Do you sell cosmetics or beauty products via your webshop, marketplaces, or both? Then you've come to the right place. You probably started with smaller sales volumes and soon realized that with increasing sales, the storage, packaging, and shipping of your products become an increasingly big challenge. In short, you're looking for a scalable solution for your cosmetics or beauty product fulfillment. In the next 5 minutes, you'll gain insightful information on the following topics:
The Cosmetics & Beauty industry is one of those markets that did not let itself be knocked off its feet by the pandemic. Guess what, growth from $483 billion in 2020 to $511 billion in 2021 was mainly due to online sales. The good news, the market is set to keep growing. In 2027, the beauty & personal care market is predicted to grow further to $784.6 billion.
Accordingly, the largest increase is predicted in the cosmetics segment (+32% between 2019 and 2025). This is closely followed by skincare (+24.3%) and personal care (+18.7%) products. Even before the pandemic, revenues in offline sales channels were declining. However, this has been offset by the strong increase in online retail. In total, that means a clear increase in the market's valuation.
One thing, in particular, is clear: the trend towards online purchases of cosmetics and beauty products offers opportunities for small and medium-sized companies to compete with the big players, as confirmed by a study by Nielsen. In fact, in brick-and-mortar retail, the top 20 manufacturers are responsible for 96% of sales in the category. In e-commerce, however, the picture is different. Here, the largest 20 vendors generate only 14% of sales. In short, e-commerce in the cosmetics and beauty sector is more accessible to smaller and young direct-to-consumer brands.
As previously shown, the e-commerce market for cosmetics and beauty is quite attractive. However, before getting down to work, one should be aware of the fact that this industry also brings with it some industry-specific challenges. These include, first and foremost, the logistics associated with storage, shipping, and returns.
Especially in the case of organic products or products that have natural and therefore perishable ingredients, it is of the utmost importance to always keep an eye on the best-before date. Various processes make this possible. One option that should be used by any good fulfillment center is lot tracking. More on this below. The same goes for the FIFO method, which ensures that older products are shipped first, making sure to use an efficient method to prevent waste.
Especially in countries like Germany, Great Britain, and France, but also in other countries within and outside the EU, the demand for cosmetics, beauty, and hygiene products with natural and sustainable ingredients is increasing. At the same time, more and more shoppers are attributing importance to organic products, which poses additional challenges for online retailers in terms of storage, packaging, and shipping of organic products. Here, too, close monitoring and accurate tracking are the keys to success.
In addition to accurate tracking, segregated storage is not only important but also mandatory to obtain an organic certificate. In addition, for many cosmetics, beauty, and hygiene products, the storage temperature is also crucial. Usually, the optimal room temperature for products in this category is 15-20°.
It is fair to assume that customers who buy organic cosmetics and the like will also attribute greater importance to environmentally friendly shipping. It is therefore important for online retailers to find a set-up where they can offer this without having a strong negative impact on the margin. In cooperation with parcel delivery services like DHL, DPD, GLS, fulfillment companies like byrd offer climate-neutral delivery options.
The topic of packaging goes in a similar direction. In the cosmetics and beauty industry, packaging should be sustainable, but the design is also more important for these products than it is for other product groups. Packaging is the first physical point of contact with a product in e-commerce. Especially in this area, the aesthetics of the goods are crucial to making a good first impression. In addition, you should not underestimate the power of the so-called unboxing experience for the loyalty of your customers, as well as the resulting "free earned media". Often this unboxing of the products is posted on social media channels, which has proven to have a stronger effect on friends and acquaintances than paid advertising.
Another challenge you have to master as an online retailer in this area is that the demand for products in the cosmetics & beauty sector is often very trend-driven and therefore short-lived. This makes inventory planning difficult. Of course, you want to avoid the worst-case scenario of a stockout, but you also don't want to be "stuck" with your products. In addition to good planning and appropriate marketing measures, you need to negotiate flexible contracts with your suppliers. This will allow you to react to developments in the market without taking too much risk for expiring and leftover products.
Generally speaking, the faster an order is delivered the better. However, this of course also depends on the type of product and fast your customers need it. Especially in the beauty or cosmetics industry, customers often want extremely fast deliveries. That's not a surprise as impulse purchases play an important role, as do short-term purchases as a reaction to certain circumstances (such as acne occurring before a certain event). In this case, customers usually expect delivery within the next day.
The challenges described above make life difficult for online retailers. However, as with everything in life, there are proper solutions for this.
Many of the problems mentioned can be solved with a smart storage and shipping strategy. Probably the most known of these is the FIFO method - FIFO stands for first-in-first-out. This storage strategy means that products that were stocked first are also picked packed, and shipped first. This minimizes the risk of products exceeding their best-before date. Lost profits, additional costs for disposal, and operations that are not in line with the trend of sustainable e-commerce can thus be prevented.
Equally important is the use of tracking processes. LoT tracking has become established as one of the dominant methods. LoT tracking is a necessary method for controlling processes, remaining able to act at all times, and reacting quickly to changing or problematic circumstances. When it comes to product recalls or warnings, for example, accurate tracking enables a fast and straightforward process that can prevent negative consequences in the best possible way.
In addition, accurate batch tracking is also crucial for optimizing inventory management. It allows you to keep track of your inventory at all times, subsequently increasing efficiency. In addition, loT tracking simplifies the aforementioned FIFO method and accidental shipment of expired products can be ruled out.
There is no simple solution to the complex challenge of planning your inventory for trendy products. Anyone who says there is such thing out there would also probably sell you a ride on unicorns. However, some solutions greatly simplify this task. For example, clear and graphically presented data and tech-assisted analysis. Some fulfillment companies offer these dashboards for free as part of their service. Real-time overviews of your inventory and current and historical data on your sales and the like can help you stay ahead of the competition. If you want to learn more about the typical inventory management mistakes made by online retailers, this article will give you a good foundation.
Finally, the location of your fulfillment centers is a crucial and often overlooked factor. Most retailers look for logistics warehouses close to them, but it is crucial to use a warehouse that is close to your customers. Geographic proximity automatically means faster, cheaper, and more environmentally friendly shipping. All this is what your customers and of course every entrepreneur wants.
An obvious solution is to use the services of a fulfillment provider who can offer you just that. byrd has a strong fulfillment network with locations in Germany, France, the Netherlands, Austria, the UK, and Italy, among others, and is one of the leading providers in Europe. byrd's fulfillment network allows for strategic and flexible distribution. This in turn results in numerous other advantages. For example, your logistics becomes more robust - the outage of one warehouse or one parcel carrier can be absorbed by others. In addition, you can also use the preferred, national, or local parcel services, which can be an important purchase decision criterion in online retail.
At byrd we have years of experience with the fulfillment of cosmetics and beauty products. So of course we offer all the solutions mentioned above to help you overcome the challenges in logistics.
This includes well-thought-out and efficient processes and concepts from storage to returns management, as well as close-meshed tracking of your products. This in turn allows us to hold various organic certifications, which are strictly monitored and controlled regularly.
Our dashboard helps you stay on top of things, even if you use multiple fulfillment locations in parallel. The data is collected and can be viewed individually by the logistics center, country, or as an aggregated overview. We also offer the possibility to use branded and environmentally friendly packaging material and to enclose flyers.
There is also the option to choose climate-neutral shipping and byrd offsets its carbon footprint every year with climate projects. Last but not least, pricing at byrd is fair and transparent. So if you want to learn more, we would be more than happy to talk to you to assess the fit without any obligation.
As you can see, the sale of cosmetics and similar products offers many opportunities - but you know that just as well as we do. You've probably already encountered the various challenges that come with this line of business. When it comes to fulfillment, we'll be happy to help you and take some of the work off your hands. We look forward to talking to you and wish you further success with your project.