29. February 2024

5 Unexpected Findings in Beauty Retail eCommerce

Beauty Industry - 5 eCommerce Landscape Findings

As part of the beauty retail industry, selling through online commerce is inevitable. In fact, beauty is one of the most advanced industries when it comes to eCommerce maturity. 

However, as beauty brands have a wide selection of retail platforms to choose from, eCommerce strategy can be quite complex to develop. Why is this?

  • There are many platforms to choose from but few resources available to launch on all of them successfully. 
  • It is often difficult to then prioritize among these retailers to know which option would deliver the most value.
  • Brands need to be better informed in order to better negotiate and get into joint business planning with retail partners.

Using Data to Negotiate with Power
There is an informational void and brands can often feel disempowered. Data offers the best solution for such brands. Understanding the landscape through the lens of data science can not only help brands prioritize retailers but also negotiate from a position of strength. 

5 Insights to Know for Negotiations in 2024

If you’re an eCom professional in beauty retail in Germany, here are 5 insights that can help drive your trade term negotiations in 2024. 

If you’re interested in finding out more about specific retailers, let us know and we can create a custom study. 

For now, here are findings based on the top 32 beauty retailers!

Retailer Selection Needs to be Strategic

The German eCommerce landscape for beauty retail is highly fragmented. There is a wide variety of players and each comes with their own strengths and challenges. It is not enough to invest in big names such as Amazon. 

Though Amazon still dominates the market, there are now serious alternatives that can and should be leveraged. Hence, identifying these partners and developing them into strategic counterweights should be a priority.

Beauty Retail - Overview of Retailers by Reach 0r Footprint vs. eCommerce Capabilities
Beauty Retail – Overview of Retailers by Reach 0r Footprint vs. eCommerce Capabilities

Beauty Retail Brands Cannot Ignore Marketplaces

In our study, we define a marketplace as a platform that only matches buyers & sellers without owning the product. From this point of view, it may be surprising to know that Marketplaces offer great potential for beauty retail in Germany.

For instance, Marketplaces are accountable for 90% of online beauty sales in Germany. Furthermore, their large footprints along with advanced capabilities create conversion-friendly opportunities. 

To win in eCom in Germany, brands need to be present in the major marketplaces. This does not necessarily mean having in-house, burdensome logistics processes. You can also outsource these functions to specialized service providers or clients.

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Beware of Overreliance on Big Name Retailers

When it comes to the beauty of eCommerce, tenure, and recognizability do not equate to success. Players such as Müller who entered eCom early do not necessarily have the most dominant position in the market. 

Beauty Industry - Müller's performance
Müller’s Performance vs Country Average & Industry Maximum

Remember that omnichannel players who can guarantee success offline are not always equally capable of converting online. How should you mitigate this? Download the full report to find out. 

Perfumeries offer You Relevance but not Reach

Beauty brands tend to focus on beauty retailers and perfumeries when it comes to their eCommerce strategy. In principle, it makes sense to go after big players such as Amazon in addition to niche players such as perfumeries. However, selecting the right mix under each category is still key to success. 

The Beauty Retail Industry - A closer look at Perfumeries
The Beauty Retail Industry – A Closer Look at Perfumeries

In Germany, other than Douglas, perfumeries are yet to be able to attract large volumes in terms of traffic. The wide gap also leaves room for consolidation which is something to watch out for over the course of 2024!

Be Strategic with Your Investments in International Beauty Retailers

International retailers who are successful in other parts of the world have not found it easy to gain traction in Germany. Based on their footprint or reach, they seem to be struggling to catch up with local retailers such as Douglas or DM. 

International Players have smaller Footprints
International Players have smaller Footprints

For beauty brands, this means that investing in a player like Sephora in the US may not drive the same results for you in Germany. To assess the true potential of each retailer, it is best to competitively benchmark them in the specific market in which you want to make your investments. 

Continue Leveraging Data to Enhance Ecommerce Beauty Retail Negotiations

If you’re interested in digging deeper:

Want to benchmark your own retailers against the beauty landscape, talk to us to order a custom report.