Beauty brands take the online stage
Sephora is one of the earliest and most successful e-commerce players in the U.S. beauty industry. The French beauty retailer launched its first website in 1998, catapulting the company into a promising digital future and generating nearly 1.8 billion U.S. dollars in e-commerce revenue two decades later. In 2022, around three in four U.S. online shoppers were aware of Sephora, which has a similar business model to the American beauty chain store Ulta Beauty, or Ulta. As both retailers serve as arguably the most popular one-stop shops for beauty products in the country, they are often compared by shoppers looking for the best buys. Despite such inevitable comparisons between the two retailer brands—their membership programs, product selections, sales, and deals—online shoppers seemed to view them quite similarly. While 28 percent of online health and beauty shoppers liked Sephora and Ulta respectively, Sephora enjoyed a slightly higher usage rate, at 23 percent, compared to Ulta’s 21 percent. Consumer loyalty and media buzz about each retailer also fell within similar levels, with a minor advantage towards Ulta.Bath & Body Works is another popular U.S. retailer, albeit for personal care products such as toiletries and fragrances rather than makeup and skincare. The company, which generated over 7.8 billion U.S. dollars in sales in 2021, showed a brand recognition share of nearly 90 percent among digital buyers and was popular among 50 percent.
Social media revamps the beauty industry
Given the variety of beauty and personal care brands, how do consumers choose which products to buy and where to buy them? One major contributor to this decision-making process is social media. Globally, around seven in ten shoppers cited social media as a source of discovery or inspiration for products and brands. Among U.S. consumers, regardless of whether the content is posted by friends, brands, or influencers, social channels undeniably influence purchasing decisions. Digital content and online video content have become some of the most lucrative forms of marketing during the last decade, and nowhere is the influence of such channels more evident than in the beauty industry.Today’s consumers no longer have to frequent brick-and-mortar stores for beauty and make-up advice but instead expand their beauty horizons from home. Millions of digital natives are turning to tutorials and reviews on social networks like Instagram and video-sharing site YouTube for the latest trends in the beauty world. By clicking on content and subsequently buying the products on offer, beauty shoppers are boosting sales numbers and simultaneously producing new online celebrities. For beauty companies, the rise of self-made beauty experts like Nikkie Tutorials or James Charles creates the perfect storm to engage beauty audiences and expand brand awareness. In turn, such cooperations help influencers and beauty content creators earn eight-digit sums each year.
