12/04/13

Health/Beauty

The 'cool factor' is crucial.

Stefany Zaroban , Associate Director of Research

The health and beauty retailers in this year's Hot 100 have found novel ways to sell beauty products online.

Dollar Shave Club offers shoppers a monthly replenishment of razors, starting at only a buck; Nyx Cosmetics incorporates consumer-generated images on its product pages; and Manpacks.com sprinkles humor into all its interactions with consumers—including its tagline, which promises that its product will enable men to have "more time to slay dragons."

Standing out from the pack in the health and beauty category is particularly important, as the largest retailers in the group are underperforming the market, according to data from the Internet Retailer 2013 Top 500 and Second 500 Guides. As a whole, the 54 Top 1000 merchants in the health and beauty category grew online sales about 13% last year (from $4.5 billion to $5.1 billion), far below the 17% growth in 2012 web sales for the Top 1000 e-retailers in North America.

Some examples of retailers generating relatively little online growth include Avon Products Inc., which increased web sales 0.9% to an estimated $781 million from $774 million. Amway grew 5.1% to $1.03 billion from $980 million, and Sally Beauty grew 6.6% to $26.0 million from $24.4 million.

An optimist would argue that the the category is ripe for online growth, as e-commerce comprised only around 2% of overall health and beauty retail sales last year in the United States. The web represents a far larger share in other product categories, such as 39% for books, music and videos, and 50% for office supplies.

Retailers in the category looking to grow their online sales might want to look to the six merchants profiled in this issue for some intriguing ways to sell online items most often bought offline.

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Topics:

2013 December magazine, 2014 Hot 100, Dollar Shave Club, e-commerce and beauty products, health and beauty, Manpacks.com, Nyx Cosmetics, Second 500, Top 500

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