Amazon represents the largest e-tailer in some of the biggest EU markets (UK, France, Germany), and even though e-commerce represents only a small portion of overall beauty sales in these countries, it is growing and Amazon should be evaluated by all brands as a potential partner.
The hold-up for prestige brands is often because they are wary that the combination of third-party distributors and high discounts on the platform will hurt their image.
According to L2’s Insight Report: Beauty EU, fewer than half of Index brands officially distribute on the platform, and most of those fall into the mass price point category. However, as in the US, L2 says that the holdouts are making a mistake.
Don’t be afraid to work with Amazon…
Most cosmetics brands these days have upped their digital spend and online influence is growing, meaning beauty brands need to take e-commerce and digital ecosystems into consideration, and in Amazon there is big potential.
Consumer packaged goods (CPG) is Amazon’s fastest growing category, and with more than 170 million active customers (spending money, not users) the platform has been there for a while for beauty brands to grab a slice of the action.
Amazon also has the ability to personalize each customer’s experience, suggesting other items they might enjoy and what other’s purchasing an item also bought, which gets users to spend and brands to advertise.
There Is also the power of online reviews and other’s influence, which has become the internet’s word-of-mouth; and increasing the quantity of product reviews is one of the main components of a sound Amazon strategy, according to L2.
Be afraid NOT to work with Amazon
Referring back to its report and looking at the Beauty brands that appear most frequently on first-page search results in the UK, France, and Germany, a pattern emerges: they all sell directly on Amazon.
This also holds true for all but three of the brands dominating the top spot in those results, says L2. Those include Rimmel London, which demonstrates the highest category visibility in the UK, and L’Oréal Paris, the visibility leader in France and Germany.
“And while brands might fear the gray market, working with Amazon is the best way to assuage that fear,” says the digital think tank.
“As in the US, the retailer seems to lower third-party listings for brands that work with them. Prestige brands that officially distribute on Amazon have 31% fewer third-party SKUs in Germany and 23% fewer in the UK, according to the study. In other words, brands should not be afraid of working with Amazon – they should be afraid of not doing so.”