Business of Fashion Feature: How Amazon Fits Into the New Beauty Playbook

Amazon's influence in the beauty industry is poised to reach unprecedented heights. According to Morgan Stanley, Amazon is set to surpass Walmart as the largest beauty retailer in the US by 2025, capturing a significant 14.5 percent of the total beauty market. However, this retail behemoth's dominance comes with a set of challenges and complexities that make beauty brands ponder their participation in the Amazon ecosystem.

With over 300 million customers worldwide, Amazon's sheer size and reach make it too significant for beauty brands to ignore. Despite its influence and market share, many prestige beauty labels have hesitated to embrace Amazon due to concerns about its generic interface and the juxtaposition of luxury products with everyday items.

The Unseen Impact of Uncontrolled Presence

Even brands refraining from direct engagement with Amazon may find their products being sold on the platform without their express permission. This unauthorized, reseller-led presence can have detrimental effects on a brand's image, potentially leading to customers receiving expired or damaged products.

Credibility vs. Control

For emerging brands, the credibility associated with being on Amazon can be significant. Amazon's status as one of the world's most trusted companies can lend credibility to newer brands. Still, this comes at the cost of relinquishing a degree of control over branding and customer experience.

Navigating the Amazon Landscape

Selling on Amazon is not a "set it and forget it" scenario. Instead, it demands continual upkeep and adjustment. Beauty brands must navigate Amazon's unique set of guidelines, terms, and expectations, which differ significantly from traditional retail relationships.

Amazon's rigid model comes with its own set of costs, including referral fees, warehousing costs for Fulfilled by Amazon (FBA), and last-mile fulfillment costs. These fees can add up to approximately 25 percent of the product's ticket price. Moreover, Amazon can swiftly implement changes to guidelines, requiring brands to adapt rapidly.

Unraveling the Amazon Jargon

Selling on Amazon requires brands to adapt to a different vocabulary and approach. Negotiating or changing rules directly with Amazon is challenging, as most beauty brands operate as third-party sellers, paying for placement and logistics without engaging with Amazon as a wholesaler.

Building Reputation Amidst Risks

The presence of unauthorized resellers poses reputational risks. Brands need to actively manage the "buy box" and carefully consider pricing to maintain control and visibility. Amazon's algorithms can influence pricing strategies, impacting a brand's position on the platform.

Optimizing Product Pages

Positive reviews, compelling imagery, and clear product claims are crucial for building out Amazon product pages. Leveraging Amazon's search engine functionality and using insights from reviews can significantly enhance conversion rates.

Premium and Luxury Programs: A Glimpse of Control

Amazon's premium and luxury programs, available through invitation only, offer brands more control over logistics, fulfillment, and product presentation. While premium programs provide better protection against resellers, luxury programs create a gated community, allowing brands to maintain a distinct visual identity.

Selling on Amazon necessitates a nuanced approach, acknowledging both the benefits and challenges. While the platform opens doors to a massive customer base, brands must be vigilant in safeguarding their reputation, controlling pricing, and optimizing their presence. Ultimately, success on Amazon demands a willingness to adapt and operate within the parameters set by the e-commerce giant – the Amazon way. As beauty brands grapple with this decision, the allure of Amazon's vast audience remains undeniable, but the path to success requires a careful dance between embracing credibility and retaining brand control.

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