The beauty market needs offline experiences

Once again, we're here to ask you (and ourselves) where do you buy your beauty products, where you discover new ones, what criteria you follow to choose what to buy, and - more generally and as a direct consequence of these questions - how changing consumer habits, influenced by social trends as well as socio-economic conditions, impact (like a domino effect, or cascading) on the relatively old sales methods. Specifically, this time we're questioning the success or failure of multi-brand and multi-category e-commerce, those operated by large retail sites that are, in fact, increasingly struggling. Let's try to understand why and what could be the solutions.

Contemporary Issues in the Beauty Market

The beauty world grows relentlessly, increasingly discussed, vast, and diversified. The US market is oversaturated, acquiring new customers costs, and competition doesn't give up. Trending brands are important for success, but their number is limited. Initially, major online retailers tried to compete against so-called pure players (who sell only beauty and makeup) by including a broader range of products beyond clothing, trying to ride a growing wave. Perhaps overdoing it and unable to predict its collapse, equally swift. To this, an increase in prices and uncertain economic climate were added, making consumers more cautious and pessimistic.

Downsizing Multi-Brand Retailers

"Online shopping has proven to be much less profitable than people expected 5 years ago," explains to Business of Fashion Benjamin Bond, vice president of the Simbe commercial intelligence platform. The immediate and inevitable solution? Downsize. Just like Net-A-Porter did, reducing its selection of beauty brands from 200 in 2022 to 70 today. Farfetch, on the other hand, closed its beauty division in 2023, after just one year of activity. The same was done by Brown, a high-end London retailer. Not that websites dealing only with beauty fare much better. British company THG, which owns online retailers Look Fantastic, Cult Beauty, and Dermstore, lost 700,000 active customers in 2023. Despite a 2.6% increase in the last quarter of the year, the division's revenue decreased by 4.2% in 2023. For Beauty Bay, a 19% decrease in sales in 2023. To contribute to this decline, beyond the reasons already mentioned, there's also the increasing strength of individual beauty brands, which build standalone sales sites, enriching them with virtual trials and additional features made with the help of artificial intelligence. The customer to be assured, for multi-brand retailers and individual brands, is the same and must choose.

The Future of Online Beauty Retailers? Offline

So, what to do to win this customer? Surprisingly but not too much, a plus is needed. A unique proposal, which goes beyond the online shop to materialize offline, in person. Samples, events, content created with an experiential perspective are imposing themselves as a medium and long-term strategy much more than continuous promotions, which are volatile and push buyers to move from site to site in search of the best offer, in a downward game. In short, one should build a relationship with the customer, which when it comes to beauty, skincare, and makeup is more fickle than ever. In this, it could help to establish itself as an authoritative figure in the beauty world, transform into a discovery space (even in person, touching products firsthand), differentiate, create communities, and thus loyalty, partnership programs and long-term collaborations with prominent figures in the online beauty world.

The Challenge of Omnichannel 

These are complex efforts, repositioning, and therefore also costly. However, it's not said that they won't prove fruitful. Investments must be carefully evaluated, but they could be worth it, especially towards omnichannel sales, mixing online and offline. Not everyone, finally, is suffering. In less saturated markets, there's still space. Just think of Notino, based in the Czech Republic and expanding into Serbia, Norway, and Turkey. Or Nykaa, the Indian beauty giant, which grew by 29% in the third quarter of 2023.