The beauty and cosmetics industry is undergoing a transformation reminiscent in some ways of the rise of Silicon Valley.
No longer a staid retail sector dominated by a few lumbering giants, the industry today is being pushed forward by venture-capital-fueled startups that are aggressively plugging into the needs and desires of a new kind of consumer. And sure, some of the upstarts are being gobbled up by big players, but that doesn’t mean their influence is waning.
Signifyd’s latest beauty industry report takes a deep dive into the perfume and cosmetics sector, a space long synonymous with glamour and increasingly synonymous with innovation.
The report, “Risk & Reward: The Beauty Industry’s Digital Transformation,” looks at the reasons for the changes in the industry and lays out the projected growth, both overall and in online sales. It highlights some of the successful startups that have shaken up the industry — and points out the role of female leaders in the changes taking place. In sum, it projects a future that is both vibrant and filled with potential.
The Beauty Industry's Digital Transformation
“Today, new brands are being created at light speed, products are being re-engineered from the ground up; globalization and the growing diversity of the customer base are creating new demands and, of course, technology is augmenting every trend,” the report says.
The report explains how consumers’ desire for personalized looks and fragrances, and the growing preference for natural ingredients, are driving change. It shows that consumers are buying online in bigger numbers — a story that is familiar throughout retail.
The shifts in consumer buying habits and style preferences naturally means there will be winners and losers. The winners stand to gain handsomely, with growth in the sector projected to run at 4 to 5 percent annually. The report looks at how some retailers are connecting with consumers in new ways and how laboratories are providing a wealth of new ideas and products.
Online growth means bigger fraud opportunities
Amid all the froth, there are new opportunities for online fraudsters, too, the report says.
The perfume and cosmetics sector, in fact, was the leader in online fraud growth, the Risk & Reward report says, citing Signifyd’s Ecommerce Fraud Index. Between 2016 and 2017, the sector saw total fraud losses increase by 103 percent. That compares to a 7 percent increase across all eight verticals studied.
Fraud losses are calculated by adding the total number of chargebacks due to fraud and the number of orders rejected on suspicion of fraud. That sum is expressed as a percentage of all orders received.
The staggering increase in fraud is obviously a blemish on an otherwise upbeat story. The good news is that those working to prevent fraud are hardly standing still and an industry that has shown itself to be as tech friendly as the beauty industry will no doubt find ways to curb the problem.
Meantime, those blazing the path to the future will continue to come up with new and compelling ways to reach consumers who appear ready to point the way to what they want — not just today, but for a long time to come.
Photo by iStock
Contact Mike Cassidy at firstname.lastname@example.org; follow him on Twitter at @mikecassidy