The beauty industry has always been at the forefront of eCommerce innovation and reinvention, and this year has been no exception. From clean beauty to hyper-personalized skincare and AI cosmetics solutions, beauty retailers are always looking to enhance their customer experience.

With all that’s going on, we decided to deep dive into this ever-changing world and provide you with our top beauty eCommerce trends that will continue to push the beauty industry forward in 2021.

Inclusivity is invaluable

In a survey conducted by market research company Nielsen, findings showed that in America beauty aisles were finally beginning to reflect diversity. The number of unique color ranges has grown seven times as fast as product lines as a whole, whilst the number of unique colors of foundation sold had grown three times as fast as the rate of new general product development across foundations.

The need to find oneself is becoming increasingly reflected in consumers seeking value-driven products they can relate to in terms of individual personalities and lifestyles. Global Cosmetic Industry data showed sales of multicultural beauty products surging at a pace double the conventional market and companies that are embracing inclusive styles and lines are seeing their efforts rewarded in their annual revenue.

VR, AR and tech partnerships

In October 2019, Perfect Corp, the world’s leading AR company partnered with the Chinese eCommerce giant, Jack Ma’s Alibaba group, and integrated its YouCam Makeup AR virtual try-on technology into Taobao and Tmall Alibaba online shopping experiences. This brought new virtual try-outs to consumers in China. Just six months into using Perfect Corp’s AR technology, Alibaba revealed they had increased their conversion rate by 4x.

Since then, new technology in the beauty industry is coming on leaps and bounds, immersing AI, AR, and VR into household brands like MAC, NARS, and L’Oreal.

Facebook’s Spark AR studio also adopted the rise of the interactive experience. Popular social media platforms Facebook, Instagram, and YouTube incorporate its technology into banner advertisements that allow consumers to click and virtually try on makeup products without ever leaving their app. Brands like Chanel, YSL, Charlotte Tilbury, and Maybelline now too offer VR try on services across their website and mobile apps.

Beauty subscription services

A report from Royal Mail forecasts the value of the subscription box market to grow 72% by 2022, and data from across the globe appears to agree. First Insight’s recent survey on subscription boxes reported that 25% of American consumers (both men and women) are currently receiving a subscription box, and another 32% of respondents plan to subscribe in the next six months.

Meanwhile, in China, Shingetsu Research revealed that women were more likely to dominate the market by 2027 due to the surge in the working population, the changing female shopping preference toward convenience, and the popularity of subscription boxes available for apparel, beauty, and hosiery.

In the beauty eCommerce industry, examples such as Birchbox and Glossybox have displayed just how successful the subscription box business model can be. In a research study of 5,000 US consumers conducted by McKinsey, the study found that curation services – subscriptions which aim to seek and surprise by providing new items or highly personalized experiences – received 55% of total subscriptions, and were by far the most popular, suggesting a strong desire for personalized services.

Beauty subscription boxes and men’s grooming services have been identified as offering the largest growth opportunities in the market, so it’s no surprise it’s attracted the attention of brands and retailers such as P&G (Gillette on Demand), Sephora (Play!), and Walmart (Beauty Box).

Beauty boxes cater to the replenishment needs of their subscribers, but additionally offer the excitement of getting to try out new products. As the McKinsey study concluded, subscribers surveyed wanted something new and innovative in order to continue subscribing, and consumers (particularly curation subscribers) expected personalized subscriptions to become more tailored over time.

As the subscription box service continues to grow, expect to see more brands keep the excitement alive by utilizing social media and content marketing to drum up a sense of brand community.

Natural, clean, and transparent beauty

Consumers are now seeking brands that are as transparent in their ingredient list as they are natural in their products. Whilst clean beauty has been a rising buzz across the industry since 2018, it is still a controversial, confusing, and ever so enigmatic subject that can present more questions than answers.

For example, both the FDA and EU vary on their banned ingredients – the FDA ban 11, the EU ban 1,328, but more brands are beginning to emerge from the confusion with minimalistic and transparent approaches as consumers continue to pay eagle-eyed attention to the ingredients list on the back of the packet.

In a Neilsen research study, the company found that beauty industry consumers are flocking to more natural and objectively simpler products. But rather than simply accept brands’ definitions of what’s natural, consumers are deciding for themselves.

While sales of cosmetics claiming to be natural have declined 1.2% over the last year (on par with cosmetics as a whole), sales of cosmetics free from parabens have grown 2.3%. Additionally, sales of cosmetics products that are both free from parabens and claim to be natural are growing 12% – five times as fast as those just meeting the paraben-free specification.

A Harper’s BAZAAR poll of more than 1,000 women across all ages, races, and ethnicities, discovered more than 60% of women would be willing to spend on new brands if they were offering natural products. New sustainable brands also attracted the interest of 55% of those surveyed.

The eagerness to try something new if it is clean is enabling the rise of new niches, such as blue beauty, a concept referring to products that aim to protect the oceans and water supplies (such as One Ocean Beauty, which partners with charity Oceana).

Leveraging big data for new product development

“The next big idea in beauty is community,” stated Jennifer Goldfarb, Ipsy co-founder at WWD’s Digital Beauty forum in February 2020. “The brands that will win in the future are the ones that can activate their customers, their followers, their fans, and really bring them into their brand, help them build the brand, product development, marketing, all aspects of the business.”

How is that achieved? Enter: The rise of big data in the beauty industry, collected through questionnaires, search term data, and spending habits.

Across the beauty industry, more brands are embracing the use of data collection and analysis and watching it exceed their development processes.

Proven, a beauty startup simply analyses data gathered freely from the world wide web and uses an Artificial Intelligence engine to digest thousands of reviews, evaluate over 20,000 ingredients, and peer review thousands of specific scientific articles. Thanks to its massive database and machine learning, Proven has programmed an entire bespoke beauty regime for its individual consumers.

Influencers are an investment

Influencer marketing has been part of beauty eCommerce strategies for the past few years, and it’s not going anywhere soon. The British Beauty Council’s 2020 Value of Beauty report found influencer marketing had once more given the industry a notable boost in economic capacity, expanding on a 2017 study, which found for every $1 spent on influencer marketing, brands secured a return of investment of around $11.45.

Within the rise of influencers, and now micro-influencers (influencers with smaller fan bases, traditionally 100,000 or under) the beauty industry and its advertising outlets have finally found a return of investment in renewable resources.

Harvard Business School reported that global spending on influencer marketing has risen from an estimated $2 billion in 2017 to about $8 billion in 2019, with one forecast showing that spending is expected to jump to $15 billion by 2022.

These new values of transparency and relatability pave the perfect path for the up-trend of the just as influential micro-influencer, who consumers often feel they can build a personal connection with through regular, more personalized interaction.

Brand partnerships

Recent market analysis by AdNews revealed that collaborations in any industry were up to “30 times cheaper than digital advertising” due to the ability to tap into already existing audiences.

In the beauty industry, this rings especially true: Whenever a unique makeup collaboration is released, a slew of social media posts and reviews convert excitement to product sales. Often, these products are seen as collectibles to their audience (Andy Warhol x NARS is a standout example) and generate a large demand for similar releases within the beauty industry.

So, when interests such as a favorite childhood snack or television show are combined with makeup and beauty, joining the existing audiences of both brands together in a marketing move called co-branding, more customers are attained with a potential reach – even appealing to those who wouldn’t typically be interested in makeup.

In 2020, and well into 2021 this beauty eCommerce trend is set to continue with brands such as Coca Cola partnering alongside eyeshadow giant, Morphe, whilst MAC branched out into new territory by announcing a collaboration with popular Chinese online multiplayer game, Honour of Kings, and Mentos lent their name to a new range by K-Beauty label Innisfree.

It’s not just large brands taking advantage either: With digital advertising becoming an ever more convoluted space, co-branding with influencers is a new, effective way of combining two sets of audiences and generating excitement as well as sales and brand following.

As influencers continue to take hold of the digital and collaborative space, more startup brands are beginning to make use of audiences readily available to them.

Hyper-personalized skincare

A recent Epsilon online survey of 1,000 consumers between the ages of 18-64 found the appeal for personalization within retail is high, with 80% of respondents indicating they are more likely to do business with a company if it offers personalized experiences and 90% indicating that they find personalization appealing.

This continuing desire for personalization and connection with brands has allowed a new form of hyper-personalization to blossom in the beauty eCommerce industry thanks to AI technology and a two way, data-driven conversation.

In the highly competitive beauty eCommerce industry, hyper-personalization is a way of ensuring brands can stand out by allowing consumers to make informed decisions based on their preferences, not flooding them with endless options. Using technology to help customers fulfill their needs allows for brand loyalty and repeated sales.

The desire for personalization is so high that after a study revealed that 40% of British male beauty and personal care shoppers found it difficult to know which products are right for them, Geologie was born: A male skincare subscription service that offers men a personalized regimen determined using a quiz that asks a range of questions, including ethnicity and location.

Now more than ever in a more data prevalent world, consumers are willing to have a conversation with their chosen brand if they feel as though their wants will genuinely be listened to and adapted.

Whether you want to increase conversions, traffic to your brand’s website, or both, we can help you design a digital marketing campaign that can help you reach your goals. Contact us on digital@catchthebeat.ca.

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