Consistent Growth – the strength of the UK Health and Beauty Market
Beauty has gone digital and there’s no turning back.
The UK’s online beauty market has exploded over the past few years, just as it has globally.
Predicting significant growth still to come, McKinsey statistics show this dynamic, resilient and endlessly adaptable sector has quadrupled between 2015 and 2022 worldwide.
Here in the UK, the latest Statista figures reported e-commerce beauty revenues of US$2.64 billion, with expected annual growth of 2.17% between now and 2027.
In fact, as of 2022, 41% of UK shoppers now buy their health and beauty products through digital channels, with Statista anticipating that 44.2% of total market revenues will be generated by online sales in 2023.
And of course, Amazon’s unmatched convenience and vast product scope has quickly seen the marketplace positioned at the front of the pack in terms of online beauty sellers.
Amazon’s Place in the UK Beauty Space
As with many sectors, Amazon’s growth in the UK Beauty space was supercharged by the pandemic.
Unable to visit normal retail outlets and try items out, buyers turned in droves to the accessibility, next-day deliveries and no-risk returns of the marketplace, and Amazon stepped up to meet them.
As did Sellers.
While many categories have dropped in popularity with Sellers between 2022 and 2023 through lack of opportunities or poor profitability, Beauty has grown year-on-year.
Globally, Beauty and Personal Care is now the second most popular category for Sellers according to JungleScout – and no wonder.
In categories with the most profitable Sellers, Beauty tops the list – with over 30% of Sellers making net margins of 21% or more.
And sales volumes also continue to increase.
During 2022, first-party (1P) sales of beauty products increased by 23%, and third-party (3P sales) grew by 14%, actually outperforming their 1P competitors in absolute values.
The Shape of the UK Beauty Market on Amazon
Is this a competitive sector?
Yes, and (as we’ll see) big players and mass-market brands like Garnier, Nivea, L’Oreal and Rimmel have established a strong presence on the marketplace.
But there’s still impressive scope for growth for brands of all sizes.
For those already dominating, there’s an obvious need to defend the position that you’ve secured.
But seeing beyond that defensive positioning, there is also exciting latitude to increase market share and maximise profitability with smart strategies that are Amazon-focused.
For smaller Sellers and emerging brands, the continual evolution and trend-led changes of this compelling category mean that there are always plenty of opportunities on the table that will enable you to challenge for a piece of the pie.
The real appeal of the Beauty sector on Amazon is that it’s a constantly growing category driven by repetitive purchasing, in which sales of most products remain stable throughout the year, with few fluctuations outside truly seasonal products like suncream.
Always ripe for disruption, this is a sector which is constantly evolving in line with shifting perceptions of beauty, which in turn drive the changing desires of buyers.
It’s a sector with target consumers of almost all ages and demographics.
And best of all, it’s one where people like to try different things, with 44% of McKinsey’s 2023 survey respondents saying they enjoy experimenting with new products and brands.
From great optimisation to selling models; customer connection to “premiumisation”, join us as we dive deeper into the potential offered by this most exciting of Amazon categories.
Selling Models for Beauty on Amazon
With easily shippable items that generally take up little warehouse space and experience steady sales volumes through the year, we think Beauty is a great candidate for an Amazon Seller model using Amazon FBA for fulfilment…
And yet our data shows that the majority of the top 100 UK Sellers in the category are using a Vendor model.
This is likely because Vendor’s hands-off approach is perceived to work better in commercial terms for the bigger brands, who are more focused on managing high-value purchase orders and moving large quantities of goods – however, that does not necessarily mean larger players shouldn’t be considering the Seller model.
Digging deeper, we opened our search up to look at the top 5,000 listings in the Beauty category and found that actually, the vast majority (4,533) are using FBA to grow their business.
For emerging or smaller brands, we agree that this makes perfect sense.
Seller model’s retail-level profit margins and Amazon Prime benefits (from rankings advantages and increased conversion rates to next-day shipping) make it an attractive option – as does the fact that Sellers have far greater control over the technical side of Amazon, opening up the huge potential of optimisation.
Using FBA also offers access to Amazon’s “Small and Light” scheme – a brilliant way to boost both profitability and visibility on the platform, with specific cost reductions and additional promotional opportunities available (read more on this in our expert piece on maximising your Amazon profitability).
Big Brand Market Share
As you would expect, at the top end, this sector is dominated by the immense budgets, reach and brand visibility of the big beauty companies.
Our analyses show a clear pattern in which brands like Garnier, Nivea, Maybelline and L’Oreal have a strong hold on the top 100 best-selling products in the overall Beauty sector – many charting with multiple listings.
What do revenues look like for these top 100 listings?
The figures above are based on sales over a “normal” 30-day period that sits outside any key holiday dates (summer, Christmas) and away from Amazon events like Prime Day or promotional periods.
With bestsellers pulling in close to £300k over the 30 days and an average of £85,000 across the top 100 listings, it’s clear to see the revenue potential from this category.
And, it’s also possible for these dominant brands to achieve even greater growth here, driving greater conversion through regular and strategic optimisation of listings, imagery, EBC and storefronts, and using highly targeted, real-time Amazon data to achieve maximum profit margins.
But what’s the opportunity for smaller Brands?
The Beauty sector as a whole is huge, and can be broken down into hundreds of subcategories.
And it’s in these subcategories that you find real potential for those looking to challenge, with smaller Sellers, independent and emerging brands playing a strong role.
Spotlight on SubCategories
From our in-depth analysis of the top 5,000 listings, we’ve identified 3 emerging subcategories within the Beauty sector that are showing particularly strong revenues and rapid day-by-day growth:
- Gel Nail Polish
In our analyses, 30-day UK revenues for the Beauty category were £83.4 million, of which:
- Mascara took revenues of £1.2 million
- Gel Nail Polish took revenues of £1.6 million
- Tan took revenues of £1.5 million
Drilling down still further into the top listings within each of these sub-categories, something interesting emerges when you breakdown the impact of larger vs smaller Sellers:
- Mascara – 49 of the top 100 listings are split between 3 Sellers; L’Oreal, Maybelline & Rimmel
- Gel Nail Polish – 43 of the top 100 listings are split between 4 Sellers; BLUESKY, MYLEE, beetles gel polish & Modelones
- Tan – 1 Seller, St. Tropez, takes 12 of the top 100 listings
What does this show?
- The top brands within these subcategories take no more than 50% of the share.
- Within the top 100 Sellers in these subcategories, Gel Nail Polish in particular, we found lots of smaller, less-known brands breaking the barriers.
Both these points are clear indications of the latent potential that exists for new and emerging brands to make their mark.
The first also illustrates that scope exists for the major players to grow their presence still further.
Famed for their mascaras, it’s no surprise to see Maybelline and Rimmel topping the charts in this sub-sector with 16% revenue share each – Maybelline alone have 6 listings in the top 10 of our 30-day analysis.
However, a closer look through the top 100 list reveals plenty of lesser-known players.
With average revenues across the 100 hitting £14,195 for products averaging just £7 each, this is a sub-category with fantastic sales volume – and lots of promise.
Gel Nail Polish
Of all the sub-categories we’ve analysed on Amazon, Gel Nail Polish is the one which promises the strongest opportunity for smaller and independent brands.
Sector champions BLUESKY, MYLEE and beetles Gel Polish are all disruptor brands – all leading with innovative, professional quality products that are vegan and/or anti-toxic.
In fact, you have to drop to 19th place in our top 100 listings before you find the instantly recognisable names of Essie and Maybelline.
One thing the leading brands in this sector have in common is that they’re all doing the smaller Seller things on Amazon right – perfectly optimised listings, attractive storefronts, strong reviews and effective PPC strategies in place to drive discovery and repeat purchases.
Here, average revenues stand at £16,195 over our 30-day period – and in the top 10?
That rises to an impressive £78,443.
The most obviously seasonal of the sub-categories we’ve highlighted, tan does see a summer peak in demand around July and a decrease in early Autumn – but, buoyed by the skin-conscious popularity of easy, sunless tanning, sales figures certainly never drop off the scale.
Again, there is an element of dominance by the big players, with a top 5 made up entirely of well-known names:
- St Tropez (12 listings in top 100)
- Bondi Sands (9)
- Garnier (8)
- St Moritz (7)
- Skinny Tan (6)
But here again, as you move through the top 20 and beyond, an increasing number of lesser-known brands appear.
In this sub-category, average revenues in our 30-day period were £23,666, with those sitting between places 11-25 standing at £35,521, places 26-50 at £20,279 and places 51-100 at £7,567.
Key Market Trends
- Unlike other categories on Amazon, the top 100 Beauty listings contain 51 different brands – and all are making good revenue.
- There is huge potential for new and existing businesses to do well on Amazon regardless of the big brands already on the platform.
- July/August & November/December is where we see the biggest demand for beauty products – but this is a year-round category. There is no point in the calendar where there’s no demand for beauty.
- It generally takes time for new listings to reach their full potential, due to the strength of competition from existing brands. The average listings age for the top 100 sellers is around 3,000 days (8 years).
- With consumer demands in this sector changing constantly, brands of all sizes need to stay agile. Listings need to be of a really high standard from the start to retain or build the stable relationships needed between brand and consumer to drive higher repurchasing volumes.
- Mascara is a great sub-sector on Amazon, with stable demand year-round that rises in the summer.
- The top 100 listings contain 33 different brands – 20 of which have just a single listing ranked amongst the top sellers. This shows that most of the brands are holding their position tight – but remain vulnerable to new competition coming in and taking that space.
- The average revenue overall over the last 30 days was £14k, showing that there is good revenue to be made throughout the top 100 listings – but much more so as your ranking rises, with listings in the top 50 making an average of £55k in the last 30 days.
Gel Nail Polish
- Gel nail polish peaks during July/August, but still enjoys high demand throughout the year.
- 33 brands occupy the top 100 spots – 16 have single listings.
- This is a category with significant potential for brands. The top 100 listings make an average of 16k in revenues per listing, with the top seller making £84k in our 30 day analysis – great levels when you consider that the average price per product is just £10.
- Most brands in this category were launched within the last 3 years, which shows how quickly businesses can grow and mature in this exciting sub-sector.
- Tan has two main peaks – a summer spike in July/August, followed by another that begins around the November Prime season and continues through Christmas – but there is still good demand even through the dips. Our 30 day analysis fell within a dip period, and still produced an average of 2,000 units sold across the top 100.
- Another strong performer in terms of product price to average revenues. With average retail prices of around £15, average revenues across the top 100 listings was £23k over our 30 day period, with the category bestseller taking £224k.
- The top 100 listings are occupied by 31 sellers, with 14 brands having single listings. Besides the top seller having 12 listings in the top 100, the remaining brands are in single digits. This shows the huge potential for competing brands of all sizes to improve their rankings and gain extra market share.
And what about Prime Day?
Of course, the key to any strong Amazon strategy is factoring in Amazon’s main shopping events, so we analysed how the Beauty category fared through Prime Day in July 2022 to see what insights we could unlock.
- Amazon stats for 2021 and 2022 show a significant uplift across the Beauty and Personal Care category on Prime Day.
- Average daily sales volumes were 2.9x higher on Prime Day in 2022 than in the preceding 20 days – up from a 2.8x uplift in 2021.
- Similarly, a 31% revenue increase in 2022 over 2021 shows the Beauty sector’s resilience to cost-of-living impacts.
Our Tips for Success in Beauty on Amazon UK
This is a huge but competitive market, where overall dominance by the biggest brands is established – but it’s one which will continually change and evolve, it’s one where brands all through the top 100s are making good revenues and it’s one with endless sub-categories offering growth potential for everyone – large and small.
For the big brands, as with most major players selling on Amazon, it’s crucial to remain fully invested in Amazon, rather than taking current dominance for granted.
This is a tough category, in a sector that continually and rapidly evolves, and needs constant work to defend existing market share, both from competitors of a similar size and from emerging challenger brands.
Here, the key to the continued success of the leaders will lie in how strongly they are focused on maximising their profitability (see here for our top tips), as well as implementing a robust, Amazon-specific strategy across organic and Amazon advertising that’s geared towards taking market share from all competitor brands, big and small.
To retain a dominant position as online Beauty e-commerce grows on Amazon, big brands will need to be better at Amazon itself, optimising their presence and looking to marketplace specialists for advice – not just sticking to an overall e-comm strategy that has Amazon as a side component.
For smaller, emerging and independent brands, there is real potential to take a slice of the market share pie by focusing on a strong Amazon Seller strategy that does marketplace right.
Advantage can be gained from the agility and responsiveness afforded by their more diminutive size, but there’s no room here for a half-hearted or semi-focused marketplace strategy – challengers need to ensure they excel at everything Amazon.
Here are some of our expert team’s best tips to help you drive sales and revenues in this challenging but oh-so exciting sector.
Standout Storefront and Listings
In any competitive market, it’s key that your brand stands out and catches the eye for all the right reasons – and it’s even more so in Beauty, where looks are literally the name of the game.
- Optimisation is absolutely key to your brand’s success.
- Carefully chosen colourways and strong branding that reflect your message and ethos, yet still stand out from the crowd, are essential in this space.
- Ensure your copy includes all your target and generic keywords.
- Look to optimise every element of your listings, with fantastic photography and, where possible, video to demonstrate how your products work, build consumer trust and create a compelling showcase.
- And make use of A+ content to create the ultimate engaging experience for potential customers.
This, more than almost any other category, is one where it’s key to create a strong bond with your customers.
- Make use of relatable content and real-life stories that speak to the pain points of your potential buyers.
- Provide – and demonstrate – excellent customer service that builds trusting, lasting relationships and brings customers back again and again.
- Do everything you can to position your brand as an honest, credible and effective beauty choice for your consumers by working with a strong reviews strategy, and using whatever influencer and/or user-generated content you have effectively across your listings and PPC presence.
Make Amazon your key sales channel
Treat Amazon as your number-one channel for sales!
Many larger brands simply repurpose image assets and copy they use everywhere else, and in doing so are missing a trick to rank properly for crucial search terms.
- Give your brand a competitive advantage by fully optimising every element of your listings, and creating a strong PPC strategy to drive discovery by new customers and encourage repeat purchases.
- By placing Amazon as your priority and maximising all the tools the marketplace puts at your disposal, you’re giving your brand the best possible chance to take a slice of the market share away from the big players.
And remember, many customers buy from Amazon because they trust them and see them as a safe place to buy from. Consumers are more likely to buy a new brand on Amazon, before then moving to other channels for their repeat purchase helping you build your new-to-brand customers and drive incremental sales off-Amazon.
Customers love Small Business
It’s true, buyers do love to support small brands.
In fact, stats from SaaS giants Semrush said that:
91% of the time, consumers will choose small businesses when convenient, and 74% look for ways to support small businesses even if it’s not convenient.
Studies show that Amazon badges can significantly influence customers’ purchasing decisions, adding an extra layer of trust that boosts your listings – and your sales.
Amazon has been actively looking to support Small Business on the marketplace for some time now, and the Small Business badge is one of our all-time favourite developments – a mighty little icon that brings Big Seller energy to new, emerging and challenger brands.
Available to all brand owners registered with Amazon’s Brand Registry and any businesses who are part of the Handmade Programme, benefits of displaying the badge include:
- Helping to boost your sales
- Enhanced product performance
- Optimised listings for better visibility
- Allows entry to Amazon special events and promotions
Amazon is even trialling a dedicated Small Business search filter, which will allow shoppers to separate out Small Business products.
Easy to set up and with a whole host of potential benefits, this is one opportunity that challenger brands shouldn’t miss out on.
Look for the opportunities
As we’ve shown in this research, there are plenty of sub-categories that offer fantastic potential for all.
Sustainable, organic and clean beauty continues to thrive in all e-commerce settings, and Amazon is no different.
Statista Digital Market Insights have highlighted “other beauty care products” – tools and accessories such as make-up sponges, brushes and face rollers – as the segment that not only generated the most revenue in the UK Beauty care market in 2022 (in excess of US$645million), but that they estimate will hit US$1billion in revenue by 2027.
And premium beauty is tipped by McKinsey to be the defining force in the sector over the next 5 years, with projected annual growth of 8% (compared to mass beauty at 5%) between now and 2027.
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