Online beauty and personal care retailers disrupting the market

Online beauty and personal care retailers disrupting the market

The online channel in the country is now witnessing a boom in speciality e-retailers in categories like beauty, personal care, healthcare, home furnishing etc.

The online retailing channel in India has grown exponentially in past decade. Multi-brand, multi-category retailers drove the growth of the sector, where the focus was primarily on electronic gadgets, appliances, and apparel. However, the online channel in the country is now witnessing a boom in speciality e-retailers in categories like beauty, personal care, healthcare, home furnishing etc. These speciality retailers have a deep assortment in their respective categories offering a large array of global and domestic brands erstwhile inaccessible to shoppers in the country.

Beauty and hygiene-related shopping searches on Google are the third highest after the apparel and mobile phones according to Google and Bain & Company. Interestingly, these are also categories where the market is highly fragmented and organized players are virtually absent. Traditionally, this category has been catered to some extent by multi-brand, multi-category large players both in brick-and-mortar stores and also by online players. However, niche category specialists are able to bring a wider selection of brands and products including several global products on their portals.

Beauty and personal care market in India is of the order of US$ 6.5 billion that grew at CAGR of seventeen per cent over 2011-2016 as per "India Cosmetic Market Overview". The market size is projected to reach US$ 35 billion by 2035. Owing to rising digital and social media, the idea of beauty and personal care has been progressing remarkably. Global exposure and rising penetration of smartphones have led to increasing awareness and aspirations for the latest global trends including demand for beauty and personal care products. Higher participation of women in the workforce and increasing disposable income has also led to an increase in demand for premium beauty products.

While shoppers have been becoming savvier, the market has not able to meet the rising aspirations and demands. Multi-category modern trade retailers offering global brands made the access easy to customers in some places. However, limited real estate and mall development restricted the reach. Complex logistics and pricing issue for international brands found it difficult to expand in the market driven by mass brands. Unorganised small retail stores with limited facilities for display and promotion remained a challenge for premium beauty brands. The phenomenon of counterfeits and refills was another problem for premium beauty and personal care products.

This ecosystem made the market attractive for speciality online retailers like Nykaa, Purplle, and NewU to capture the imagination of shoppers looking for access to global brands in the category. While these players entered the market around 5-6 years back, the last couple of years have seen them picking up the traction. Beauty and personal care that contributed to less than 1 per cent of the total online retailing revenue witnessed a growth of 32 per cent in value sales during 2016 as observed by Euromonitor.

Nykaa, the leader in this space got top global brands like MAC, Estee Lauder, Clinique, NYX, Bare Essentials, Bobbi Brown etc. which had no or very limited availability in the country., another strong online player in this space, has exclusive distribution rights for some international brands like Moda, Vipera and Gravitale in India. This exclusive portfolio helped these companies to attract a large number of affluent customers looking for premium brands. Their shoppers are young women, have average ticket size of around INR 1,500,  and they get a substantial proportion of their revenues from repeat purchases. Beyond selling beauty and personal care products, both Nykaa and Purplle have dedicated sections on beauty trends and advisory for its shoppers. These retailers help customers with makeup looks, beauty assistant, beauty routines, and provide access to beauty experts. Having access to large behavioral data Nykaa developed its own private labels in several categories that are promoted aggressively by the retailer. The private label portfolio helps it differentiate itself from other brands on the site. Purplle also launched its private brand Stay Quirky in April 2017 to get better margins. While Nykaa and Purplle cater to customers with premium national and international brands, NewU by Dabur is another prominent online beauty and personal care retailer offering a portfolio of affordable brands. NewU has stronger focus on skin, hair and personal care products with fewer brands in colour cosmetics category. NewU's also has an exclusive range of affordable global brands Jaquline and Spice Island on its portal.

A noteworthy aspect of all these online beauty retailers is their interest in omnichannel presence. While these retailers focus on online channel for wide distribution and deep assortment, they have been looking at physical brick-and-mortar experience stores, a big white space in the country. NewU has an extensive network of stores while Nykka has recently launched brick-and-mortar stores for premium products like fragrances and colour cosmetics. While the country lagged in the brick-and-mortar chains for beauty products and customers had limited choices in the form of beauty stores, online beauty retailers have finally disrupted the market and now Indian shoppers can lay their hands on global brands through the online channel.

(The author is Associate Professor, Marketing, S.P. Jain Institute of Management and Research.)