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Coronavirus and the Evolution of eCommerce

While the global pandemic has affected us all in profound ways, the beauty and personal care industry has been uniquely transformed. The routines we have, the brands we’re loyal to, and the priority we assign to self-care will forever be defined in ‘before and after’ terms.

As the market continues to adjust to a new normal, brands are taking steps to assess the consumer landscape, solidify brand loyalty, and evaluate how shoppers interact with and buy their products. Even though the personal care industry has historically been resilient when it comes to recessions, this pandemic caused extreme hardships for many of us. Still, some brands were in a better position to adapt to retail changes that were on the horizon even before the virus hit.

Despite lockdowns bringing most industries to a halt, the personal care market was able to see faster rebounds. This suggests that the losses brands will experience might be short-lived. In February 2020 for example, China’s personal care market declined 80% year-over-year, but only dipped 20% year-over-year for March’s numbers.1

A lot of what factored into the success or failure of a brand depended on how it was sold, and what type of personal care product it was. Many direct-to-consumer brands were able to continue unabated, whereas products distributed through salons and barbershops were forced to find novel ways to keep customers in stock.

Emerging brands that started on the internet were able to leverage an infrastructure that was already quarantine-friendly. Many of those companies upped digital ad buys and evaluated their warehouses and shipping policies for safety or efficiency improvements. The rest of the industry tried to follow suit, with some brands doing better than others.

This in turn added jet fuel to the already expanding lead eCommerce had gained over traditional retail. Over the last decade, online purchases grew faster than their in-store counterparts by a measure of 2 to 1. For personal care specifically, in-store sales grew by 184% in ten years but paled in comparison with a 432% growth online. That growth was largely fueled by the world’s largest online drugstore — Amazon — which saw a 1,045% increase in sales over the same 10-year period.2

It’s obvious that eCommerce is in a boom, but as we dig deeper into the numbers, it’s apparent that traditional brick-and-mortar stores have a deep influence on consumers (even those who eventually purchase online).

From the Baby Boomers to Gen-Z, completely in-store purchases (shopped in-store, bought in-store) dipped by 42 points. Fully online purchases only increased 7 points. Most of the swing — a 292% increase — went towards a combination of shopping in-store and buying online (or vice versa).

The purchasing of personal care products is still deeply reliant on the physical store connection. While we’re apt to embrace digital commerce, we still crave the ability to discover beauty products by touching, feeling, and smelling. We value expertise in helping us find the right products and we are enamored by the shopping experience’s mise en scène.

The brands we have previous loyalty towards do not require the same sensory experience, and shifting a portion of those purchases online would not be as disruptive. However, for many emerging brands, a completely digital experience misses out on an important customer connection. If this shift towards online purchasing has indeed been fast-tracked by the pandemic, it will cause ripples throughout the industry.

The $64,000 question is whether or not this shift will be permanent, completely subside, or result in a mix between the two. Many consumers who have changed their behavior in how they bought personal care products will continue with their new normal. These numbers have potential, with eMarketer reporting that in a 1-month timespan during the height of the pandemic, U.S. adults who shifted their purchases from physical to online stores increased by 68%.3

Therefore, if brands want to find new audiences, they are at a minimum going to have to figure out how to bring the sensory experience to a digital world. Subscription services — which have grown in popularity by 890%4 — are tailor-made for the customer experience. Brands that have sophisticated social media and influencer followers can easily provide digital word-of-mouth.

Still, how personal care shopping might change in the short- and long-term is likely going to depend on the type of product we’re talking about. We’ll take a look at three basic categories:

Personal Care Essentials

The most reliable category of products includes everything we use in our day-to-day routines. Soap, shampoo, toothpaste, deodorant — these are brands with reliable source-of-supply and have historically weathered most economic downturns. They are also products that are often purchased in grocery stores and drug stores, and not as much online. Companies have made inroads trying to change that, but have a long way to go before they catch up to other product categories.

Prestige, Luxury, and Masstige

There are a lot of products we love, but in a pinch, we can live without. In poor economic times, these more dispensable products are often swapped out for cheaper brands or forgotten altogether. (Although much has been written about the Lipstick Effect, where the little indulgences help us cope with scaling back larger stuff.) This category does enjoy a large amount of online sales, but many of them are also dependant on department stores, hair salons, nail bars, and spas.

The Unknowns

The discovery of new products, ingredients, and innovations is one of the lifebloods of our industry. As consumers, we are always looking for new brands that meet our unique physiology or address a specific pain point. These brands often have a higher price point and most have successful online operations. However, they are also heavily dependant on the in-store experience to bring in new customers. Curated box services have proven themselves to be a good digital storefront, but the majority of consumers still want a tactile experience before they trust a brand enough to buy.

Expanding Options for Basic Necessities

Our most essential personal care products were not impacted as much by the pandemic as other product categories. While the onset saw a lot of out-of-stock signs, grocery stores and online retailers were able to resupply inventories. With some looking to stock up on staples, sales in this category actually increased.

The biggest change for this category was not if consumers purchased their product but how. Before lockdowns and stay-in-place orders, essentials were often bought at grocery stores, pharmacies, and big-box stores. Brand loyalty was extremely high, and consumers’ source-of-supply was predictable.

Having personal care necessities delivered precisely when you need them may keep consumers shopping online

The lockdowns forced the closure of many stores — and while some were allowed to remain open, consumers were not confident in the safety of in-store shopping. Consumers were forced to look elsewhere for the basics, and Amazon, online retailers, and direct-to-consumer brands filled the void.

After discovering that going online for essentials offers some convenience (price comparison, automatic refill shipping, bulk purchasing of shelf-stable products) this category may maintain more of its online gains. The Benchmarking Company released a survey that found 35% of respondents plan to continue automatic online ordering for personal care supplies.5

Out-of-the-Box Marketing for Prestige Care

For all the brands we use because they go above and beyond the basics, it’s unclear how they might survive if department stores and boutique retailers suffer in the long term. While we still seek to indulge ourselves, brands with higher price points or those that provide a supplemental benefit will likely feel the pinch the longer a recession drags on.

If professional services do not rebound quickly, salons could seek new revenue from things like at-home DIY kits

Retail stores and salons found success with out-of-the-box ideas like curbside pickup and DIY kits. These may be the key to weathering a recession or surviving a permanent shift in purchase behavior. Businesses without an online component should add one (and should regardless of pandemics) since younger generations are always more connected online.

Building a Sales Strategy for The Unknown

The most unpredictable outcomes for a rapid shift in consumer behavior will likely fall to the discovery of new brands. (This category also includes prestige beauty and basic goods we haven’t yet discovered.) If in-store foot traffic remains quiet, brands will have to shift marketing strategy or lose market share.

As we’ve mentioned before, it’s unlikely that a shopper’s desire to buy in person will disappear altogether. There is a therapeutic element to browsing the aisles, but the waters will still be shaky. Local businesses may fall to larger chains, and brands will need to increase exposure across all channels.

Influencers will likely yield more star power, serving as an important conduit between ‘the problem’ and ‘the solution.’ People find value in a store’s expert advice, and Instagrammers have large followings that can offer authentic opinions (even if they’re backed by advertising revenue).

We may see some regression in manufacturing processes that have driven our industry forward over the last few years. Products designed for small carbon footprints, for example, might be less desirable than packaging-heavy (but more sanitary) products. Brands with large portfolios of SKUs or on-demand inventories may have to consolidate product lines and manufacturing runs. Contract Manufacturers may take precedence over the installation of long-term upgrades. Consumers may even gravitate towards multi-issue products (like hand sanitizers that moisturize or sunscreen with anti-aging properties).

The most rational assumption is that no matter what, brands will need to evaluate their successes and failures and be prepared to adapt business strategy quickly if needed.

Charting a Path Forward

There is still so much we do not know about how consumers (including ourselves) will behave in a post-COVID world. During the pandemic, our digital connection with each other emerged as a savior for a lot of what we did. Work, education, socializing, and yes, shopping, took new meaning and structure online.

We may look back in a year and see that the numbers were temporary and we’ve reverted to a world that more resembles 2019. Perhaps. The truth is, no matter how long there was a shift, or how things did or didn’t change, we’re always going to be moving towards a marketplace that looks more digital and connected. Brands must strive to reinvent themselves in new ways, and the pandemic just bumped that up in priority.

Get a PDF copy of our article, Coronavirus and the Evolution of eCommerce

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