The online beauty retail space is getting competitive; players see rapid growth

Changing consumer preferences and the growth of digital and innovative engagement models are driving digital-first e-commerce platforms in the beauty and personal care industry.

Good Glamm Group, Smytten, BoddessBeauty are among the handful of players who have, over the past two years, responded to a growing preference for online shopping, offering something radically different from traditional e-commerce players. Moreover, these platforms were able to provide a variety of products by selling foreign brands.

“Consumers want hyper-personalized products and services delivered on demand, and this need is particularly acute in beauty and personal care. Consumers are more likely to want a specific shade, finish, or scent to suit their skin tone, hair type, or personal preference. When it comes to beauty and personal care brands, the focus is on creating a unique, omnichannel shopping experience,” said Sameer Amte, MD and Head – Retail – Accenture India. According to a January global report from Accenture, beauty and personal care are expected to gain traction in e-commerce and capture more than 40% of global digital spending on average in key markets by 2025.

The pandemic has also accelerated digital adoption, and beauty tech services have a customer-centric supply chain that helps them meet the needs of D2C delivery models and product customization.

Beauty unicorn The Good Glamm Group, for example, has seen a wave of acquisitions and fueled growth with smaller brands such as PopXO, Baby Chakra, Mom’s Co, Sirona and St Botanica, over the past two years. Company founder and group CEO Darpan Sanghvi told FE, “We have acquired around 11 companies to date and are considering at least one more in the men’s grooming space with a strong offline presence and a distribution chain like an FMCG company.”

Smytten, an online discovery platform for premium products and services, has more than 200 brands in the works and launches one brand per day. “We had never seen this level of supply before. Interestingly, supply grew 5x, but demand only grew about 2.5x, so brands populated their innovation funnel much faster,” said Siddhartha Nangia, co -founder of Smytten, who saw the interest of international brands wishing to enter the Indian market. mainly driven by fear of the scarcity factor.

“They now realize that they should have stepped in about 12 to 18 months ago given the growing demand. We have especially seen great customer interest in Korean and European brands as they perceive quality as being Overall, the cake in the market won’t increase as fast as the supply increases, so we could see a lot of brands moving,” said Nangia, who has increased the sampling umbrella to offer products. thumbnails for brands.

“Previously, if we sampled 10 products for a brand, today we do around 100. We have realized the importance of an omnichannel approach and will open around 10 offline stores by the end of this fiscal year,” said added Nangia.

Tressmart Marketing, a company that counts DAFNI, Paul Penders, Makeup Eraser among its beauty cosmetics, makeup accessories and sunscreen creams, focuses on an inventory-based business model, which has helped it realize large profit margins resulting in lucrative operations. “Our products are sourced directly from manufacturers, ensuring maximum authenticity for customers,” Bhayana said.

“As we are also working on an offline format, where we are opening offline stores for our brands and continuing to bring in more brands from around the world, we source and stock products from around the world to ensure the authenticity of competitive products and prices,” he added. .

Speaking of growth, Bhayana observed, “We are confident in our new launches despite 2021 being an extremely difficult year for everyone. Before the pandemic, 25% of beauty brands globally sold through a digital platform. However, over the past two years, there has been an over 85% growth in beauty industry sales via digital/e-commerce platforms.

According to RedSeer, India’s beauty and personal care industry is expected to grow 12% annually to reach $28 billion by 2025, from around $16 billion in 2020.

The domestic cosmetics industry has been dominated by maestro brands like Lakme, Colorbar, Lotus, etc. Currently, Lakme’s market share is 10%, Maybelline is 7% while MyGlamm and SUGAR Cosmetics are at 4% each. The others are other players like Colorbar. However, Nykaa’s entry into the beauty space has pushed other platforms towards better shopping behavior and more channels.

“Online shopping behavior for beauty and personal care is only getting better, and a lot of the credit goes to Nykaa as they have changed consumer behavior,” Sanghvi added, who believes the online presence forces customers to constantly compare prices with other brands, making it difficult to raise product prices.

With Nykaa’s push into the market, beauty shoppers are only increasing, acknowledges Prateek Ruhail, co-founder of Vanity Wagon, a clean beauty marketplace. “Through our targeted marketing, we are appealing to more beauty enthusiasts who understand the importance of consuming clean products,” added Ruhail, who plans to create penetration into consumers’ lives by increasing touchpoints. – omnichannel presence, increase in co-ownership labels, international expansion, better offers in the Indian market model. With the backing of investors such as Lotus Herbals, Vanity Wagon is aiming for a revenue entity of over 100 crores over the next two years.

While the last three or four months have brought a change in the approach of investors to trades with a much stronger financial lens, one cannot have the same price and multiples as predicted ago. nine months. “The deals that were traded around November, December are all renegotiated now, down about 30% and that’s the new marker – we’re looking at new opportunities under the new prices,” Sanghvi added.

The sector has also seen strong business and marketing approaches. Beauty tech retailer BoddessBeauty started in 2020 and has been nimble in its approach to customer service. “We developed innovative features to bring touch and feel into the hands of customers through features such as a virtual try-on and a skin analysis tool – which was used for both engagement and product recommendation. We’ve doubled down on the consultative approach to buying beauty products, such as one-on-one professional interactions with industry professionals and our content platform, Boddess edit on our social channels,” said Ritika Sharma, founder of BoddessBeauty, which incorporated its first flagship store in March this year to bring much-requested features into the physical shopping experience, such as hair, nail and eyebrow bars inside In addition, product discovery and checkout screens are placed in stores to help customers navigate beauty journeys.

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