As online fashion retailers increasingly try to make inroads into beauty, I look at the factors it takes to win. -Priya Rao
It’s become easy for beauty shoppers to shop for their makeup, skincare, and haircare virtually anywhere. Over the past four years, Amazon, Target and Walmart have all made big bets on beauty, and fashion brands like Anthropologie and Madewell have made a big bet on the category with a small edit of products. But in recent months, a spate of online fashion retailers have announced their intentions to aggressively pursue beauty.
In April, Farfetch unveiled its beauty portfolio with 100 prestige brands sold on its marketplace. In January, the e-commerce platform acquired Violet Gray to help build its position. Not to be outdone, Moda Operandi announced its foray into beauty in May, set to debut this fall. And according to sources familiar with its business, Shopbop is also rethinking its existing beauty assortment and plans to make a big splash later this summer. Shopbop declined to comment for this story.
Of course, the concept of retailers selling beauty products online is not new. Department stores like Saks Fifth Avenue and Bloomingdale’s have gone out of their way to mirror their brand and store experiences online. Amazon obviously sells beauty, as does Net-a-Porter; the latter started selling beauty in 2013 with just 11 brands. And Revolve and its sister brand FWRD expanded into beauty in 2016 and 2020, respectively. That Farfetch, Moda Operandi and Shopbop are coming into play now has more to do with the maturity of these online businesses and the hope of increasing basket size and revenue. (The latter is certainly what’s happening at Target when it teamed up with Ulta Beauty.) Additionally, beauty as a category has been much more resilient than fashion, which is likely a driving factor in previous expansion plans.
For these online beauty extensions to be successful, fashion retailers need to have a clear definition of what their point of view on beauty is. Subsequently, they must sell brands that speak to that perspective and market to new and existing customers effectively. Since there are so many new beauty brands on the market, bringing in independent or popular brands is the easiest part of building such a business. But just because you put a cool beauty brand on a website doesn’t mean it will sell.
Farfetch first experimented with beauty in 2016 when it partnered with Space NK. Stephanie Phair, the company’s director of customer service, admitted to me that the beauty product launch didn’t work out because Farfetch couldn’t simply apply its existing luxury fashion model to beauty. “The beauty industry operates very differently. It is a very emotional category and customers will choose to buy beauty from a provider that gives them that emotional connection and aligns with their values,” she said.
To make its latest foray more impactful, Phair said the company tapped into the structure of the luxury market and Farfetch’s global DNA. At the same time, it is also operating a wholesale model to source and support independent brands and incubate its own brands. Farfetch’s e-concession model and global warehouses are likely to be more attractive to big beauty groups like the Estée Lauder Companies and Coty, which have largely steered clear of selling at these kinds of online fashion retailers. Gucci Beauty, La Mer and Tom Ford are sold on Farfetch. Additionally, these conglomerates have been furiously trying to build their own direct-to-consumer websites, which the Farfetch model helps facilitate.
Furthermore, its relationships with Violet Gray and members of Farfetch’s Global Beauty Collective, made up of experts like hairstylist Jawara and make-up artists Isamaya French and Erin Parsons, give Farfetch credibility. Farfetch is using Beauty Global Collective to help develop its still-nascent ratings, reviews and tutorials section. For example, this is where Beauty Global Collective can post and also engage with online shoppers.
“We will continue to have that very, very authoritative selection of the big brands, and also the independent brands that we can get through Browns and Violet Grey,” Phair said.
Ratings, reviews, tutorials, shade finders, UGC and the like are essentially mandatory for any site selling beauty today. There’s a reason Sephora spent so much time building out those features to drive e-commerce sales during the pandemic. However, a quick look at the Shopbop and Ssense beauty charts and those attributes are nowhere to be found. On those sites, beauty is treated like any other fashion purchase. For example, on Shopbop, clicking on a Supergoop lip balm leads shoppers to a “Wear It With” section below that includes a solid and striped bathing suit and an Isabel Marant baseball cap. At Ssense, a click on a Westman Atelier pressed powder just brings up more of the line below the product listing.
Elsewhere, Revolve and FWRD have also been busy establishing their beauty seriousness. Lauren Yerkes, director of merchandising for Revolve, said the brand got its first taste of beauty with just 45 brands within fashion. After seeing success, Revolve created a dedicated homepage, “which is the central hub for shoppers to easily find the newest products, best-selling brands, trending features and beauty edits from influencers,” she said. Revolve Beauty’s social media accounts also launched in 2016, as did a weekly dedicated beauty email. While cross-posting beauty with fashion is a tactic, Revolve’s separate beauty accounts and emails have been crucial in getting it considered a beauty destination, Yerkes said.
“We went very early to take advantage of digital channels and technology, as well as to pioneer brand marketing strategies,” he said. “Our events, activations and influencer network have established themselves as our biggest differentiators, and we are constantly evolving in how we approach them.”
Revolve’s influencer bonding is significant, especially as many of the brand’s original ambassadors, including Camila Coelho, have launched their own beauty lines. Case in point: Coelho’s Elaluz Beauty which launched in 2020 is sold at Revolve.
To date, Revolve has more than 300 beauty brands, including bestsellers like Charlotte Tillbury, Olaplex, Ilia, and Dr. Barbara Sturm. As its assortment of brands has grown, sales have followed. In 2019, beauty sales at Revolve were $11.4 million. Thanks to steady growth and a craze for buying beauty products online, Revolve reached $30 million in beauty product sales in 2021.
Sister brand FWRD is also investing heavily in its beauty business. Fueled by the pandemic’s wave of online spending, FWRD leaned heavily into luxury skincare, personal care and wellness offerings. Some of their first brands offered were Byredo and Aesop.
“What we started to see is that when we brought in new brands like Maison Pearson, they sold out instantly. We started to take beauty a little more seriously when we understood that this girl really wants to be able to go shopping. [everything] under one roof and get it in one package,” said April Koza, Vice President of FWRD. FWRD sells roughly 60 beauty brands, including indie favorites Augustinus Bader and 111 Skin.
What Koza is describing goes back to what department stores originally built for their business: one-stop shopping, best-in-class assortments, and personalized service. But when it comes to beauty, department stores still have sales associates on their side. They are the ultimate salespeople, interacting with customers and promoting products.
Since Koza describes FWRD’s client as a larger buyer than Revolve’s with more disposable income, an edited assortment makes sense for that profile. “She’s a suburban mom with teenagers or college kids. She’s busy and doesn’t have a lot of free time, but she’s very outgoing,” she said. “She has a Saint Laurent bag, probably wearing Amina Muaddi [heels] and a dress that no one has ever heard of or seen, but everyone wants to know what it is.”
While FWRD’s beauty business is still small, Koza said she’s increasing her range of brands in light of the holiday season. The company did not disclose financial figures. He is hopeful that FWRD and Revolve can become bigger destinations for beauty conglomerates, given that they also have diversified portfolios. Tom Ford and La Mer from ELC, and Cle de Peau from Shiseido would make sense in FWRD. Meanwhile, ELC’s Dr. Jart and Clinique, and Shiseido’s Drunk Elephant would be more suitable for Revolve.
“Entering the worlds of those mega beauty brands is not an easy path. There are multiple decks, different budget talks, vendor operation guides, and logistical challenges. But it is something that we are actively pursuing,” Koza said.
As online fashion retailers determine their positioning for beauty, brands win in the meantime, especially if they’ve become the “it” brand like Augustinus Bader became after his Violet Gray breakthrough. Selling at any of these sites doesn’t require the capital or infrastructure that Sephora, Ulta Beauty, or mass retailers like Target or Walmart do. But again, it’s not clear whether these online fashion retailers can move the volume.
“Sephora-Ulta’s dominance is tough, because they sign tough deals and run low-margin retail businesses, but those deals can be transformative in terms of trajectory and growth,” said Tina Bou-Saba, co-founder and co-managing partner. at Verity Venture Partners. “After those two, sales drop massively at other retailers, but it’s positive for brands to experiment online because they get that exposure and awareness out of their own reach.”
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Source: www.glossy.co