High-end Beauty Products are Unwilling to Enter Amazon
For cosmetics companies, the image is everything, while Amazon does not seem to do well. In fact, some beauty brands think that Amazon's website – with a white background plus endless product, is no beauty at all. That's one of the reasons Amazon can not appeal to Estée Lauder and Coty Inc.
In order to be able to better control the product display and pricing, cosmetics manufacturers are more willing to focus on their own websites and their retailers.
However, with the expansion of the Amazon category, beauty brands have to reverse this strategy to seize the opportunity to achieve rapid growth, offsetting the downturn in sales due to the drop in physical store sales. In addition, through the Amazon sales, beauty brands will get higher profits, after all, in many products, Amazon charges the brand less than some department stores, specialty stores.
Becca Edelman, senior beauty research associate at digital marketing firm L2, said Amazon has established a position at beauty market. "Its growth path has provided the brand with greater profit margins than ever before."
High-end beauty products are unwilling to enter Amazon
Amazon has quietly become the largest beauty retailers in the United States. Analysis company 1010Data shows that Amazon has a 21% market share in the cosmetics market. Its expansion has already eroded some of the specialty retailers, but at the moment, Amazon's major beauty products are still limited to mass-market brands such as Clairol, CoverGirl and others, as well as some of the younger independent brands, the more expensive high-end beauty Makeup is still relatively rare. Much of this is because many cosmetics companies are worried that selling their premium products on Amazon will diminish their prestige.
To maintain the image, the major high-end luxury brands have been strictly limited product sales channels. December 2017, The brands usher in good news as the EU's Supreme Court ruled that luxury brands, including Coty, have the right to prohibit distributors from selling their products through third-party e-commerce platforms such as Amazon, without violating antitrust in principle.
EU judge pointed out: "luxury goods have become a luxury is not only because of its material properties, but also from its reputation and charm, give the product aura of luxury, detrimental to luxury 'aura' may undermine its Trait. "
This is one of the reasons Estée Lauder does not plan to sell on Amazon, as Fabrizio Freda, its chief executive points out. Camillo Pane, CEO of Coty, said in an interview in November 2017 that although Amazon is their "key partner", it offers great opportunities for the company's low-cost brand but its high-end luxury product line is different, it has strict distribution agreement. Edelman said high-end retailer Sephora has dropped some of the high-end cosmetics that it sells on Amazon. For this matter, Sephora refused to comment.
However, according to "Women's Wear Daily," Amazon is pushing for an agreement with online retailer Violet Gray to acquire a range of luxury brands. In addition, Amazon introduced a monthly sample box of luxury beauty products and worked with retailer Sally Beauty Holdings Inc to conduct a two-hour delivery project test in Dallas.
Amazon said in an email that they will be innovating in the beauty market in a "unique gesture." They've been working with luxury brands to "make sure branded products appear best," including improving image quality, offering more product detail and expanded editable content space.
Amazon also opened a zone for luxury beauty products, including hair products, bath products and skin care products have their own distribution. Amazon said presenting products in "storefronts" will help customers find new products easier.
Amazon took this series of moves, just as the passenger traffice reduction of beauty company in the department store, and chain pharmacies (such as CVS Health, etc.) sales stagnate. In response to the decline in passenger flow, Estee Lauder has increased its investment in the construction of its website and expanded its product line in beauty product retailers Sephora and Ulta Beauty. In a store such as Ulta, more and more mass and high-end products are sold side-by-side, it is unimaginable in such an exclusive industry. Professional retailers are now one of Estee Lauder's fastest-growing distribution channels, accounting for 11% of total sales.
Even so, Amazon's past history of rapid growth in new retail shows that cosmetic manufacturers face competition with Amazon sooner or later, "said Stephan Kanlian, chair of the Master's in Cosmetics and Perfume Marketing at the New York Fashion Institute.
Some luxury brands have accepted Amazon. From the end of 2016, Revlon has launched its Elizabeth Arden collection on Amazon. L2's Edelman also pointed out that Anastasia Beverly Hills, a crush specialist with 15m fans (some of them are Hollywood stars) on Instagram, has sold products on Amazon to increase her margins, but the company still handles customer service consulting.
FIT's Kanlian said cosmetic companies have lost the edge of having their retail outlet at the mercy of Amazon's presence in the retail market. He said: "Amazon's thunder is bigger and bigger, the traffic is flowing to it, Where is the traffic where is the customers, the cosmetics company has no choice."