Beauty Industry Report: US Market

Beauty Industry Report: US Market

A Digital Marketing Perspective: How to Compete in the Age of Amazon and YouTube

The beauty industry is shifting rapidly, but with worldwide growth and hundreds of billions of dollars on the table, the market is ripe with opportunity
for brands who can adapt. Several factors have dramatically affected the industry in the last five years:

As with other retail sectors, Amazon is quickly dominating the beauty sector. Total beauty sales only increased 2% in 2016, while Amazon Beauty sales shot up 47% last year.

The barrier to entry for independent beauty brands has lowered, and established brands are fighting to keep pace with consumer priorities. Celebrity-endorsed brands, like Fenty, have the ability to define culture and capture market share.

Increasingly powerful beauty influencers and vloggers can shape trends and create opportunities for brands to reach new audiences. However, successfully harnessing social influencers remains a challenge for many marketers.

This report helps marketers tackle these challenges, and turn them into opportunities. With examples from brands like L’Oreal, Conair and Crest, merchants will learn how to boost sales on Amazon (and even track competitor conversions). We’ll also break down how brands can capitalize on the Fenty launch, and identify the right beauty influencers to partner with.

1. Amazon: Increase Sales with Better Merchant Analytics

Optimize sales on third-party sites with in-site purchase tracking. What are shoppers seeking, comparing and buying on Amazon? Which of your competitor’s products are converting?

Maybelline vs. L’Oreal – Battle for Mascara Market Share

Driving traffic to your Amazon product page is important, but it doesn’t always translate to more sales. For example, mascara is a popular product on Amazon (the 6th most-searched term in the Beauty category), but determining the most “successful” mascara brand is more complex than it first appears. Maybelline and L’Oreal compete closely for mascara market share on Amazon; if we look at product page engagement for each brand’s top-selling mascara, L’Oreal appears to come out ahead by pulling a higher volume of sessions. But digging deeper into purchase and comparison behavior reveals otherwise.

US Beauty Report: Maybelline vs. L'Oreal
Source: Page sessions and purchase data pulled using Hitwise’s Amazon Product Tracker (learn more here) during the month of June 2017. Internal Amazon search data pulled 30 days ending 9/30/17.
Amazon Flash Sales – Tracking Flux in Product Demand

On September 15th Amazon launched a special “buy one get one 30% off” sale for a wide selection of beauty products. Tracking popular searches in Amazon’s Beauty category the day before, during, and after the sale reveals what types of products consumers seek during a sale.

US Beauty Report: Top Searches on Amazon Beauty
Source: Pulled using internal Amazon site search data (learn more here) on September 14th, 15th and 16th of 2017.

Slightly more expensive beauty products, like hair dryers and teeth whiteners shot up during the day of the sale, while more commonly purchased items like mascara were more popular on regular days. On the following page, we’ll take a look at how merchants selling “big ticket” items can select the right products to promote on sale days (when they are most in demand).

Conair – An Obvious Choice

Conair’s choice is fairly obvious when it comes to selecting the right hair dryer to promote during the Amazon sale. The “Vagabond” dryer pulls slightly fewer product page sessions than the “Soft Touch,” but it converts better. People who visit the “Vagabond” are also more likely to purchase without shopping further, making it an ideal item to drive traffic to during a sale.

US Beauty Report: Conair
Source: Sessions and purchase data pulled using Amazon Product Tracker (learn more here), pulled the month of June 2017.
Crest – A Less Obvious Choice

Teeth whitening is also a great product to promote heavily during a sale, but it poses a more complex decision for Crest. Their “White Luxe” kit initially appears to be the winner, with more sessions and total sales. But “Noticeably White Whitestrips” has a higher purchase rate and last view rate, suggesting this product may convert better if it gets more attention and traffic.

US Beauty Report: Crest
Source: Sessions and purchase data pulled using Amazon Product Tracker (learn more here), pulled the month of June 2017.

2. Fenty: Capitalize on New Product Launches

Rihanna’s cosmetics line launched in September, and has taken the cosmetics industry by storm. How can beauty brands compete? Or even better, how can they take advantage of Fenty’s success?

After years of anticipation, Rihanna launched her Fenty Beauty line on September 8th, 2017 in partnership with Sephora. Demand for Fenty products shot through the roof, and many of her most popular products sold out in days. Let’s explore the ripple effects of this influential launch, and how other cosmetics brands can ride the Fenty wave rather than drowning beneath it.

US Beauty Report: Fenty
Source: Search and clickstream data pulled using Hitwise Intelligence over 4 weeks ending 9/30/17.
Fenty Fans Flood Sephora – Shifting Cosmetic Demographics

Sephora is a massive website, but the influx of Fenty seekers still managed to affect Sephora’s overall site demographics, albeit slightly. Compared to August (pre-Fenty launch), audience cross-over between Rihanna fans and Sephora site visitors increased by 199%* in September. Let’s explore how else their audience shifted.

Younger Audience

During Fenty launch, a higher percentage of younger consumers visited Sephora compared to month before, whereas segments over the age of 45 decreased.

US Beauty Report: Sephora Audience Composition
Source: Audience data pulled using Hitwise AudienceView. Before Fenty Launch (month of August) measured 07/30/2017 – 08/26/2017 and During Fenty Launch (month of September) measured 09/03/2017 – 09/30/2017. *Quoted in: Times of London

More Diverse

Throughout Fenty’s conception and launch, Rihanna made a point of emphasizing that “Fenty Beauty is for everyone, all skin tones and races.”* Her foundation line offers 40 different shades, and as we’ll see on the next page, has become Fenty’s star product. The decision to place inclusion at the core of Fenty’s product development and advertising helped drive a more diverse customer base, not only to her products, but to the site where her products are sold.

US Beauty Report: Increase in African Americans Visiting
Fenty Product Takeover – A Competitive Merchant Strategy

As you’d expect, 6 of the 10 most-visited product pages on Sephora during September were Fenty products, with the LongWear Foundation page pulling a huge concentration of engagement (offering 40 different shade options on a single page certainly didn’t hurt).

How can other beauty brands compete with the likes of Fenty? Rihanna’s beauty line has grabbed a lot of consumer attention, but it also spawned renewed interest in several cosmetic products, creating opportunities for other brands to step in.

US Beauty Report: Fenty Launch
Source: Product page visits measured using a Hitwise Custom Analysis (learn more here). Fast-growing search clicks measured 4 weeks ending 10/7/2017.

The NARS concealer page dropped on Sephora from 9th place to 18th post-Fenty launch. However, the products actually pulled slightly higher visit share (.43%) in September. Interest in foundation and skin products has increased since Fenty’s launch, and NARS should capitalize on that by promoting this product, as well as their staple Sheer Glow Foundation.

Tarte released two all-in-one collector’s sets in September, which include blush, highlighters and eyeshadow. Considering the growing popularity of highlighters (likely amplified by the Killawatt Freestyle Highlighter), Tarte might tweak search campaign keywords to include “highlighter” rather than emphasizing other elements of these makeup sets.

3. YouTube: Work with the Right Beauty Influencers

Every brand wants to harness the power of social media celebrities to promote their products. But how can you choose the best influencer for you?

Beauty influencers attract massive audiences on YouTube with their make-up tutorials and how-to’s. How can a brand evaluate the best YouTube Influencer to partner with? In the example below, we compared the audience overlap between women with strong lifestyle interests (i.e. Fashionistas, Weddings, Job-Seekers, based on their search behavior), and their engagement index* with different YouTube influencers. As we see below, Beauty vloggers are a great match for Costume seekers and Fashionista audiences.

US Beauty Report: Audience Interest vs. Beauty Vlogger

Next, we break down the most engaged audience segments for top cosmetic brands, like Sephora, Clinique, and Salley Beauty. While Wedding is generally a strong audience for makeup brnds, Kylie Cosmetics shares even higher engagement with Fashionistas. Younique, in the meantime has the lowest overlap with Fashionistas as well as three other audiences: Nightlife, Job-seekers, and Costume.

US Beauty Report: Audience Interests vs. Top Brands

When brands better understand how their audience composition — and customer’s interests — overlap with social influencers, this provides direction on who to partner with, and for which products.

For example, Sephora might want to promote their “Girls Night Out” line with Grav3yardGirl, or Kylie Cosmetics might partner with Michelle Phan to produce a makeup tutorial on the Deer Snapchat Filter costume using Kylie’s Bronze Palette.

US Beauty Report: Shared Audience Interests
Source: YouTube influencer segments based on internal site searches for each influencer on (learn more here). Audience segments (i.e. “Wedding” “Fashionista”) based on search behavior indicating interest in particular theme. Segments built exclusively based on female consumers. Pulled over the month of June, 2017.

Key Takeaways

Advanced Amazon analytics are crucial for merchants to get ahead: Amazon is a rising force in the beauty industry, and getting a peek behind the curtain is a key advantage. Measure not only how your products are performing, but their relative purchase rate in relation to competitors. Learn how Hitwise can help with that here.

Use data to capitalize on a new product launch: Not every beauty brand can be Fenty, but they can take advantage of market shifts created by major product releases. Keep an eye on rising search terms in the wake of a major launch, and re-evaluate which products to promote based on the rising tides of consumer interest.

Audience analysis is essential for choosing the right influencer: Not every social influencer in your industry is ideal to partner with — always conduct an audience overlap analysis first. Understand the interests of both your audience and a social influencer’s audience in order to align specific products with the right influencer.

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