(Last Updated On: December 15, 2022)
The beauty industry is changing the eCommerce game in India. One of the leading segments in eCommerce, the market size of the beauty and personal care industry in India for eCommerce alone is estimated to reach six billion USD in 2025.
What factors are driving this trend?
Growth of the beauty and personal care market in India
According to Statista, the beauty and personal care industry in India is expected to grow by 3.86% annually and with a 143% increase in volumes year-on-year. And the online sales channel for this industry is projected to grow by 18.2% by 2025.
Though the eCommerce growth in the beauty industry is low compared to offline, it is enough to bring a significant change in the market. Experts say that the new-age companies with digitization and automated supply chain have played a pivotal role in driving growth for the beauty and personal care segment.
Let’s look at the major factors that are driving the growth of beauty eCommerce in India.
Factors that drive beauty eCommerce growth
Rise of D2C brands
D2C brands are becoming increasingly popular among Indian consumers. In fact, it’s predicted that, roughly 1/3rd of the online retail sales globally will come from direct-to-consumer brands (D2C) in 2025. And the beauty industry will be a leading segment in this growth.
D2C brands in the beauty industry is thriving because:
They offer consumers personalized, need-to-order products
Develop meaningful relationships with customers by aligning with their values
Bring niche products that are different from mainstream brands
Another factor that is accelerating the growth of the beauty industry is influencer marketing. Beauty is one of the leading sectors to embrace this mode of marketing. Beauty influencers have one of the largest follower bases. The niche is incredibly visual and influencer marketing with creators works best in a visual medium.
Online buyers have increasing trust in content creators. One survey reveals that 61% of online consumers rely on influencers when making a buying decision.
Strategic partnerships with content creators that have an influence in the beauty niche will resonate directly with consumers and bring in more customers for beauty brands.
Evolving consumer behaviour
A shift in consumer needs and mindset also contributed to the exponential growth of beauty eCommerce. The younger consumers show a strong generational shift that results in moving away from mainstream brands.
Customers are also more open to innovative products that meet their needs. By utilizing techniques like surveys and customer feedback, brands are concentrating on bringing personalized products and shopping experiences.
Let’s look at what modern beauty eCommerce shoppers expect from brands.
Beauty eCommerce trends: what consumers expect
Here are the three major trends on customer preferences when it comes to beauty products.
1. Cruelty-free and organic products
Cruelty-free (no animal testing) and vegan (no animal ingredients) beauty ingredients gained popularity in the global market and are finding their space in the Indian market too. Many reports suggest that this will be a huge factor in consumer needs in the coming years.
Indian consumers are paying extra attention to what beauty products are made of. Rising environmental and ethical awareness has given rise to the “conscious consumer.” Global vegan cosmetics brands are venturing into Indian market and local brands are also moving into this trend.
For instance, June Cosmetics is a small eCommerce brand that sells vegan cosmetics products. They also feature re-fillable bottles which cater to the environment-conscious customer.
Organic cosmetic products are also gaining traction. Here’s a graph that shows the year-on-year growth till 2021:
This trend will continue to increase in the coming years.
Cosmetics products infused in bio-active oils, butter, and natural clays are gaining popularity. Consumers look for products that are plant & mineral based rather than going for popular mainstream products.
Consumers search for brands that cater to diversity — in the case of skin tones and gender. This is an increasing demand among large sections of Indian society.
India-based cosmetics companies such as Ruby’s organics developed a range of makeup products that are specifically meant for Indian skin tones and textures. They also succeeded in positioning themselves as a brand that supports the values of individuality and self-expression.
It’s noteworthy that beauty brands that support inclusivity have a good digital presence. To get messaging clear it’s important for beauty brands to utilize eCommerce.
Personalization in the beauty eCommerce space is a growing trend.
Niches like skincare have room for personalization as each consumer is different. This indicates a broader opportunity for custom-made products. In the coming years, we will see brands that offer personalized beauty and wellness products. Technology will be a huge influence on this trend.
Challenges beauty brands face and how to overcome them in 2023
More beauty brands emerging in the coming years will lead to higher competition. It will be challenging to differentiate your brand from the market and get a target audience to be your loyal customers.
Solution: Brands need to leverage customer data and continuously bring differentiated products into the market.
For example, brands like Sugar are positioning themselves as a diverse brand for a diverse customer base by creating products for customer segments that were ignored by legacy brands.
Another way to overcome competition is to leverage multiple eCommerce channels. As more consumers start to buy online, position yourself as a digital-first brands and use channels to gain traction.
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Increased customer acquisition cost
Acquiring customers is getting expensive, in both offline and online sales channels. Marketing methods like paid advertising will dig into your profit margins.
Solution: The way out is to embrace organic growth strategies.
Unlock the power of content creators, who have now emerged as the most influential medium for enabling the discovery and purchase of D2C beauty products. Strategic partnerships with micro-influencers and long-term collaborations are the way forward to leverage the creator economy for your brand.
Huda Beauty, a D2C beauty brand, does extensive collaborations with micro-influencers to drive engagement and appeal to shoppers.
Low brand loyalty
As consumers have more options from than ever, brand loyalty is hard to earn. As D2C brands, it’s essential to get repeat customers in order to thrive and scale.
Solution: Get started with loyalty programs. Incentivize repeat purchases and get them to bring in referrals — your customers become brand ambassadors. Building a profitable loyalty program will take time. But, it will prove effective and reduce your acquisition costs in the long run.
Beauty eCommerce is rapidly growing across the country for consumers looking for convenience and value. To summarize, here are the key insights:
In terms of products: vegan, cruelty-free and inclusivity will reign
Consumers expect personalization in both products and experience
Influencer marketing and loyalty programs are the two top organic ways beauty brands can grow
To grow your eCommerce beauty brand, get your own online store and grow your business.