Think Subscription: Thriving Beauty Industry Presents Great E-Commerce Opportunity

Posted on November 2, 2018

The beauty industry springboarded into a $465 billion market in 2017 and is projected to reach $750 billion by 2024. There were more than 100 mergers and acquisitions completed in beauty last year, a 70 percent increase from just three years earlier. That growth is rapidly spreading into the e-commerce world. In the United States, 10 percent of beauty purchases in 2017 were made online. That’s up from just 5.6 percent in 2011. That sort of percentage growth will almost certainly increase rapidly each year for the foreseeable future.

If you’re an e-commerce business in the beauty industry, you obviously understand this growth means potentially great things for you. It’s the perfect time for your business to grow your brand into something special. The market is presenting the chance for your top-end goals to be attained if you find the right ways to take advantage.

“Retail is going through this massive reinvention”, Moj Mahdara, chief executive of Beautycon, told CNBC. “Eighty-six percent of women buy make-up; 78 percent buy skincare. Billions of people are online at all times, scouring for something that’s going to make them feel better.”

The beauty industry has proven to be not nearly as disruptable as other sectors. That’s in large part because beauty consumers of today value an experience, a journey, and a relationship more than they necessarily value a low price.

If your beauty brand wants to become something truly special during this time of opportunity, you need to be aware of the key differences between traditional retail and the direct-to-consumer approach. From an e-commerce perspective, being a direct-to-consumer beauty business is becoming increasingly profitable.

Traditional retail in beauty requires brands to go through a distribution channel such as Macy’s or Dillard’s. You may have created a great product, but you are beholden to those retailers when it comes to distribution.

When you have a direct-to-consumer plan, you are not beholden to anyone but the consumer that’s actually using your product. That can be an extremely valuable key propelling your brand toward immense growth.

Also, remember that while the beauty industry is thriving, it’s still a fragmented market. Almost all consumers have a long list of beauty brands within their regular collection. Very few are purchasing everything they need from one brand.

So the goal should be to get your product(s) within that collection. Your brand owning a consumer’s entire beauty collection isn’t reasonable. But if you find a way to carve out a place within a consumer’s collection, you’re still going to get a repeat customer that will stick with you for a long time. And that, as much as anything, is why the beauty market is thriving for many brands as opposed to being monopolized by a few.

Let’s look at Glossier, for example. The thriving e-commerce beauty brand balances the direct-to-consumer relationship to perfection. Glossier used content creation and a well-thought approach on social media in order to give beauty consumers a brand that speaks to them in a way they’ve never before experienced.

It’s important to remember Glossier didn’t get this done by acting as if it were the only brand for consumers. In less than a decade, it became a beauty brand with 1.5 million Instagram followers and a recent influx of $52 million in venture capital by accepting the fact beauty consumers aren’t married to one brand for all products.

“Where most beauty companies have tried to ignore the fact that women are in an open relationship with beauty brands, we have embraced that,” — Glossier CEO Emily Weiss

It’s also important to think about how subscription can impact the valuable direct-to-consumer relationship in e-commerce. If a beauty brand has a great subscription model available to its customers, a brand can be implemented into their collection in an instant.

At Engine, that’s something we’ve focused on heavily. We want the businesses we help to thrive through subscription, which is a rapidly growing businesses model. Here are some of the highlights of what Engine is doing with subscription:

  • Any products can easily be made subscribable or vice versa.
  • Any product can have subscribable variants. For example, if you have a product that comes in three different sizes but only want the largest product to be subscribable, that works great on the Engine platform.
  • The periods at which a subscription can be renewed are customizable. If a product needs to be renewed weekly, monthly, or quarterly, that can be done easily with Engine.
  • Subscribing is a two-click process. You simply decide you want to subscribe and how frequently. From there, it’s a smooth checkout and shoppers can expect products to show up at their door as planned.

Subscription can drive revenue for months and years to come. Whereas one-off purchases, obviously, only have short-time benefits.