2020 has been a roller coaster year for the online beauty productsindustry. Big brands with brick-and-mortar stores were hit hard by the COVID-19 blockade, forcing marketers to come up with new ways to sell to customers. As a result, many e-commerce and direct-to-consumer (DTC) brands saw sales growth as a result of the pandemic, as millions of people had to shop almost exclusively online.
Download Terakeet's beauty industry report to see which brands are winning (and losing) in Google's organic search market share.
What will the beauty industry look like in the next few years? Will consumers return to stores in the same numbers, or will they continue to buy online?Terakeet analyzed current trends and search data with our proprietary software, Carina, to extract some key marketing insights.
Read on to get a high-level view of the beauty industry, the trends that matter, and the digital marketing strategies that will create the most success.
Common Threads
Slowing growth. How much is the beauty industry worth? In 2020, global cosmetics sales total $483 billion. With an annual growth rate of 4.75%, total revenues are expected to reach $716 billion by 2025.
Asia Pacific, including China, has the largest market share of the beauty industry at 46%, followed by North America at 24% and Western Europe at 18%. By geography, Asia Pacific and North America dominate, together accounting for more than 70% of the total market size.
In the U.S., the beauty market share by revenue is composed of the following beauty categories.
Historically, most beauty products have been purchased in brick-and-mortar stores, such as department stores, drugstores, and specialty stores.
However, this is changing rapidly, with online sales expected to account for 48% of the total by 2023. This growth in online purchases is occurring well before 2020, and the global pandemic of COVID-19 has greatly accelerated this growth. Overall, the beauty online channel in the U.S. grew by 5.6% in 2020, while the offline channel contracted by 1.2%, according to Statista.
But why is the beauty industry growing? Furthermore, how are online sellers taking market share from brick-and-mortar retailers? Let's take a look at some of the key drivers.
DIY Beauty
With many salons closing for months in 2020, demand for DIY beauty products, such as peels, masks and hair removal kits, has risen dramatically. This trend is expected to grow even as salons and spas reopen.
Clean Beauty
Clean beauty is another area of business growth to watch within the beauty industry. However, it is difficult to give an exact definition of clean beauty. In fact, it can range from the development of natural products, to non-polluting products, to products that take sustainability into account.
Consumers are wary of using products that contain harsh chemicals. This is why the global market for natural cosmetics is expected to reach a value of $54 billion by 2027.
Companies selling clean beauty products can expect to see a surge in demand in the future.
Statistics
Inclusivity
Inclusivity is also playing an increasingly important role in the beauty industry. Historically, many products allowed only a limited range of skin tones. However, in recent years, cosmetic brands have become more inclusive, greatly expanding color options.
For example, Fenty has a face shade finder on its website that allows site visitors to choose from 40 different foundation shades.
Beauty Marketing Example - Fenty Face Shade Finder Website Helps Consumers Choose the Right Cosmetic Color
Beauty industry analysis. Google Organic Market Research
Consumer behavior has shifted. With more and more people researching and buying beauty products online, it is critical for brands in the cosmetics industry to capitalize on the growing opportunity of organic search.
However, an analysis of Google's organic search market share in the beauty industry reveals a surprising reality.
Beauty Industry Report: Organic Market Share
Terakeet analyzed 3,168 high-value, non-branded beauty industry search queries that accounted for 112.7 million annual Google searches in the United States. These keywords span three key markets, including skin care, cosmetics and hair care.
The surprising reality is that publishers and information sites significantly outperformed beauty brands and retailers.
Percentage of organic search market share in the beauty industry based on retail vs. non-retail brands
When we compare informational search to transactional search, online publishers really come out on top. The top six market share holders for informational search are publications. Only three of the top ten are beauty retailers. And, even in the more product-focused searches, informational sites like Allure, Good Housekeeping and Byrdie performed well.
Percentage of Google's organic search market share for the beauty industry based on product vs. informational searches
Organic search market share. Skincare
When we zoom in on the skin care market (which includes lotions, creams and skincare products), we see that the organic search share in the skin care market is very high.
