Changing consumer preferences and the growth of digital and innovative engagement models are driving digital-first e-commerce platforms in the beauty and personal care industry.
The Good Glamm Group, Smytten, BoddessBeauty are among a few players who have in the past two years catered to a growing preference for online shopping, offering something radically different from traditional e-commerce players. Also, these platforms have been able to provide a variety of products by selling foreign brands.
“Consumers want hyper-personalised products and services delivered on demand, and this need is particularly acute in beauty and personal care. Consumers are more likely to want a specific shade, finish, or scent that’s appropriate for their unique skin tone, hair type, or personal preference. As for beauty and personal care brands, the focus is on creating a unique and omnichannel shopping experience,” said Sameer Amte, MD and lead – retail – Accenture India. As per a January global Accenture report, beauty and personal care is predicted to gain ground on e-commerce and capture over 40% of global digital spend on average in key markets by 2025.
The pandemic has also accelerated digital adoption and the beauty tech services have a customer-centric supply chain that helps them address the needs of D2C delivery models and product customisation.
Beauty unicorn The Good Glamm Group, for instance, has been on an acquiring spree and fuelling growth with smaller brands such as PopXO, Baby Chakra, Mom’s Co, Sirona, and St Botanica, over the past two years. The company’s founder and group CEO Darpan Sanghvi told FE, “We have acquired about 11 companies to date and are looking at at least another one in the men’s grooming space with a strong offline presence and a distribution chain like an FMCG company.”
Smytten, an online discovery platform for premium products and services, has over 200 brands in the pipeline and launching a brand a day. “We haven’t seen this level of supply before. Interestingly, the supply has increased 5X but demand is increasing only about 2.5X, so brands have populated their innovation funnel much faster,” said Siddhartha Nangia, co-founder, Smytten, which has seen interest from international brands wanting to enter the Indian market mainly driven by the fear of the missing out factor.
“They now realise they should have jumped in about 12-18 months ago given the increasing demand. We have especially seen a lot of interest from customers in Korean and European brands as they perceive the quality to be superior. Overall, the pie in the market is not going to increase as fast as the supply is increasing, so we might see a lot of brands moving out,” said Nangia, who has increased the sampling umbrella to offer miniature products for brands.
“Earlier if we were sampling 10 products for a brand, today we do about 100. We’ve realised the importance of an omnichannel approach and will be opening roughly 10 offline stores by end of this financial year,” added Nangia.
Tressmart Marketing, a company that has DAFNI, Paul Penders, Makeup Eraser among its beauty cosmetics, makeup accessories, and sun protection creams, focuses on an inventory-led business model, which has helped it achieve significant profit margins resulting in lucrative operations. “Our products are directly purchased from the manufacturers, ensuring utmost authenticity for customers,” said Bhayana.
“Since we work on an offline format too, wherein we open offline stores for our brands and continue to bring more brands from across the world, we buy and store products from all across the world to ensure product authenticity and competitive pricing,” he added.
Speaking about the growth, Bhayana observed, “We are confident of our new launches despite 2021 being an extremely difficult year for all. Pre-pandemic, globally 25% of beauty brands were selling through a digital platform. However, in the past two years, there is more than 85% growth in beauty industry sales through digital/ e-commerce platforms.”
According to RedSeer, India’s beauty and personal care industry is expected to grow at 12% per annum to reach $28 billion by 2025, from an estimated $16 billion in 2020.
The domestic cosmetic industry has been dominated by maestro brands like Lakme, Colorbar, Lotus, etc. Currently, the market share for Lakme is 10%, Maybelline is 7% while MyGlamm and SUGAR Cosmetics are at 4% each. The rest are other players like Colorbar. However, Nykaa’s entry into the beauty space has pushed other platforms toward better buying behaviour and more channels.
“The buying behaviour online for beauty and personal care has only been improving, and a lot of the credit for that should be given to Nykaa as they have changed consumer behaviour,” added Sanghvi, who feels the online presence makes customers constantly compare prices with other brands which makes it difficult to hike prices of products.
With Nykaa’s push in the market, beauty shoppers are only increasing, agrees Prateek Ruhail, co-founder, Vanity Wagon, a clean beauty marketplace. “With our focused marketing we are tapping into more beauty enthusiasts who understand the importance of consuming clean products,” added Ruhail, who plans to create penetration into consumers’ lives by increasing touchpoints — omni channel presence, increase of co-owned labels, international expansion, better offerings in the Indian marketplace model. With the backing of investors such as Lotus Herbals, Vanity Wagon aims for a `100 crore-plus revenue entity in the next two years.
While the last three-four months have brought a change in investors’ approach looking at deals with a much stronger financial lens, one cannot have the same price and multiples that were intended nine months ago. “Deals that were negotiated around November, December are all being re-negotiated now, down by about 30% or so and that’s the new marker — we are looking at new opportunities as per the new price points,” added Sanghvi.
The sector also saw robust sales and marketing approaches. Beauty tech retailer BoddessBeauty started in 2020 and has been nimble in its approach to serving customers. “We developed innovative functionality to bring touch and feel in the hands of customers through features like a virtual try-on, and skin analysis tool – that was used for both engagement and product recommendation. We doubled down on the consultative approach to beauty shopping such as professional one-on-one interactions with industry professionals and our content platform, Boddess edit on our social channels,” said Ritika Sharma, founder, BoddessBeauty, which integrated its first flagship store in March this year to bring highly requested features into the physical shopping experience, like hair, nail and brow bars inside the store. Additionally, product discovery and check-out screens are placed in stores to assist guests to navigate beauty journeys.