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Health and Beauty We examine the trends underlying the growth of the global marketplace in health, beauty and hygiene. Our analysts will point the way forward by highlighting critical innovations and behaviours that are driving industry evolution.

Small Beauty Formats to Profit from Rising E-Commerce

3/30/2018
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Global internet access is growing rapidly, changing how consumers are purchasing goods and impacting the products’ associated packaging. In fact all packaging aspects, including primary, secondary, closure and shipment packaging are now playing a larger role in protecting their contents during delivery, while also answering consumers’ new preferred formats when purchasing goods online. In beauty and personal care, this notably translates into growing demand for smaller pack sizes which provide consumers with choice, affordability and convenience.

Globally online sales of beauty and personal care products are led by discretionary categories, namely skin care, colour cosmetics and fragrances. These categories tend to show higher penetration of internet retailing, all being above the industry average of 7% of beauty and personal care products being bought online. Increasingly, these beauty products show a trend towards smaller pack sizes, as these more affordable formats allow consumers to try more products for the same cost.

Consumers also have access to a larger choice of products online, as it is easier and more cost effective for retailers to offer smaller formats such as samples and travel size products than in physical stores. Online beauty specialist Feelunique, present in Europe but also in China and the US, aims to provide premium and luxury products in sample sizes to make them more accessible to customers, while these samples also represent a good promotion tool for brands. The company’s “Pick ‘n’ Mix” sample offer consists of consumers choosing five free samples from a choice of over 300 products and only pay the shipping fee. Amazon also recently launched its Beauty Box, offering a curated selection of samples to purchase. Unlike the traditional monthly subscription model, customers choose from samples available at all times. The Amazon Beauty Box was well received by consumers and was rapidly out of stock soon after its launch.

Looking at skin care, the global adoption of multi-step skin care routines also supports this trend. Consumers are using a larger number of products, which tend to be in smaller pack sizes, as part of their daily skin care regimen. As a result, over 2016-2021, 0-50ml is the pack size expected to see the strongest growth in skin care. Skin care is also the category with the largest internet retailing penetration. As such, the growing popularity for 0-50ml products will also most likely be seen in skin care purchased through internet retailing.

As online sales of beauty products continues to grow, the shift towards smaller pack sizes is also expected to apply to other beauty categories, such as colour cosmetics and fragrances. This trend is expected to be popular among new generations of consumers, Millennials and Generation Z, who like to test new products and have a wider choice of products available at home.

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