Agenda-setting intelligence, analysis and advice for the global fashion community.
NEW YORK, United States — Independent beauty brands have a big decision to make: to sell on Amazon, or not to sell on Amazon.
The e-commerce giant is launching an “Indie Beauty Shop” in June, which will include skincare and cosmetics brands not already sold at mass retailers like Ulta, Target or Walmart, people familiar with the company’s plans say.
A spot in Amazon’s marketplace offers a springboard for emerging beauty brands to enter the mainstream by putting their products in front of hundreds of millions of potential customers. For Amazon, which already has an online storefront featuring luxury beauty brands, the new shop is a step to solidify the company’s position in online beauty. Amazon is the top retailer in the US market, with a 35.5 percent share of online beauty sales in 2016, according to Coresight Research.
But not every brand is eager to sign up. Amazon often steers customers to the cheapest items and sellers can find themselves dragged into price wars. Some buzzy independent beauty companies also say they fear being lost in the crowd of sellers who flock to popular categories or find their products listed alongside inferior brands. Many brands find themselves competing against themselves when unauthorised sellers buy their products from other retailers and sell them on Amazon for a discount. And Amazon itself has launched several in-house beauty products.
ADVERTISEMENT
“Amazon reached out to me a couple months ago asking if I would be interested ... I cut them off a little early, because I knew I wasn’t going to do it,” said Alana Rivera, founder of skincare brand Etta + Billie. “Most people view Amazon as an easy way to get anything at the cheapest possible price. I didn’t want to be lumped in with a group of discounted goods.”
For Rivera, who launched her brand in 2009, the lack of control over her brand, which today counts 160 stores across the US and Asia, was the main reason she felt Amazon wouldn’t be a good fit.
Others say the level of exposure Amazon can offer is difficult to turn down. Many consumers go to the site, rather than Google, to search for products. Beauty products are also dependent on reviews to win new customers and items listed on Amazon can quickly receive large numbers of user ratings.
“[Amazon] is an incredible opportunity to make ourselves available right where and when the customer is shopping,” said Julia Moran, marketing manager of Odacite. Still, the organic skincare brand, which is available in over 300 doors worldwide, declined to list on Amazon after the company was approached last year.
“Amazon is a lot more complex to work with than our other retailers,” she said. "At that time, we were still evaluating our opportunities. But as Amazon's beauty category grows and gains consumer trust, our opportunity with [them] grows too." Moran said Odacite hopes to pick up the conversation again this year.
By providing Amazon with data, beauty brands may be helping the marketplace launch competing products.
Another reason to sign on with Amazon: sellers on the marketplace can use the retailer’s global network of fulfillment centres to store inventory and ship orders to customers. While indie brands pay for the service, they avoid the upfront costs of renting their own warehouse space and the complexities of arranging global shipping. Amazon also conducts tracking, returns and customer inquiries, which small companies are often ill-equipped to handle.
“In a practical sense, it makes sense for indie brands to work with Amazon, because many small brands simply don’t have the logistical capabilities to service their own shipping requirements,” said Doug Stephens, a retail industry futurist.
He added that the convenience comes at a potentially steep cost: by providing Amazon with data on sales, shipping and customers, beauty brands may be helping the marketplace launch competing products. Amazon currently has over 70 private-label brand names, including several in the beauty category.
ADVERTISEMENT
One of the biggest challenges for small brands selling on Amazon is that their listings can get lost, because the marketplace is so huge. Products that fall outside the first page of search results see sales drop precipitously, so sellers must keep sales up through advertising outside Amazon or via the site to drive traffic.
“Just because an indie beauty brand signs up, it doesn’t mean all those customers will start seeing the brand,” said James Thomson, co-founder and partner of the consulting firm Buy Box Experts, a former head of Amazon Services, which recruits sellers to the marketplace. “To succeed on Amazon, you need to be on the first-page search results. But to get there, you need to spend a lot of money to drive traffic to your listings … if you’re an indie brand, how do you get to the point where you’re selling enough to surface to the top?”
Still, there is an emotional connection to beauty purchases and most shoppers go looking for particular brands, which may slow Amazon's ability to develop its own beauty products, Thomson said. Beauty brands connect with their customer base by offering a personal experience, and specialist retailers like Ulta and Sephora are able to offer value-added services in-store like makeovers and samples.
It’s one of the reasons why Etta + Billie isn’t stocked on Amazon (although nor is it stocked on Ulta and Sephora). The company handles order fulfillment in-house “so that the customer’s unboxing experience is something special,” Rivera said.
“It is, of course, great to get your order from Amazon within two days,” she said. “But it doesn’t have a personal feel.”
Related Articles:
[ How to Build a Beauty Brand in the Digital AgeOpens in new window ]
[ Can Revamped Beauty Floors Save Department Stores?Opens in new window ]
[ Amazon Has More Than 100 Million Prime SubscribersOpens in new window ]
