BW Confidential - Issue #14 - May/June 2013 - (Page 44)

Retail Amazon Becoming earth’s biggest beauty store? Amazon is becoming a distribution channel for beauty that can no longer be ignored by Alex Wynne E -commerce leader Amazon turned its giant hand to the beauty world only a handful of years ago (Amazon’s US beauty portal launched in 2004) and until recently, struggled to convince manufacturers that it was the right environment for selling cosmetics. Slowly but surely, that is changing, as brands realize that the marketing power and presence of this very secretive retailer, which has come to be known as “everyone’s competitor,” increasingly makes it very difficult to ignore. While sales figures for Amazon’s beauty activity are confidential, it is understood that they now represent an important part of the group’s ‘Electronics and Other General Merchandise’ business category, which saw sales grow 35% to reach $38.63bn in 2012. According to a source close to Amazon, the company’s beauty activity has more than doubled in size over the past year. “The big story is not so much the dollar size of the business, but the degree to which [the Amazon] customer allows the company to track his or her habits [by identifying links between categories and reviews, for example],” Wendy Liebmann, ceo of WSL Strategic Retail, comments. What’s in it for brands? The main interest for brands selling on Amazon is, of course, its reach: “It helps to increase our brand awareness and to reach a customer that we may not already touch,” comments Butter London ceo Leslie Freytag, one of few executives who agreed to talk about Amazon’s beauty activity. The US is Amazon’s most developed beauty market, followed by Germany and 44 the UK. In the US, the e-tailer is slowly bringing prestige brands on board with an increasingly appealing visual context. “ There has been a reality check for some manufacturers, that one of the best ways they could learn about selling beauty in the digital space was not through their traditional retail partners, but with Amazon ” WSL Strategic Retail ceo Wendy Liebmann Shiseido-owned Nars Cosmetics operates a boutique directly on Amazon, L’Occitane has a strong presence and Sephora USA has an integrated storefront, although orders are supplied by the LVMH-owned firm directly, rather than through Amazon. “In the past two or three years, there has been a reality check for some of the major manufacturers, that one of the best ways they could learn about selling beauty in the digital space was not through their traditional retail partners, but with Amazon,” Liebmann explains. “To do that, it was important for Amazon to improve its proposition, and by that, I mean to create an appropriate environment, as any retailer does, for brands to sell. It had to up its beauty game to reflect the kind of atmosphere that all brands, especially the premium-priced brands, wanted.” Amazon offers a decided advantage: its knowledge of its customers’ spending habits is something that many retailers, let alone brands, can only dream of having. This is due to its multi-segment approach. “When brands sell directly on Amazon, they have access to tools that allow them to understand what their customers are buying and what they are looking at, including products from other brands,” an executive from Amazon explains. “The May-June 2013 - N°14 - BW Confidential

Table of Contents for the Digital Edition of BW Confidential - Issue #14 - May/June 2013

Cover
Comment
Contents
Update
- Brand & retail news recap
- Companies on the move
Take note Market facts, figures & trends
Best of BW Highlights from our e-publication
Launches The latest in fragrance, skincare & make-up
Interview Clarins Group ceo Philip Shearer
Insight: Skincare
- Category overview
- Skincare devices
- Retail case studies
- The latest trends
Retail
- Amazon
- Store concepts
Digital Facebook
Market watch: China
- Country overview
- Industry viewpoint
- National domestic airports
- Department stores
- Third- & fourth-tier cities
Travel retail
- Emerging Asia analysis
- Passenger profiles
- Interview: King Power Group Duty Free & Travel Retail Hong Kong managing director Sunil Tuli
Radar Up-and-coming brands
Emerging markets Company profile: VLCC
Packaging
- Industry outlook
- Differentiation techniques
Last word Brand Keys founder and president Robert Passikoff

BW Confidential - Issue #14 - May/June 2013