Jeff Bezos just became the richest man in modern history with a net worth of over 150 BILLION dollars. This news, announced yesterday, only further illustrates the fact that the Seattle-based Amazon has become a force to be reckoned with. While Bezos is busy swimming in a pool of gold coins, his company is hard at work disrupting almost every industry.
Beauty is Stronger Than You Think
Amazon’s latest victims include (but is not limited to) grocery stores, Blue Apron, Target, Macy’s, Best Buy, Staples and Barnes & Noble. These companies have all felt the heat of Amazon’s burgeoning success one way or the other. But, it seems that there is one industry that has been able to withstand the marketplace’s impact. Turns out the protective armor against Amazon is made of lipstick, foundation and mascara.
The beauty industry has grown substantially in recent years making it a viable industry for Amazon to try and permeate. Instead, cosmetics proven to be too strong for the online retail leader. Amazon has made giant strides in beauty and personal care and have enjoyed a 57% growth rate in the first quarter of 2018 in its luxury products sector. A Quartz piece mentioned that the organization had launched a distinct badge for “professional beauty” products.
This exclusive category is said to feature “… a selection of high-quality products that can be found in professional settings such as salons, spas, and dermatology offices.” Amazon also revealed that it is establishing an “Indie Beauty Shop,” according to the Quartz report. The shop is designed to sell directly to clients and will carry brands unavailable at stores such as Ulta Beauty, Target, or Walmart.
Ulta-The Go-To Beauty Destination
While Amazon is still making strides in the beauty department, it can’t seem to upstage specialist beauty store, Ulta Beauty. Jim Cramer, Co-Manager of the Action Alerts PLUS Portfolio, believes Ulta remains undefeated and will remain so because consumers “can’t go to the Amazon beauty parlor – at least not yet – and drones can’t cut hair,” per TheStreet.
Cramer added that “Ulta is the most un-Amazon-able company on earth.” The numbers suggest so too. Ulta shares have gone up 33% year-on-year, and around 386% in the past five years. It has been predicted that Ulta will have a sizable market share of 6.6% by 2022.
In recognition of its success even in the face of Amazon’s expansion, UBS described Ulta Beauty as “One of the best growth stories in retail,” according to Quartz. The feature links Ulta’s progress to its loyalty program, which has improved customer retention both online and offline. The program has proven to be a powerful customer retention strategy, as the company generates 90% of its sales through it.
Cosmetics continue to prosper because a make-up purchase is a “personal and unique experience,” said the Qz.com article. “It’s only in a store that a customer can perfectly match a shade or find details of how to use new products. Many consumers also want to use a product immediately, something that can only be done in a physical store.”
As with most luxury brands, Ulta also maintains its status thanks to its exclusivity on product selection and the fact that it offers these products at competitive prices. The UBS study found that the 25 best-selling makeup products at Ulta are not obtainable from Amazon.
It remains to be seen what the future holds for cosmetics. But so long as consumers’ choices are influenced by experiences such as face-to-face human curation and other real-world experiences, it is safe to assume that specialist Beauty stores like Ulta will continue to lead the competition, including Amazon.