Luxury Beauty Sales Up $188 million over 2016
At 47% growth YoY, the Luxury Beauty category saw the most year-over-year growth for Amazon in 2017. Lending credence to the idea that Amazon is a transactional marketplace, the Luxury Beauty category is full of long tail brands and products and helps to explain this category’s stellar growth, especially when compared to the US beauty market as a whole.
Amazon Cornering the Beauty Market
One Click Retail reported in May of 2017 that Amazon saw an increase of 30% in the health and personal care segment while the US segment as a whole shrunk by 1%. Skin care contributes the most to Amazon’s growth as revenue from products associated with feet, hands, and nails grew by 200% in the first quarter of 2017.
For some, this is welcome news as luxury products are sold for less than salon or retail store prices on Amazon. Using Amazon to shop when a consumer knows the brand they want and the product they want is far easier and less expensive than purchasing from a brick-and-mortar luxury beauty store or salon.But for salon owners and luxury brands, it poses a problem as their supply chain can quickly get out of hand. In affect, Amazon forces luxury brands’ hands and helps lower the prices as the brands wholesale to Amazon, who sets their own prices and is known to take a loss sometime in order to move a product.
Protecting your Supply Chain
While it might seem like an uphill battle to sell luxury beauty products on Amazon, where price drives most consumer’s decisions, Amazon’s growth in this category is evidence that it can be done successfully. One major way to help your brand sell on Amazon is to control your supply chain meticulously. Ignoring a sales channel probably seems like bad business, but in this case it isn’t. You can still make money, in fact you will improve your profit margin greatly, when you ignore wholesale orders from known Amazon resellers. By listing and selling your own products through Seller Central, you take control of your prices and compete with other brands instead of Amazon and wholesale retailers who are not as concerned about profit margin.
When Amazon grows in a category, that leaves a lot of room for individual sellers to enter the market and make money. Amazon’s growth is reflective of a market that had been previously hesitant to compete, but that is all changing.
