Online Cosmetics Market - Growth, Trends, COVID-19 Impact, and Forecasts (2022 - 2027)

Online Cosmetics Market - Growth, Trends, COVID-19 Impact, and Forecasts (2022 - 2027)

Online Cosmetics Market is projected to register a CAGR of 7.23% during the forecast period, 2022-2027.

The COVID-19 pandemic has dramatically altered the consumer purchasing pattern across the beauty space due to the strict lockdown and widespread store closures in the first half of 2020. Retail store closures created opportunities for the online cosmetics market leading to a rapid shift towards e-commerce platforms that enabled beauty brands to offset the sales decline across offline channels. As per L'Oréal's 2020-annual-results published in February 2021, the company's sales increased by 62% for e-commerce across all divisions and all regions, accounting for about 26.6% of the total company's sales for 2020. Therefore, players operating in the beauty market were trying to streamline their supply chain during the pandemic period with an increased focus on online marketing.

Furthermore, a few players like Beiersdorf AG, Procter & Gamble, and Unilever also considered COVID-19 as an opportunity to expand their business operations by investing heavily in research and development to innovate new packaging designs, formulations, and product variants, as well as increased their focus on social media marketing, and advertising campaigns to create a buzz in the market, thereby improving their brand’s visibility among the consumers and keep competing for a dominant market position.

Rising consumer awareness about the safety of vegan and organic cosmetics is encouraging manufacturers to launch new offerings and expand their footprint in the emerging segment. For instance, in June 2021, SO'BiO étic, a socially conscious French cosmetics firm, launched an organic beauty line in the United States to provide environmentally friendly and healthful cosmetics. The company claims that its products are free from glycol, parabens, silicones, nanoparticles, PEG, and chemical filters.

Key Market TrendsGrowing Inclination Towards Natural/Organic Products

Although, synthetic cosmetics products have a prominent share in the market, in recent years due to increased health awareness consumers are shifting towards plant-based, cruelty-free, and natural cosmetics products. Growing concerns regarding the side effects of chemicals in conventional cosmetic products, which lead to ailments such as skin irritation, allergies, and skin dullness, have been fueling the demand for natural and organic cosmetic products. Prolonged use of synthetic cosmetics may cause various health issues, such as irritation, hormonal imbalance, and toxicity. However, cosmetic products made of organic ingredients, such as plant extracts and natural oils, do not leave any harmful impact on the skin. Natural cosmetic products that are free from chemicals and transparent about the ingredients sourcing have been preferred by consumers, which is likely to drive the demand for natural cosmetic products. To capitalize on this growing interest, the manufacturers in the market have been revamping and expanding their product offerings by introducing a wide range of organic skincare products containing plant-based, clean-label ingredients, with claims such as ‘organic’, ‘vegan’, ‘natural’, ‘chemical-free’ and ‘cruelty-free’, among others. For instance, in April 2022, Shiseido revealed a new beauty brand Ulé, which sources pesticide-free botanicals from local vertical farms. The Shiseido-incubated French startup works with Tower Farm to procure exotic ingredients grown near Paris. Instead of shipping in dried plant substances purchased in bulk, Ulé sources fresh botanicals from a vertical farm near Paris, where they're 'hand-harvested at their optimal potency.

Asia-Pacific is the Fastest Growing Market

Asia-Pacific region is experiencing significant demand for online cosmetics products due to the increased number of smartphone users accompanied by strong penetration of internet services. Emerging economies such as China and India exhibit the highest number of online shoppers, owing to the ongoing developments in the e-commerce ecosystem of respective countries. For instance, the recent study published by the ITA (International Trade Administration, U.S. Department of Commerce) shows that among online channels, live streaming has substantially grown into a major sales platform for cosmetics in China and constitutes around 10% of Chinese cosmetic e-commerce as of 2021. Additionally, the improved standard of living owing to urbanization, and the increasing number of working women, push the demand for online cosmetic products. The middle-class population is likely to purchase beauty products as they evolve rapidly based on the significant changes in their preferences. Thus, the rising middle-class population in the region is responsible for the burgeoning demand for online cosmetic products. Beauty products made from cruelty-free, and vegan ingredients have recorded a high adoption rate in recent years and are becoming increasingly popular in Asian countries. Furthermore, there are several online stores specializing in organic cosmetics, allowing a wider selection of both private label and international brands with one click from the comfort of the consumer's home. For instance, some of the well-accepted stores in India include, Vanity Wagon, The Glocal Store, Just Herbs, Nykaa, and healthandglow.com, among others.

Competitive Landscape

The online cosmetics market is highly competitive, with a strong presence of regional and global players, where demand is mostly driven by high consumer awareness of online cosmetic brands and affinity for online purchases. In the market studied, some of the prominent players are launching/acquiring portfolios that claimed to be natural, organic, and sustainable to have higher penetration across online channels. For Instance, in 2020 L’Oréal SA signed an agreement to acquire ThayersNatural Remedies, a United States-based natural skincare brand from Henry Thayer Company. The brand is expected to be integrated into L’Oréal’s consumer products division.​ Likewise, the key brands are partnering with e-commerce platforms and social media influencers to expand their reach and maintain their position in the market. For instance, in July 2022, Homegrown beauty brand Nutriglow entered into a strategic partnership with e-commerce major Flipkart to sell its skincare and cosmetic products exclusively on the platform. Some of the major players identified in the market inlcude

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