The year 2021 was challenging for many industries, for cosmetic companies as well. Let's take a closer look at how this business performs and what are the biggest opportunities and challenges. Is it a dynamic environment or rather a stable one? How do beauty routines change impact the ecommerce approach? A typical consumer is always a female, or shall we address the expectations for the cosmetics products to all groups?
What do we mean when speaking about the cosmetics field? The beauty industry means a supply of such products as skincare products, hair care, colour and make-up, fragrances, and personal care products.
In 2020, the global cosmetic market decreased an estimated eight percent in comparison to the previous year. Skincare, haircare, make-up, perfumes, toiletries and deodorants, and oral hygiene are the main product categories of the cosmetic market. Skincare was the leading category, accounting for about 42 percent of the global market. Haircare products made up a further 22 percent, while make-up accounted for 16 percent in 2020. Skincare is one of the most profitable product categories, as its revenue is projected to generate roughly 177 billion U.S. dollars in 2025. As of 2020, Asia Pacific was the industry leader, accounting for approximately 43 percent of the global market.
One of the main changes in ecommerce in recent years was a shift for broader digitalisations: companies used various ways of engagement in different digital channels, to boost sales. We've gained access to personalised products, that can be prepared as per our own expectations (i.e. food supplements, that are mixed and prepared for your needs, after filling in a dedicated form). Another way of providing a personalised health product is packaging, which goes very much in hand with beauty products bought as gifts: fragrances, skincare, make-up accessories.
Reports show that social selling for cosmetic products is an absolute must-go - very common already in Asia, and becoming more and more popular in Europe and US. Consumers are looking for live interaction, and believe a lot in a personal recommendation by a dedicated team. Authenticity, a good influencer can demonstrate with the product, can be the best way to promote, or sell it. There is a big group of people, that needs advice and expertise on beauty products but avoid at all costs personal interaction with a consultant in a physical store. Social selling is the channel they will pick as their preferred one, be prepared.
The trend of the increasing popularity of digital sales channels is constantly present and is expected to grow 15% in the next months globally. However, ecommerce should observe and analyse the data regarding customer behaviours and channel preferences, as it may turn out, that once the pandemic situation is more stable, they will turn back to the way of shopping they were used to before the world forces us to use digital sales more. This is one of the reasons omnichannel is one of the best sales and marketing strategies for ecommerce nowadays.
People are different and they will follow different customer journeys. Some will use a visit to a store to try the fragrances, and then order them online. Also, the role of the channels may vary - not each of them is supposed to maximize their sales. For beauty products, some of them will mainly put the focus on consumer engagement, sell of additional services, or special care.
Sustainable development and being eco are trends that clearly breakthrough when it comes to the cosmetics market. Vegan products, natural ingredients, biodegradable packaging, reducing the carbon footprint are additional points in the race for consumer attention. These trends are followed by specific requirements related to transport, storage, packaging and shipping.
Not so long ago, the cosmetics market was almost 100% targeted at women: make-up and care products, hygiene and cleaning products. The market for men's offer was quite narrow, but we are currently seeing a very large reconstruction and change in this area: products are becoming more and more unisex, we observe also diversification of the range due to race. The stereotypical definition of gender, roles, and needs are not acceptable - mainly in the European, American, and Asian markets. Of course, there are countries and markets with a more conservative approach where this will not change for a long time.
The trends mentioned above define the most common client needs:
Technology in beauty is an area that develops more and more, and some clients may expect to include innovation in the offer. Of course, it can't leverage the cost too much, as the competition in the market is quite high.
Certain kinds of cosmetics may easily become damaged when stored in temperatures too cold or too wet or dry. It is important that the company you select is capable to handle your goods, store and ship these under optimal climate conditions so that your customers get the very best version. Choose a company that operates under the best climate conditions for storing your products in optimal conditions so your clients.
Organic materials will generally be required to move rapidly since they are free of preservatives and other chemicals which can extend shelf life. Expiration dates are an underestimated factor, that is quite important for the right supply chain.
In some circumstances, organic cosmetic products may require reverse logistics in order to dispose of expired goods. It's important to keep the dates right so the inventory in warehouses remains organized and rotating. If you are a manufacturer, ask a lot of questions about the services provided in order to find the right solution and solve an issue such as the need for reverse logistics where the need arises.
Certain products you manufacture might also have specific requirements when it comes to packing process and shipping. The environment a product enjoys is as important during the product's distribution cycle and when they are being stored. You need a company which understands the need for delivery of the product. Be upfront about shipping requirements for your products and ensure that any cosmetic business with which you work is able to meet your needs before making a commitment.
A very important factor is to pick the right fulfillment company or cosmetic fulfillment center. There are a number of best practices to consider when it comes to cosmetic fulfillment, which includes:
A third-party logistics warehouse is a good solution for cosmetic products production. A 3PL warehouse handles the cosmetics supply delivery side so the customer can concentrate on production and business growth. A specialised cosmetics distribution center can provide a range of services such as kitting and assembly for a monthly subscription box of cosmetics or fulfilling orders for a sale.
Cosmetics fulfillment is not as strict as fashion when it comes to the returns policy. Some products, by definition, can't be sent back, however, this part can't be skipped when planning a fulfillment process. When working with cosmetic supply fulfillment centers there's a practice called close partnership that can provide effective products for the return transportation services the customer needs.
The strategy of FIFO or first out, first in is a good method for cosmetic fulfillment. The first cosmetic supply stocks will first be released to fulfill orders at the warehouse. This helps with planning for what cosmetics accessories need replenishment based on orders. If the delivery company cannot deliver cosmetic supplies fast enough the customer usually looks elsewhere and eventually buys from the company with the quicker shipping route. That is how streamlining the shipping process is important to maintain demand but to avoid getting caught up in keeping up with demand.
There are many departments that have a few rules that need to be followed. In most cases, the fulfillment partner needs specific certification, when it comes to drugs or some chemical products.
Do you feel that some of the recommendations we have outlined are a problem for you? Need help planning the fulfillment strategy for your business? We are here to help!
We aim to provide the best possible experience for your customers throughout the entire order fulfillment process. We will not only help you to find the best solutions but also to optimise specific phases and choose the right partners.
Don't wait, let us do the beauty fulfillment for you!