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Published
Jan 22, 2018
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Amazon becomes the biggest online retailer of beauty products

Published
Jan 22, 2018

Amazon’s disruption in categories such as consumer electronics or the voice assistant market are well known. The retail giant has however, also stealthily become the largest seller of beauty products online.


Revlon has begun selling Elizabeth Arden on Amazon


 
Amazon now has 36 percent of the U.S. online beauty market, as reported by Bloomberg. The number represents sales on Amazon.com, including those from its marketplace sellers.
 
Department stores in the U.S. have been suffering from falling foot traffic, and supermarkets and pharmacy chains have reported stagnating sales. It’s those lagging revenues that Amazon has been encroaching upon.

Amazon reported 43 percent year-over-year growth in beauty sales in the second quarter of 2017, according to eCommerce analytics firm One Click Retail. Mass cosmetics has become Amazon’s fastest-growing beauty category — once the claim of pharmacy chains like CVS.
 
Amazon is still, however, up against specialty retailers like Sephora and Ulta. Both are performing well offline and across brick and mortar locations.
 
Ulta’s e-commerce sales in the third quarter of 2017 grew 62.9 percent to $119.8 million compared to the year-ago period. The retailer also opened 100 new stores in 2017.
 
Last year Sephora opened its largest store ever, in New York — an 11,300-square-foot space with over 13,000 products on sale. It’s ability to express itself as a experiential brand in a physical space is still its strongest suit despite e-commerce being a cornerstone of its business.
 
There is also the matter of the premium beauty market.
 
Most brands sold on Amazon are mass-market. In comparison, the relatively high-end make-up companies like Clinique, Estée Lauder and Dior that distribute through Ulta and Sephora have had little overlap with Amazon.
 
For beauty companies, image is paramount and selling on Amazon doesn't have the same luxury identity that premium brands traditionally want.
 
That could all change, especially as even department stores beauty counters fall susceptible to sales pricing and discounting.
 
Revlon has begun selling Elizabeth Arden on Amazon; other luxury brands like Elemis, Natura Bisse and Anastasia Beverly Hills have followed.
 
In response, Amazon is creating specialized sections for luxury beauty products on its website.
 
The efforts are paying off. Luxury Beauty, that for Amazon includes professional skin care, haircare and grooming, was the company's top-growing category in 2017 soaring 47 percent year-on-year to hit $400 million in sales.
 
Another area Amazon could make significant inroads in is beauty private labels.

Affordable retail competitor Target just launched its first exclusive fragrance brand. Christened ‘Good Chemistry', the 48-piece fragrance line is part of the retailer's big effort to invest in the beauty sector.

Amazon has done especially well with its private label consumer goods and increasingly, apparel. Many of Amazon's 40-plus private labels have been launched in the past few months.
 
The biggest move for Amazon though, analysts say, would likely be a big-ticket acquisition — Whole Foods is an example. A similar move in the beauty industry could have disruptive consequences.

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