Online beauty product sales accounted for approximately 1 percent of the $25 billion-plus total US beauty market in 1999, but could gain significant market share in the near term, according to a report by The NPD Group and Media Metrix.
|Why Shop for Beauty Products Online
Instead of Traditional Stores
|Shop any time||75%|
|Delivery of purchases||54%|
|Ease of comparison shopping||46%|
|Avoid sales tax||38%|
|Avoid interacting with salespeople||19%|
|Stores too far away||13%|
|Source: NPD Online Research|
While a relatively small percentage of Internet users reported previously purchasing beauty products online, nearly two-thirds of those polled said they would consider doing so in the future.
According to the report, fragrance, makeup, and skin care products accounted for 2 percent of all health and beauty products online. Fifteen percent of consumers with Web access have shopped on the Internet for fragrances, makeup, skin care, bath and body or hair products. Eight percent of these consumers have purchased a beauty product on the Internet.
Boding well for the future of the industry, NPD’s BeautyTrends® reports that 62 percent of consumers surveyed for the report said they would consider purchasing beauty products online in the future. Thirty-three percent said they were very or extremely likely to purchase beauty products online in the future. Among women only, this number rose to 37 percent.
For consumers of health and beauty products, convenience, not price, is driving most of these consumers to the Internet for beauty products. Seventy-five percent of online beauty shoppers cited “shop anytime” as a reason for choosing the Internet over traditional retail stores for beauty products to find better prices. Online beauty shoppers value time over money, and beauty e-tailers are listening: many of the recently launched beauty e-commerce sites do not offer discounted prices, but they do offer coupons and other incentives for shopping online, according to the report.
Brand name has also emerged as another important factor in online beauty purchasing decisions. Sixty-four percent of online beauty purchasers said they mostly buy products that they have tried before, evidence of how important replenishment has been to the success of beauty e-commerce sites. Only 5 percent of purchasers said they mostly buy products they have never tried. Another 31 percent said “it’s equally fair” — they purchase both products they have tried before as well as products new to them. NPD BeautyTrends expects replenishment and brand equity to remain key drivers of online beauty sales.
|Top Beauty E-Commerce Sites
Unique Visitors, Dec. 1999
|All shopping sites||49,735|
|Sites selling beauty products only|
|Sites selling some beauty products|
|Source: Media Metrix|
Supporting these findings, separate NPD brand analysis determined that brand names matter more than price to consumers in the fragrance, makeup, and skin care categories. These shoppers understand the differences between brands, show loyalty to their favorite brands and will seek out and pay premium prices for their brands. On the other hand, while bath and body users know and respect the differences between brands and tend to have favorite brands, these shoppers try to find their top brands at lower prices.
“Brand equity will take on increased importance in the world of beauty e-commerce, especially as well-known department stores previously without a Web presence introduce proprietary Web sites,” said Karyn Schoenbart, NPD group president for Tracking Services. “Existing pure-play sites, many of which offer specialty or niche brands, will have their work cut out for them if they intend to compete with the well-established brands that are heading to the Web. Those that survive on the Net will be those carrying the key brands. These could be the big brands but also the ‘hot’ brands. E-tailers who have secure relationships with the most valuable brands will remain standing as competition heats up.”
According to Timra Carson, vice president, NPD Beauty Trends, consumers can expect to see more consolidation among beauty e-tailers as existing sites scramble to carry the top brands and the proprietary sites of the top brands begin to steal market share from the specialty brands marketed online.
“We’re also seeing blurred lines between mass and class in the online beauty market,” Carlson said. “Prestige beauty products traditionally sold only in department stores are featured next to mass beauty products on some e-commerce sites. This detracts from the perceived exclusivity of the prestige brands, one reason some of the top brands have not authorized sales on pure-play sites that carry several brands.”
The most visited beauty e-commerce sites are those that have existed for a longer time and have a high level of advertising, according to the report. Sites that focus on health and beauty are more visited than beauty-only sites. Health-related sites typically carry mass merchandise beauty brands. Beauty-only sites tend to carry only prestige or exclusive brands.
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