Online sales have accelerated strongly during the Covid-19 pandemic in most major regional markets.
According to Edge by Ascential, one of the world’s leading data, insights and advisory companies, e-commerce is expected to account for nearly a third of global health and beauty sales by 2026 – up from 20 per cent by the end of this year.
Many pure play online platforms such as Amazon, Shopee and China’s Alibaba and JD.com are expected to grow four to five times faster than major players in the health and beauty sectors such as Walgreens Boots Alliance.
From 2021 to 2026, the worldwide health, beauty and personal care category will increase sales by US$305 billion to US$1.34 trillion, says Edge by Asential.
The lucrative opportunity of e-commerce in health and beauty has not been lost on some of the dominant forces in the category today, notes Florence Wright, Senior Analyst at Edge by Ascential. “In July, the LVMH-owned beauty chain Sephora, which has one of the largest beauty store networks in the world, entered the UK market with the purchase of e-commerce firm Feelunique. While in April, US investment firm Carlyle bought Beautycounter, a mostly clean cosmetics and skincare brand, in a deal worth US$1 billion.”
Deren Baker, CEO of Edge by Ascential, underscores the fact that items that were once bought in-store are not only available online, but in an increasingly mobile-first age, brands have been rapidly experimenting with innovative digital technologies to engage customers remotely, such as using augmented reality to allow customers to try on lipsticks virtually.
“Seasonal events and shoppable livestreaming opportunities offered by digital marketplace giants like Alibaba, Amazon, JD.com, as well as China’s fast-growing group-buying platform Pinduoduo will lead growth in the category over the next five years.”
On the flip side, the vast bulk of global health, beauty and personal care sales – 70 per cent – will continue to be sold in bricks-and-mortar stores because the majority of people like to see, touch and smell products before they buy.