Picture the scene. I’m looking for that perfect lip gloss online, I research, scroll, and research some more. Then I find it. The one. Yet the dreaded notification; ‘delivery between 3 – 7 days’ pops up and I, of course, leave the site and promptly find the cheapest web page that offers next day delivery, because, essentially, I want it now. And I know I’m not alone. Online shopping has changed, and consumers such as myself have increasingly high expectations. We want what we want, when we want it, which is more often than not within 24 hours, with same-day options even, excitingly, coming to the fore.
Step up Amazon. As my colleague Georgina has touched on before, Amazon has the ‘holistic, flexible and fast approach’ to distribution nailed. And this is merely the tip of the iceberg when it comes to Amazon’s growing prowess within the cosmetics world.
However, it’s not just its distribution dominance that is putting this e-commerce behemoth head and shoulders above the rest – although its Prime Now service is definitely ticking my boxes. Such is Amazon’s influence across many industries, that, according to Seeking Alpha’s analysis of Bloomberg data, Amazon was mentioned in over 100 company quarterly earning calls, including Walgreen Boots Alliance, CVS, Colgate-Palmolive, Kimberly-Clark and Ulta Beauty. And, according to Seeking Alpha, Amazon’s dominance has, as expected, had a negative impact on bricks and mortar stores and share prices of retailers.
But what is it about this e-commerce powerhouse that has other players in the market quaking in their boots? In a nutshell, Amazon has successfully grasped consumer profiling (Amazon uses data to profile clients based on their historical purchases/viewing habits, rather than their demographic). Indeed, L’Oréal’s recent increased Amazon search budget showcases the industry’s faith in the site’s ability to successfully pinpoint consumer purchasing habits. Likewise, the e-tailer is also creating products and services that appeal to the modern day 24/7 buyer. Innovations such as Amazon Dash, the one-click home ordering service, and voice-buying from the likes of Amazonbasic are capturing consumers, while continued innovation such as a possible pharmacy offering has got CVS and Walgreens Boots Alliance talking. Meanwhile its recent Whole Foods acquisition has created concern for natural beauty sellers. Indeed, even our very own Global Cosmetics News is drawing on the power of Amazon by giving readers the option of having the news read to them by Alexa (fancy a listen? click here).
Not only are the innovations ruffling feathers, it’s the speed and accuracy in their deliverance that is making it difficult for bricks and mortar stores, or indeed other digital competitors, to keep up. Likewise the e-commerce giant has its finger on the pulse when it comes to catering to regional preferences – a key factor in retaining region-specific consumers. Indeed, the likes of the Chinese language version of its Japanese website caters to the growing thirst for Japanese products amongst Chinese consumers – a strong marketing move in the region. Likewise, such is Amazon’s stronghold in the North American market that the company is thought to be the driving force behind sales of the health and beauty sector, with it said to be the sole driver in the sector in the first quarter of 2017, according to a report by One Click Retail. Posting a 30 percent year on year sales growth, the report quite rightly suggests the e-tail space as being the best growth opportunity for brands. A worrying statement for concerned health and beauty retailers.
Indeed, it’s not all plain sailing for Amazon – Coty looks set to win a 10-year battle prohibiting retailers from selling its products via a third party online marketplace, such as Amazon, which will limit luxury beauty items sold on the site and just this week Walmart and Google announced a partnership looking to challenge Amazon’s hold on online sales, with Walmart selling its wares outside its own store and e-tail site for the first time.
But while not resting on its laurels, we suspect Amazon isn’t too worried just yet. In the words of the NY Times, ‘No other retailer can match the size of Amazon’s inventory, the efficiency with which it moves shoppers from browsing to buying, or its many home delivery options.’ Indeed.
