Beauty influencers and industry experts use Vendo to launch a beauty marketplace dropshipping business with tens of new beauty brands from Shopify, WooCommerce, Magento, or similar onboarded in just minutes. Global cosmetics brands reinvent their business model with Vendo by testing new product categories without an inventory risk. Beauty retailers are expanding their brick and mortar business with an online platform in a dropshipping model. Vendo empowers them all to onboard new brands weekly, curate the product catalog, configure the storefront experience, automate operations and go live in days.
Beauty trends and strategies for marketplace growth
If you're looking for a marketplace business idea that has plenty of growth potential, look no further than the beauty industry. The global online beauty market is expected to exceed $716B by 2025. eCommerce is the key growth driver for beauty sales worldwide, with digitally native beauty brands rapidly proliferating thanks to a plethora of innovative, new beauty products. In the US, eCommerce will account for nearly a third of the category’s total retail sales by 2026.
In this blog post, we'll discuss some of the latest trends in the beauty industry and how you can capitalize on them to grow your online beauty business. We'll also provide tips on optimizing your eCommerce site for conversions and ensuring you're providing a great user experience for your customers.
Trends shaping the future of the $700B eCommerce beauty market
The importance of diversity in the personal care and cosmetics industries is no secret. Today's customers are demonstrating that such exclusivity is no longer acceptable, from marketing that promotes unrealistic beauty standards to cosmetics that only work for particular skin tones. Sales of multicultural beauty products have surged in recent years, and companies that are embracing inclusive styles and lines are seeing their efforts rewarded in their annual revenue. For instance, the increase of unique color ranges is outpacing the growth of product lines, with foundation colors growing three times as fast.
“Inclusive ranges allowing for everyone to ‘find’ themselves are becoming more of the norm.” - Jordan Rost, Nielsen’s VP of consumer insights
In the beauty eCommerce industry, hyper-personalization allows new brands to stand out from the crowd. This is done by allowing consumers to make decisions based on their preferences instead of giving them so many options that they become overwhelmed. When a consumer feels like a brand knows them and their preferences, they are more likely to feel a sense of loyalty and connection to the brand.
Personalization good practices examples:
- ILIA beauty, a skincare brand, sent customers reminders to replace their products at certain intervals after they had made a purchase.
- Clue is a period-tracking software that recently collaborated with skincare giant L'Oreal to provide tailored hormone-related skincare advice to women.
- MaskiD by Neutrogena – a 3D-printed face mask tailored to your skin’s needs, based on data collected from a selfie
- The stick-on My Skin Track pH patch by La Roche-Posay, which tracks pH levels and prescribes targeted products via an app on your phone
- Made-to-measure Custom Dose correction serums by SkinCeuticals
- Geologie - a male skincare subscription service that offers men a personalized regimen determined by a quiz that asks a range of questions, including ethnicity and location
Customers are more likely to trust influencers' recommendations than traditional advertising. This is because influencers are seen as real people with genuine opinions, whereas ads are perceived as being biased and not always trustworthy. Influencers have become much more accessible in recent years. Emerging brands can now work with micro-influencers who have a smaller but more engaged following. This makes it easier and less expensive to create quality influencer marketing campaigns. In addition, social media platforms have made it possible for brands to track the performance of their influencer campaigns and measure ROI. According to the British Beauty Council’s report, for every $1 spent on influencer marketing, beauty brands secured a return of investment of around $11.45.
Examples of successful influencer campaigns:
- Skincare brand CeraVe created a lot of buzz on TikTok with its "skinfluencers”. CeraVe teamed up with influencers specializing in skin products with a total following of 150 million. Each of them posted a TikTok video highlighting the benefits of the brand’s moisturizing cream. The result: over 132 million views for the video, and the brand's TikTok account growing to over 300,000 followers.
- Game Face is Benefit Cosmetic's influencer campaign targeting female gamers with the slogan, "Reveal your Game Face with Benefit." For a week, the brand teamed up with over 20 female gamers (with a total of more than 1 million followers) from across the world to live-stream nonstop content on its Twitch channel.
With over 5,000 hours of streaming viewed and an average of 3,000 viewers throughout the week, Benefit Cosmetics succeeded in establishing a relationship of trust with its audience while establishing itself as the reference channel mixing video games and beauty products on Twitch.
- Storytelling at its best by Kiko Milano - Influencers, including French actress Tess Masazza, recreated their favorite classic Diva looks using Kiko Milano’s Dolce Diva collection. The focus is less on the beauty products themselves and more on the recreation of the sensation of classic Italian cinema.
- Influencer marketing is also leveraged by luxury beauty brands. For example, Chanel has had a long-standing partnership with influencer Jessica Clements through her YouTube channel and Instagram.
- Artificial intelligence, virtual and augmented reality
New technologies can be used in a number of ways to enhance the beauty shopping experience. AI can be used to recommend products based on customer behavior, provide real-time customer support, and improve search results. VR can boost the online shopping experience for beauty products by offering customers a way to try products before they buy them. In addition, VR can provide an interactive and fun way for customers to explore different products.
Examples of beauty brands using AI, VR & AR:
- Proven, a beauty startup simply analyses data gathered freely from the internet and uses an Artificial Intelligence engine to digest thousands of reviews, evaluate over 20,000 ingredients, and peer review thousands of specific scientific articles. Proven has created a whole bespoke beauty routine for each of its clients based on their unique data and machine learning.
- Sephora has developed an app that lets users try on makeup virtually before they make a purchase.
- Alibaba group integrated YouCam Makeup AR virtual try-on technology into Taobao and Tmall Alibaba online shopping experiences. Consumers in China were then able to virtually try-out the product. Alibaba announced that it had boosted its conversion rate by four times in just six months as a result of utilizing AR technology.
- Brand partnerships
According to AdNews research, collaborations across industries are up to "30 times cheaper than digital advertising" due to the capacity to exploit already existing audiences.
In the beauty industry, this proves especially effective: whenever a unique makeup collaboration is released, social media posts and reviews spur excitement that quickly converts to product sales.
Examples of cross-industry beauty collaborations:
- Vintage makeup brand Besame Cosmetics partnered with Disney to recreate Mary Poppins' signature red lipstick, proving a winner for both fans of the brand and the movies.
- Hershey collaborated with the Korean beauty brand Etude House to create chocolate bar-themed products
- Cheetos-themed eyeshadow and bronzer palettes, as well as an XXTRA Flamin’ Hot lip gloss kit
- Coca-Cola partnered with eyeshadow giant, Morphe
- Beauty subscriptions and curated bundles
According to research conducted by First Insight, 25% of American consumers (both men and women) are currently receiving a subscription box, while another 32% intend to do so in the next six months. While a McKinsey study of 5,000 US consumers found that curation services – subscriptions that aim to seek and surprise by providing new items or highly personalized experiences – received 55% of total subscriptions and were by far the most popular, suggesting a strong desire for personalized services. This shows that there is a lot of growth potential in curating products from different new beauty brands and providing them to consumers as bundles in a subscription model.
- Using crowdsourcing and big data for beauty products development
Crowdsourcing in the beauty industry is leveraged by brands like Volition Beauty that are built on the concept of "community-created products". Volition Beauty gathers product ideas from its customer base and then asks the community for feedback to help decide which products to develop and bring to market.
This strategy can be beneficial for a few reasons:
- It allows for direct feedback from customers that new brands can use to improve their products.
- Crowdsourcing can help create a sense of community and customer loyalty.
- It can save on research and development costs.
Data collected from sources such as questionnaires, search terms, and spending habits have profound implications for the beauty industry.
Olay, a household name, was in decline for years until they reworked their digital strategies and took the time to understand what consumers actually wanted. In partnership with Procter and Gamble, Olay Skin Advisor was created as a web-based tool to help users understand what products are best for their skin type by gathering data. To date, the Olay Skin Advisor has amassed over ten million data points, which have significantly influenced product development.
- Sustainable beauty
Some other popular trends in the beauty industry include natural and organic products, vegan and cruelty-free products, and eco-friendly packaging. Natural and organic products are becoming more popular as consumers become more aware of their beauty products' ingredients and their potential health risks. Vegan and cruelty-free products are also becoming more popular as consumers become more aware of the ethical implications of using animal-based products. Eco-friendly packaging is also becoming more popular as consumers become more aware of the environmental impact of traditional packaging materials.
These trends suggest that the beauty industry is moving towards a more sustainable and environmentally friendly future. Consumers are increasingly interested in products that are good for their health and the environment. This is a positive trend for the beauty industry as a whole, and it presents an opportunity for eCommerce businesses to capitalize on these trends.
Successful beauty marketplaces
- Goop is a marketplace created by actress Gwyneth Paltrow that focuses on beauty, wellness, and lifestyle
- Violet Gray is an online marketplace with products curated by top Hollywood makeup artists that has recently been acquired by Farfetch
- Beauty Bridge is a curated beauty and wellness marketplace
Beauty brands created or co-created by celebrities
Fenty by Rihanna: Diversity, Embraced
Rihanna brand offers a catalog of foundations in revolutionary 40 shades and leverages advertising campaigns to promote black people around the world.
Kylie Cosmetics: Influence
Kylie Jenner is one of the most successful entrepreneurs in the world. Her success demonstrates the influence that social media celebrities may have. She built her fan base before she ever offered a sale.
What beauty products are most in demand?
Beauty marketplace businesses most often focus on product categories such as skincare products, hair care products, makeup, perfumes, toiletries, deodorants, and oral care products. Skincare and hair care products are the most popular as they make up almost 60% of the global cosmetics market.
However, there are some new cosmetic categories and subcategories with a lot of growth potential, such as:
- Anti-aging products, especially those with anti-oxidizing elements like Vitamin C and E, are expected to grow in value by a CAGR of 5.8% in the coming years. By 2026, the global anti-aging cosmetics industry is estimated to reach $60.26 billion.
- CBD-infused cosmetics are expected to grow by $2.22 billion through 2024.
- increasing consumer awareness in regard to sun damage suggests growth in the sub-categories of skin care and sun care
The beauty, cosmetics and personal care industry is booming as men and women buy more self-care products than ever. Skincare, hair care, makeup, perfume, toiletries, deodorants, and oral care are all in high demand. This trend doesn't appear to be slowing down any time soon as beauty buyers indulge in retail therapy and crave all the endorphins they deserve.
In fact, it is increasing at a compound annual growth rate of 5.3% over the long term. The future of cosmetics appears to be bright, with Americans spending an average of $244 to $313 on cosmetics each month.
eCommerce is the key growth driver for beauty sales worldwide, with digitally native brands rapidly proliferating across social media and online shopping platforms.
8 tips on starting a thriving beauty marketplace:
- Identify a niche: When starting your online marketplace, you'll need to decide what kind of products or services you want to offer. Do you want to focus on makeup, skincare, hair care, or all of the above?
- Create a memorable brand: In such a competitive industry, it's essential to have a solid and recognizable brand. Your branding should be unique and reflect the values of your business. Go a little crazy to stand out. Internet is full of really creative and memorable brands to inspire you.
- Onboard amazing beauty brands: Apply your chosen product categories to select and onboard Shopify brands you like so they can sync their products with your marketplace. It only takes a few minutes with Vendo and does not require any extra work after the initial connection is made.
- Curate your marketplace product catalog and product discovery: Use Vendo marketplace merchandising tools to set up your product category tree, main navigation, assign vendors' categories to your marketplace categories, curate product photos, descriptions, attributes for easy searching and filtering.
- Make your marketplace website visually appealing: People want to see what they're buying when it comes to beauty products. Ensure your website is visually appealing and easy to navigate so potential customers can easily find what they're looking for. Vendo built-in and customizable storefront, product filtering and search will come in handy.
- Offer streamlined add-to-cart and checkout experience: Creating a seamless and enjoyable transactional experience will keep your customers coming back. Vendo allows your marketplace customers to pay with their preferred method, including Apple Pay, Google Pay, Klarna and so on.
- Provide product advice and social proof: This could include beauty tips, product reviews, or tutorials. It will not only help establish your brand as an authority in the industry but will also keep it real. Vendo integrates with Reviews.io, Klaviyo product recommendations and many other apps to support your efforts.
- Add Wishlists: Creating a wishlist encourages users to re-visit the website where they have saved products. This leads to a higher rate of customer return, which has a positive effect on the conversion rate.
Start a beauty marketplace to help your customers find their perfect skincare, haircare, and makeup products. Leverage Vendo-powered tools for brand onboarding from Shopify, marketplace merchandising, product catalog curation, operations automation, streamlined cart and checkout experience.