During Covid-19, personal care and cosmetics firms had some unusual challenges: not only were many retail outlets shuttered, but social distance and mask wearing in many places had a negative influence on sales.
As a result, several companies are focusing on increasing online sales and speeding up plans for subscription beauty models. As a result, packaging that maximizes interactions and brand equity in direct-to-consumer sales has become more important.
Glossier, a direct-to-consumer brand, is one of the industry’s newest unicorns, demonstrating the market’s interest in firms in this sector. Even before Covid-19 hit, it was worth $1.2 billion. The firm sells nearly entirely online and uses Instagram to market its own-brand serums, balms, and cleansers to over 2 million followers. Significantly, sales for all product areas – including color cosmetics, skincare, and fragrance lines – are expected to increase in 2020.
The Marketplace at Covid-19
According to Smithers’ latest industry analysis, the entire packaging market shrank by 6.0 percent from $915 billion in 2019 to $860 billion in 2020. In comparison, a +2.7 percent increase was predicted prior to the epidemic.
The decrease was particularly apparent in the personal care category. The market dropped from $27.59 billion to $23.52 billion, a 14.8 percent drop. As a result, the industry has attempted to replace retail sales with increased usage of e-commerce, with the goal of moving consumers into subscription service models in particular. According to Smithers research, direct-to-consumer e-commerce packaging sales increased from $2.58 billion in 2019 to $3.77 billion in 2020, and the industry is expected to more than quadruple by 2025, with future growth predicted at an astounding 17.8 percent CAGR.
Keeping brand equity, guaranteeing security, exhibiting a business’s sustainability credentials, and maintaining a personal contact with the client are all problems when selling via this channel. E-commerce shipping bypasses many of the traditional indications that personal care businesses rely on in real-world selling, so packaging may be a useful tool in this regard. Packaging and subscription models will become increasingly essential as this market develops, intersecting with desires for customized and digital beauty.
Replenishment in cosmetic beauty
There has been a push to convert one-time sales on third-party platforms to subscription models until 2020. Consumers profit most from replenishment subscriptions because of their convenience and low cost. Subscribers at Kopari Beauty, for example, receive a 10% discount, and manufacturers sometimes forgo shipping fees as an extra bonus. The transaction may be locked in for the brand, and there is less risk of product replacement, which is made very easy by browsing suggestion engines on sites like Amazon or Alibaba. According to a recent Ipsos poll, one out of every five customers bought phony cosmetics online in 2020.
Customers can be retained with the opportunity to reorder favorites and discounts in e-commerce. Unilever’s recently revised Love Beauty and Planet idea, for example, includes an on-pack QR code that, when scanned, takes the consumer to a webpage where they may purchase replenishments.
Any packaging presented on a website should be easily comprehensible, such as the size and quantity of goods offered in a multi-pack.
According to reports, L’Oréal currently spends 30% of its yearly marketing expenditure on digital platforms, which includes social media ads. Sponsored placements in such product evaluations should focus on the unpacking experience via the package to stand out. Simple graphic designs that are recognized and easy to identify and read on smartphone displays or in social media postings are also required.
Delivery reliability is also crucial, because customers are more likely to move to another provider after a bad experience with damaged products.
Models of Subscription
The growing demand for re-use or refill packaging is one major emerging trend in personal care packaging that was only momentarily postponed by Covid-19. The most common configuration is for a long-lasting base unit that may be renewed on a regular basis with refills supplied to the consumer’s house in flexible polymer packs.
This can be advertised as a carbon-cutting strategy, but it also binds the buyer to a single product and packaging method.
This is most suited to formats where there is no requirement for novelty or product modification between seasons, such as deodorants. Unilever launched a refill design for its Dove brand in January 2021. This features a stainless steel base unit with the Dove logo etched in silver, as well as refills for three scents in pouches made from 98 percent recyclable polypropylene. In comparison to the previous Dove box, Unilever claims that this reduces the plastic content by 54%.
Grove Collaborative, based in the United States, employs a similar approach. It charges $19.95 for a Peach Forever Deodorant Case and a refill starting kit, with refills costing $11.95 apiece. Wild, a clean cosmetics company headquartered in the United Kingdom, has pushed this notion even further. It now has refills manufactured from bamboo pulp to go along with its natural vegan-friendly formulations. Two layers of recycled bamboo pulp are separated by a waxy inner layer in the 43g bamboo refills. If the consumer joins Wild’s subscription program, an aluminum base set and three refills cost $34.40, or $12.00 for the base unit and one refill.
In August 2020, P&G began selling 50ml refillable pods for its Olay X moisturizer on Amazon as an experiment. Meanwhile, Henkel has opted to use the Solids Box for its NAE brand instead of plastic packaging. Solid face, body, and shampoo bars, as well as reusable soap bags, are included in the deliveries, which are presently available on Amazon.
Unilever announced a reusable aluminum container idea for its Love Beauty and Planet brand on June 16, expanding its refill possibilities to haircare. This is available for purchase both online and in person at Target locations. The 16-ounce aluminum container costs $9.99, while the 32.3-ounce refill bottle, constructed of stiff recycled PET, costs $14.99.
Beauty that is both digital and personalized
Over the last 18 months, not all beauty categories have been equally affected. Stay-at-home customers have had less contact to sunshine and greater exposure to blue light from screens, and they are experiencing new issues such as mask acne, often known as “mascne.” As a result, more people are interested in skincare lines, particularly those that integrate smart or digital beauty assessments with subscription sales.
Atolla, a customized cosmetic company from the United States, was born out of research at the Massachusetts Institute of Technology (MIT). Its potential subscribers fill out an online questionnaire and receive an at-home test kit in the mail.
They are then given customized skincare serums, as well as consultations with an Atolla aesthetician. Clean label packets customised with the user’s name cost $69 per month, while tailored regimens consisting of a cleanser, serum, and moisturizer cost $69 per month. Y’OUR, Curology, and Proven Skincare all have similar business strategies. For customized haircare products, Function of Beauty provides a comparable service.
Rook Perfumes, a London-based independent fragrance business, has taken another step into the digital arena by using blockchain and non-fungible tokens (NFT). It is selling 100 NFTs, each worth 0.3 etherium cryptocurrency ($830), to fund the creation of a new fragrance.
Purchasers will have access to Rook’s design team, will be able to help define the fragrance’s composition, and will have the option of receiving priority, reduced orders.
The Year 2021 and Beyond
Personal care firms will need to rethink their strategy now that lockdown orders are being lifted — at least in some nations. It’s understandable that retailers want to get as many customers back into their stores as possible, especially for premium product sales. On the other hand, many customers say that, after being forced to switch to online sales in 2020, they plan to conduct more buying in this channel in the future.
As a result, businesses must consider which of their goods are most suited for e-commerce sales, as well as where these may best utilize digital beauty platforms, as well as innovative sustainability concepts, such as refill packaging, that are well suited to this channel.
Author Information
Smithers’ market research and consulting company employs John Nelson, an award-winning editor and writer. He writes on market and technological trends in a variety of technical and commercial areas, including home and personal care, sustainability, packaging, printing, paper, nonwovens, rubber, and tires.
