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Online beauty market to represent just 2% of total online retail sales in the UK
It is growing rapidly, rising 20% in 2010 to an estimated value of 420 million (equivalent to 5% of the
total beauty market).
Mintel forecasts sales of beauty products online to reach 855 million by 2015, doubling sales over the fiveyear period to account for as much as 9% of all beauty sales.
Only 44% of internet users have bought a beauty product online in the past year this is likely to rise
however the industry faces some obstacles.
The biggest obstacle for consumers is that they are unable to physically see, smell or
feel let alone test the product prior to purchase, and this acts as a deterrent for
over six in ten consumers.
Building trust throughout the online experience is key for retailers, which need to find
ways to make beauty products more interactive and less 2D online.
Almost six in ten female internet users find it difficult to buy beauty products online
because they cannot tell if products will suit their skin tone, hair or skin type.
Ensuring that the whole experience of buying online is easy, hassle-free, safe and pleasurable is
essential.
Enabling consumers to share everything from reviews about their purchases to expert beauty
advice with other customers, or ideally, their own network of friends, online can become a
channel that offers something that the high street cannot: a social shopping experience at the
click of a button.
Beauty brands and department stores have reflected a lack of trust too, being reluctant to
implement any serious online strategy, although this is at last starting to change.
Market Forecast
Looking ahead, growth in the market may be more difficult as the number of online shoppers reaches maturity, and
economic uncertainty, tax rises and unemployment continue to be an issue. However, online beauty retailing has already
proved it can weather a fragile economy better than the high street.
Best and worst case forecast for online consumer expenditure on cosmetics & toiletries, 2005-15
1,200
Best case (m)
1,097
1,000
800
Mintel forecast
(m) 855
600
400
200
0
2005
2006
2007
2008
2009
2010
2011
2012
2013
2014
2015
Seasonality Trends
In general, FMCG sub-categories seasonal peaks towards the later months in the calendar year inline with Christmas
holiday peaks & early months into the new year.
Health & Medical site visits are the highest however Alcohol & Grocery sites are increasing share month on month
towards the December peak
Search Traffic
Traffic
Searches for major FMCG brands continue to
climb on Bing.
December 2010 was the largest month where
consumers continued to search for branded
goods - increasing +45% YoY
Market Insights
Bargain
Online
Hunters
Enthusiasts
34%
33%
Net Neutrals
33%
18
10
19
11
26
24
14
26
26
15
Source: GMI/Mintel
54
34
Fragrances
15
25
Women
Men
15
20
30
40
50
60
Four in ten online beauty consumers have bought items from pure-play stores. These retailers are most
popular amongst 16-24s, particularly for make-up.
Men and women are equally likely to shop at online chemists (37%), and although chemists tend to
attract purchases across many product areas, they dont stand-out in any one category. However,
chemists are in a good position: over six in ten women and under-35s would consider buying beauty
products at an online chemist.
Specialist retailers such as The Perfume Shop are slightly more popular with men than women (37%
vs. 30%).
16-24s represent the biggest opportunity for brands selling direct from their website.
Boots would always be my starting point for online beauty products as they
have a very wide range of stuff, dont go anywhere else so wouldnt check
other choices 45-54 ABC1 female
I may buy grooming products such as shaving and skincare online from reputable
retailers such as Boots and Superdrug if there was significant savings to be made.
35-44 ABC1 male
Market Shares
Market shares in online sales of cosmetics and toiletries, 2010
Department
Stores
5%
Other
5%
Specialists*
10%
Chemists/Drug
Stores
35%
Pureplays
15%
Supermarkets
30%
* Eg Perfume Shop
Weaknesses
Nearly half of consumers are indifferent
to beauty and grooming products.
The main obstacle facing the market is
that the majority of consumers (six in
ten) would rather feel, touch or smell a
beauty product before they buy it.
Make-up is particularly challenging to
sell online.
Beauty is currently one of the smallest
online categories, representing an
estimated 2% of total online sales in
2010.
Consumer mistrust about using the
internet to buy beauty is widespread.
Almost half (46%) of internet shoppers
are nervous about using unfamiliar
sites to buy beauty.
18
2006
2007
2008
2009
6,876
7,151
7,456
7,739
7,916
na
+4.0
+4.3
+3.8
160
190
225
na
+18.8
2.3
2.7
2010
(est)
m
%
change
2005 - 10
8,182
+3.4
+19.0
+2.3
290
350
420
+162.5
+18.4
+28.9
+20.7
+20.0
3.0
3.7
4.4
5.1
+2.8*
* % point change
Online is currently a very minor channel of distribution for beauty, taking an estimated 5%
share of the total cosmetics and toiletries market in 2010. However this has more than doubled
since 2005.
The reluctance of high street beauty retailers to sell beauty online created an opportunity for
the development of a pure-play market that is dynamic and creative.
Multichannel retailers recent, serious drives to increase online business will be a likely boon to
the online beauty market in the future.
Source: Mintel, Beauty Retailing Report 2011
FMCG Opportunities
Creativity is Key
Creative sites, display ads and search creative can boost
ROI. Consider utilising unique technology i.e. photosynth,
deep zoom to interact with consumers.
Consider how users could potentially try before you
buy could help boost interaction.
Opportunity to test products against skin tones, personal
attributes could open further purchase opportunities
Reach of the Internet
Utilise Microsoft Advertisings large reach of the internet
population through MSA properties we reach 93% on
the UK internet population. (comscore January 2011)
FMCG Unique Users
Using adMetrix data we can see that through Microsoft
Advertising we delivered the most unique users for
FMCG brands compared to our closest competitors!
(adMetrix, Dec 2011 slide 11 of this deck)
APPENDIX
58
Superdrug
36
Tesco
35
Asda
21
Sainsbury's
17
Morrisons
14
13
Avon
12
12
M&S
Debenhams
Other supermarket
Somewhere else
Lush
Don't know
2
1
32
22
12
17
26
16
14
13
8
6
3
2009
Source: Mintel, Beauty Retailing Report 2011
11
18
2010
23
17
27
13
16
11
12
7
12
5
11
Women
Men
24
2006
2007
2008
2009
8,064
na
10,640
+31.9
14,448
+35.8
160
190
na
2.0
2010
(est)
m
%
change
2005 - 10
17,584
+21.7
19,758
+13.4
21,728
+10.0
+169.4
225
290
350
420
+162.5
+18.8
+18 .4
+28.9
+20.7
+20.0
1.8
1.6
1.6
1.8
1.9
- 0.1*
* % point change
Online beauty retailing represents a small portion of the online market. In 2010 beauty accounts
for an estimated 2% of total online retail sales.
Sales growth has slowed since 2008, when the sector increased in value by 29%, due to Boots,
Superdrug and Tesco gaining more importance in online beauty retailing. The recession caught up
with this market in 2009 when growth was considerably slower.
Women
Men
20
40
60
Men
0
Source: GMI/Mintel
20
40
60
80
Women
Men
Source: GMI/Mintel
20
40
60
80
10
20
30
40
50
60
70
80
90
100
% of respondents
Base: 1,025 internet users aged 16+
29
International terminal
Any website
Sainsbury's
Debenhams
Affluence
The Body
Shop
Other
variety st
Local independent
chemist
Tesco
The Perfume
Shop
M&S
Boots
Asda
Morrisons
Superdrug
Avon
Average Age
30