SKINCARE SUCCESS: SEVEN FUNDAMENTALS FOR GROWTH IN THE AMAZON SKINCARE CATEGORY
Beauty ecommerce generated $13.5B in retail sales in 2021 and is expected to double in the next five years. A portion of the growth will be driven by the largest subcategory: skincare. As we reviewed our 2021 Amazon client performance, many of our strongest success stories were driven by our skincare brands. On average, our Amazon skincare clients experienced a revenue increase of 58% YoY compared to 2020. Although each brand is unique in its offerings, brand story, tenure on Amazon, and revenue size, there were seven common elements that drove success for skincare brands on Amazon in 2021:
- Brand Awareness: Amazon is not a place where demand is created, but rather where demand is filled. This holds especially true for skincare, the largest category within beauty, and one of Amazon’s fastest growing and competitive categories. It is difficult to compete in a sea of serums that seemingly all provide similar benefits, leaving consumers overwhelmed. This is where brand awareness comes in. One in three premium skincare customers use Amazon as a discovery destination while on their shopping journeys, and 64% of premium skincare shoppers visited Amazon as they were just starting their research. The brands that establish awareness off-Amazon are the ones that gain consumers’ trust when they search on Amazon. This off-Amazon strategy includes distribution in other retail channels, a compelling social media approach, strong press and PR, and more. Two out of three shoppers say brand name is an important factor on their shopping journey.
- Content: Amazon serves as a research tool—skincare shoppers are using Amazon to discover and search for new brands and products. 86% of shoppers say they’ve found new brands and products while on Amazon. Content on Amazon detail pages is key, especially in a category that is hyper-focused on ingredients; how-to content and ingredient claims are critical. Claims such as vegan, cruelty-free, and paraben-free are important details to add into titles and bullet points, helping to differentiate your product from the competition and giving consumers trust in your brand (disclaimer: be prepared to back up all claims made!) 64% of premium skincare shoppers said that information they found on Amazon helped them feel more confident in their purchases. We begin all client engagements with a Retail Readiness strategy that includes content optimization, ensuring that copy and content are fully optimized, aiding conversion.
- Assortment: Brands have unique approaches when deciding on catalog assortment for Amazon. Some use Amazon as an acquisition channel and only list a portion of their catalog; others have full parity with their DTC websites, delivering a seamless customer experience. Regardless of the chosen approach or catalog size, successful skincare clients prioritize their best sellers on Amazon.
- Inventory: There is no doubt that supply chain issues led to a challenging inventory environment—not only on Amazon, but across all retail channels. Having enough inventory on hand in one of two ways drove skincare success:
- Maintaining a low Rep OOS metric (we aim for less than 5% and as close to 0% as possible) for the Vendors and
- Sufficient inventory limits for the Sellers. For those with an inventory limit cap, we recommend utilizing that precious space for the high-volume ASINs, even if that meant discounting or disposing of overstock or unhealthy inventory to make that space available.
- Subscribe & Save (SNS): Given that skincare is a replenishable category, one of the simplest tactics to maintain best-in-class positioning is ensuring that SNS is turned on for all ASINs that can be replenished. SNS is a proven way to increase revenue by gaining the consumer’s trust by providing consistent product at their chosen cadence. The customer gets a discount (5% or 15%), and the brand gets a loyal customer—a win-win for all.
- Marketing Opportunities: While respecting that skincare, especially in the Premium Beauty category, aims to position itself as an infrequently promotional category, occasional promotions are key to driving traffic and new users. Participation in promotional offers during key time periods such as New Year, New You, Valentine’s Day, Mother’s Day, Prime Day, and Holiday across a variety of promotions such as Deal of the Day (DOTD), Best Deal, and Coupons are recommended. The percentage itself can vary depending on the product and the category, however skincare brands experienced a healthy increase in traffic, revenue, and new-to-brand users, even with a promotion as low as 15%.
- Advertising: 84% of premium skincare shoppers who visited Amazon recalled seeing an ad. The main driver of YoY growth for our skincare brands was a YoY increase in advertising spend. All skincare brands significantly increased their advertising spend last year, with some triple digit YoY increases. The additional dollars helped fund incremental upper funnel tactics to prospect new users and compete in an increasingly competitive category, across Search and Display channels. The category saw a minimum advertising investment of 10% of topline sales, with some brands investing as high as 18%. Amazon advertising strategies such as Sponsored Products, Sponsored Brands, Sponsored Display, DSP Retargeting, and DSP Prospecting are all recommended tactics to drive visibility to your skincare brands’ product detail pages.
Amazon is investing heavily in owning the beauty category, creating opportunity for brands with savvy strategies. A leader in the marketplace era, with deep expertise in the beauty category, Stella Rising is focused on client business 24/7, unlocking revenue growth and helping brands shine amidst increasing competition.
Sources: Amazon, “Find a Healthy Glow with Premium Skincare Shoppers Looking to Discover New Products,” 16 December 2021, eMarketer, U.S., May 2021