marketing budget on influencers and L’Oreal spending 30% of its media spend on digital channels.
Additionally, L’Oreal its ‘Beauty Squad’ campaign, wherein several beauty influencers made articles YouTube videos that were posted on the brand’s website, the influencers’ social media accounts, and their own channels. Amazingly, the total audience reached was 5.5 million.
The beauty and wellness industries will never want to lag in terms of ecommerce and digital marketing. Now is the best time to invest in good digital marketing strategies with the help of agencies who have the experience and expertise as well as the knowledge of trends that can drive conversions and sales. With more people shifting online in searching for their favorite products, you can leverage your business by employing the best strategies. Get a free consultation with Versant Digital today.
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Writer, blogger, software reviewer.