How Beauty Retailers Can Use Amazon to Their Advantage

Indie skincare brand Experiment recently pulled off a tricky move: It landed prime placement in Sephora after six months of selling on Amazon.

Historically, many premium retailers preferred brands to shun Amazon, wanting a bigger piece of the sales pie and to maintain a more elevated assortment. But as the platform has grown to encompass more of the overall beauty retail landscape, along with newer upstarts like TikTok Shop, brands and retailers have slowly begun to capitulate.

“Amazon is reaching an entire audience that Sephora is probably not reaching,” said Lisa Guerrara, co-founder and chief executive of Experiment, which sells accessibly-priced clinical skincare like its Super Saturated Serum, $28. “They’re feeding each other in terms of brand awareness, and getting the brand in front of more eyes,” she added. The sales potential was so great that the company chose to launch on Amazon while still negotiating with Sephora and “ask for forgiveness later.” Experiment is projecting over $1 million in sales on Amazon for its first year, and expects that to have a halo effect for its Sephora sales.

When it comes to exclusive brands, retailers may have lost the exclusivity fight against Amazon, but they can still use its data to their advantage.

Rather than try and fight it tit-for-tat, experts say that Amazon can be a valuable tool for retailers, and may hold the power to increase in-store sales by boosting marketing, connecting the brand with a new customer and helping to improve demand forecasting. Renee Parker, co-founder of Amazon advisory agency Invinci, said that “smart retailers” can use it as a barometer for demand, while Divya Gugnani, a beauty investor and entrepreneur who previously founded the cosmetics line Wander Beauty, said Amazon and other digital retailers allow for faster community-building. “Being native on TikTok Shop and Amazon with organic and affiliate content, and owning your keyword search and SEO gives [a brand] more support in retail. You have a community that you’ve built that can then shop you in person,” she said.

In order for retailers to accurately parse Amazon data, the approach will need to be both quantitative and qualitative. Specialist software like Helium 10 can help tease out granular insights, like the keywords driving customers to a certain brand, and identify peaks and valleys in purchasing patterns. This data can also inform a retailer’s understanding of a brand’s customer demographic, its top categories, and where repeat customers are coming from.

It can also bring a new customer in-store who might not normally shop in specialty retail, but wants to try something they’ve seen online.

“Brands are actually proving their success on other channels before going into retail,” said Gugnani.

A Tool For Awareness and Insights

For many customers, Amazon isn’t just a shopping platform. Some use it as a search engine, an aggregator of product reviews and as a discovery platform. A customer might see a product on TikTok, but head to Amazon to see real reviews from paying customers.

Gugnani said Amazon offers top-of-funnel brand awareness. “Mostly, when people go to a retailer, they know specifically what brand they want to buy,” she said. Keeping a well-maintained Amazon presence can help brands notch up their visibility, and also educate customers about their products in a way they can’t do on other channels — Parker called out the sheer level of detail found on Amazon product pages and the work that goes into crafting the most impactful pages. “[Amazon] is sharing the load with retailers now on education,” she said.

Drilling down into Amazon data like keyword searches and sales volume can also signal which products and factors are lifting up a brand, and their potential halo effect on in-store sales.

“If someone searches for a hydrating serum, and we’re ranking really high for that, and they see our product, they then see it at Sephora, they might be more likely to purchase it there because it’s that final stamp of approval,” Guerrera said.

Parker said retailers can also use sales data from Amazon to more richly illustrate who a brand’s customer is. Pulling zip code data from purchases can give a sense of which areas a brand is most popular in; or if a certain product surges at certain times of the year, a retailer could adjust their forecasting accordingly.

Mapping that against Google search data could give an even fuller picture of any phasing and trends in the brand’s popularity. “Maybe a brand is really hot in Q4 each year, then it drops off a cliff,” she said.

Reaching a New Customer

While specialty retailers are popular with die-hard beauty lovers, they don’t always attract more casual shoppers who buy beauty sparingly, or are what Parker described as “shy buyers” who want to shop but don’t always feel comfortable in-store.

For Experiment, being stocked on Amazon allows it to reach a more middle American customer, one who is not so obsessed with beauty and digital culture, but is looking for something to add to their standard household restocks. That customer likely can’t be enticed in-store, so being carried on Amazon allows the brand to keep the customer, but also protect its pricing and brand by avoiding third-party sellers.

Amazon shoppers aren’t only interested in low-cost replenishment items. Parker noted that on the Amazon storefront for Augustinus Bader, the ultra-luxury skincare brand with a $305 hero face cream, the reviews are all over 4 stars, without any mention of the products being too expensive. “Amazon has a little slice of everyone,” she said. Retailers could also use Amazon data to get a sense of how a brand’s market share on Amazon differs from its in-store share of shelf, and use that as a barometer for customer sentiment over time.

There are also “Amazon influencers” — an ecosystem of content creators who solely post about Amazon products with dedicated storefronts and affiliate links. Currying favour with this powerful group of influencers can help transport brands to new levels of awareness and visibility, and some of those viewers will take their transactions in-store if they want to swatch, sniff or otherwise sample a product before buying.

Ultimately, retailers and brands alike should understand the evolved role that Amazon plays in the customer journey: It’s a place where customers might be introduced to the brand for the first time, vet and validate reviews and price, and get educated about a product, even if they’re not transacting in every instance.

“Retailers have realised that they can’t fight the tide. The customer has spoken and the old playbook isn’t working,” said Parker.

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