Thriving in the Beauty and Wellness Market

About a year and a half ago, we published a blog post that explored the challenges of selling into the health, beauty, and wellness sector, along with tactics for overcoming those obstacles. Since then growth in the sector has accelerated. Sales revenue is higher, new brands have entered the market, and a broader range of people are now enthusiastic health, beauty, and wellness consumers. We thought that now would be a good time to revisit the topic, and to create a BULLSEYE maturity quiz specifically for health, beauty, and wellness brands. We’re also in the process of creating a comprehensive health, beauty, and wellness ebook, due out this summer.

Can our enthusiasm for the sector be any more apparent?

The fact is, beauty and wellness is big business. Cosmetic sales in the U.S. alone brought in $93.5 billion in 2019, and over-the-counter wellness sales reached $35.2 in 2018.

Skin care in particular is booming; according to Vogue Business sales in the category topped $1.4 billion in the first quarter of 2019 alone. I’m curious to see if sales were maintained in Q1 2020. My sense is they will despite the pandemic and recession. Consumers view quality skin care products as essential necessities, not luxury purchases.

Even before the pandemic shutdown physical retail outlets for many Americans, beauty and wellness ecommerce was huge. Last year eMarketer projected that by 2022, ecommerce sales of health, personal care and beauty products will top $85.5 billion.

Something Digital has worked with a number of beauty and wellness brands, including Moroccanoil, Burt’s Bees Baby, Malin+Goetz, Muji Aromatherapy, Bronson Vitamins, and we have considerable expertise in helping them grow. We’ve seen the phenomenal opportunities of this sector first hand, and believe that there is still a lot of room for growth.

Challenges

Our previous blog post, Challenges and Tactics of Ecommerce for Health and Beauty Brands, did a deep dive into the challenges brand marketers face. For instance, it talks about how consumers view any product they ingest or put on their bodies as highly personal, which means they take a long time to decide whether or not something is right for them.

Not too long ago I spoke with the former CMO of Boxed who has since moved on to Nutranext, a DTC wellness sub-brand of Clorox. He told me that he divides his product line into three echelons: products that are around you (e.g. aromatherapy), on you, and in you. Those that are around you have a shorter consideration time; those you put in you can command a higher price point, but have the highest consideration period. Consumers want a high level of comfort before they’re willing to swallow something, and they get that comfort through research. A robust content marketing strategy is a requirement for every successful brand.

Additionally, consumers learn about products from social media influencers, which means an Instagram strategy will be essential for brands as they mature. As a brand marketer, how will you attract and deploy influencers to close the gap with a customer?

Some of the challenges we didn’t cover in the previous blog post are specific to beauty products. For instance, beauty is very broad and very niche at the same time. It’s broad in that it covers an extensive array of product categories, from shaving, skin care and sun protection, to hair styling, cosmetics and nail polish. Many emerging brands begin by selling a specific product meant for a specific type of customer, say lip gloss for younger women, or hair regrowth geared towards middle-aged men. To mature they expand their categories to attract a broad range of consumers.

Whatever you sell, you can expect to compete against niche brands like Harry’s Shave Club, Fur Oil, and Winky Lux, which sell men’s shaving products, oil for hair in intimate places, and CBD-infused lip gloss respectively. With this level of specificity it’s easy to see why storytelling is so essential to success.

Finally, consumers have rising expectations regarding the quality of the products they buy, often demanding transparency into how their products are made and by whom. To succeed, brands must meet these demands and communicate their commitment to their customer base. For instance, here’s what Fur Oil tells its customers:

“Our entire line is created with the cleanest facial-grade, vegan, cruelty free, non-toxic ingredients that are dermatologically and gynaecologically tested. We don’t formulate with mineral oil, silicones, parabens, synthetic fragrances, or artificial dyes. That’s why Fur is safe enough for your most intimate areas, and effective from head to toe.”

Opportunities

For every challenge there is an opportunity for a brand to enter the market, make a name and grow. One of the key opportunities is to find a social media influencer who can present your brand to his or her following. For more information on how to identify and recruit a brand influencer check out my post Influencers, Affiliates and Collaborations.

While customer acquisition costs are high, winning a new customer delivers big rewards. Many wellness products are designed as a daily or weekly regimen, which means the brand can count on repeat sales at regular intervals. Fads will render many products obsolete even if the consumer hasn’t depleted the item. Consumer interest in new fads — nootropics, adaptogens, and CBD oil — offers a never-ending opportunity to win new customers.

Seasonality is also a driver of sales. Come flu season consumers will stock up on homeopathic remedies, New Year’s will see an uptick in diet products.

Another fascinating opportunity is the way boys and men have embraced the category.

Gen Z males spend $1.4 billion on cosmetics, and brands of all sizes are cashing in on the opportunity. For instance, Chanel has launched Boy de Chanel which offers skin-care products, foundation, eyebrow pencil, moisturizers and other products formulated for men.

But the biggest opportunity of all is the path to maturity — aka growing your business either by expanding categories, or by expanding the cohorts of people who can buy your products. You don’t need to be a Revlon, L’Oreal or Clorox to grow into a mature wellness or beauty company, you just need a vision that’s right-sized for your company.

BULLSEYE for Beauty and Wellness

Readers of this blog know that we talked a lot about BULLSEYE, which is Something Digital’s tool to assess the maturity level of an ecommerce business so that we can plot an appropriate path to growth. Recently we rolled out a BULLSEYE for DTC (check out our new eBook, The ABCs of DTC). And as I mentioned in the beginning of this post, we are getting ready to launch a BULLSEYE for Beauty & Wellness.

BULLSEYE for Beauty & Wellness identifies five levels of maturity: from seed to bloom. Before we get into what maturity looks like, it’s important to note that beauty and wellness have two different outcomes for the consumer. Wellness seeks to enhance health and fitness; beauty is externalized. This reality means we need to take care with how we rate the maturity level of a brand. A brand doesn’t need to be a giant multinational corporation in order to be a “bloom.”

Maturity is assessed, in part, by the degree to which a product catalog is accessible to a broad range of cohorts. Growth in the beauty category can be achieved by, say, selling more CBD-infused lip glosses to more young women, or by adding a lip balm for men to your product catalog. Mature brands serve multiple generations, such as neon hair dyes for young people, and anti-aging cream for senior citizens.

Nor does a mature brand need a full omni-channel and marketplace strategy, although your customer base might appreciate having multiple options to buy from you, and you’re likely to win new customers by doing so. There are plenty of mature brands that don’t sell via a marketplace or have a brick-and-mortar channel.

To prove my point, here is how we have rated the maturity level of the following brands:

We plan to roll out BULLSEYE for Beauty and Wellness within the next few weeks, and we’ll be happy to make it available to any brand in the category that is thinking about how to expand and which pieces it needs in place in order to achieve their growth goals.

We have good reason to be bullish on the beauty and wellness section, even as we enter challenging times. Consumers are spending more money on products that enhance their health, state of mind and looks, and they’re not likely to stop anytime soon.

If you have questions about your health, wellness, or beauty company don’t hesitate to reach out to SD.