The indie beauty market has rapidly matured into one of the largest categories within beauty, and Amazon plans to take advantage of its popularity by launching a new digital storefront dedicated to it in June. The move will put it at odds with indie retail leaders like Ulta and Sephora.
Currently, Amazon features a luxury beauty shop on its online marketplace that launched in 2013, but as natural and smaller beauty brands have received increased consumer interest, the Seattle-based company has been looking to grow its offerings. According to a new report by One Click Retail, a marketing and analysis firm, beauty sales at Amazon are on the rise. In the first quarter of 2018, its total beauty sales grew by 30 percent, to $900 million.
“Indie beauty is definitely a big focus for us,” said Justin Boettcher, senior strategic business development leader at Amazon, at the BeautyX Retail Summit in May.
Amazon brands that will sell in the Indie Beauty Shop must be at least 50 percent independently owned and must not be sold at Ulta, Target or Walmart, Boettcher said. Other retailers also have exclusive relationships with brands — for example, Ulta currently claims MAC as an exclusive brand for online retail. Sephora too has capitalized on the value of limited editions by commissioning exclusive products from brands for their stores.
The customer is key
Amazon’s business model has centered on offering some of the lowest prices on products that are rapidly shipped to customers. It’s a kind of perfunctory system that lends itself well to everyday items that need no fanfare — but beauty shoppers are used to a different customer experience, and indie beauty brands require an additional leg up when it comes to building their brands, something Sephora and Ulta have succeeded at.
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“I am curious to see how Amazon addresses the high level of personalization and customization beauty customers are looking for,” said Kathryn Murray Dickinson, founder of online beauty store Aillea. “There is a reason that in a retail downturn, beauty retailers are still thriving. Women still want to see, touch, feel and experience their makeup before they make a purchase.”
To that end, Amazon plans to have a “Treasure Truck” available as a kind of mobile pop-up with trending and local items when the truck will be nearby, according to Beauty Independent. Amazon is also evaluating sampling activations to supplement the Treasure Truck experience, including a sampling program through its Amazon Campus program that supports free same-day pickup and returns for college students who are Prime members.
Brand ethos versus Amazon
But these personalized experiences are plainly geared toward the customer and not the brands.
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Alana Rivera, the founder of skin-care brand Etta + Billie, said one reason she declined to join Amazon’s new shop when the company reached out was due to the lack of control she would have.
“You may have control over the design of your page … but they have control over what shows up on your page, in terms of advertising, their search algorithm and how much you pay them, and those can change at any time,” she said.
Etta + Billie ships products with handwritten notes and takes pride in how it presents its packaging, Rivera said. The Amazon Fulfillment Center, while allowing a brand to ship quickly, would remove that special customer relationship. “There’s no personalization, and I would really hate to lose that,” she said.
Maintaining a relationship with other stockists is also important, she said. The brand is retailed in 160 stores in the U.S. and Asia, and by partnering with Amazon, it might give the impression of deemphasizing other relationships.
Additionally, in an era in which there are so many brands available, emerging ones need an additional support system. Amazon is currently developing an Amazon Associated program that will connect indie beauty brands to influencers and provide samples, said Jennifer Tran, marketing program manager at Amazon, at the BeautyX Retail Summit. Influencers in the Amazon Associates program receive up to 10 percent commission on sales.
Retailers like Sephora and Ulta have already been instrumental in helping develop and promote indie brands, said Christopher Skinner, founder of creative brand agency School House.
“They’re brand builders and incubators. They invest time, energy and talent into giving advice, giving direction and providing updates to brands about what they’re hearing from customers,” he said. “Where is that personalization and connection to the customer [from Amazon]? [They should realize] it’s not always a replenishment purchase,” he said.
Natural and indie beauty brands have also been promoters of product transparency, in terms of everything from ingredients they use to where they manufacture. Private-labeling is a common practice in beauty, and Sephora and Ulta have been clear about their own practices, said Skinner. But Amazon is a company that usually operates in stealth. Case in point: It has not been forthcoming about when in June the Indie Beauty Shop will launch.
For Rivera, Amazon’s private-label products were a concern as they might cannibalize the sales of brands that would already be beholden to the company. Amazon currently has over 70 private-label brand names, including several in the beauty category.
“A lot of those things don’t jive with our values at Etta + Billie,” she said.
