Glossy Annual Report 2022: The state and future of beauty brand distribution

After a bleak 2020, beauty business gross sales had been up in 2021 and the market is predicted to flourish in 2022. The business started to rebound final yr after a 2020 of pandemic-driven lockdowns wherein shade cosmetics gross sales fell by 33% globally and general retail gross sales within the beauty class declined by 15%, based on McKinsey. As many as 47,000 chain shops, together with beauty specialists and department shops like Sephora and Macy’s, had been compelled to close down through the pandemic, based on Baird, enjoying an enormous half within the income decline for shade cosmetics. Without in-person social and work-related occasions to attend, shoppers stopped spending on make-up. However, skin-care and self-care merchandise remained a precedence.  By 2021, manufacturers had discovered a workaround in e-commerce, and beauty and private care classes elevated gross sales 16% in comparison with 2020, largely pushed by e-commerce gross sales, based on NielsenIQ. 

Just one yr earlier than the pandemic, e-commerce accounted for less than 11% of 2019 beauty gross sales, and greater than 70% of beauty purchases concerned a go to to an offline location. But with shops shuttered, manufacturers needed to reinvent their distribution methods. Many turned to third-party vendor platforms, like Amazon or Walmart’s Marketplace, giving retailer web sites a run for his or her cash as a number one distribution channel. Retailers too started increasing enterprise by providing e-concessions and drop-shipping distribution choices. And some consumers discovered different sources for beauty merchandise within the “important” massive field and drug retailer chains that remained open.

Beauty entrepreneurs have additionally been experimenting with promoting merchandise immediately on social commerce platforms like TikTook and Instagram the place they will attain a youthful viewers, usually livestreaming so consumers can work together with brand representatives and buy merchandise in actual time. But reigning supreme over all e-commerce channels are conventional brand-owned web sites, which nonetheless outpace different e-commerce choices as essentially the most worthwhile and most frequently used distribution channel. 

Although the pandemic accelerated e-commerce, that doesn’t imply brick-and-mortar shops are a factor of the previous. Brands that shifted to DTC through the pandemic are discovering digital advertising prices sky excessive — CPMs on Facebook, Instagram and Google has gone up, as have delivery prices — and many are discovering they nonetheless want retail companions as an alternative of going it alone. Additionally, with vaccines extensively obtainable within the U.S. and shops reopened, shoppers are as soon as once more venturing out to strive on make-up and skin-care merchandise in individual. 

Aware of rising in-store site visitors, manufacturers are increasing in-store choices like “shop-in-shop” partnerships, as within the case of Sephora with Kohl’s and Ulta with Target. Some are even merging their social media technique with their brick-and-mortar method by bringing influencers into shops to check out their manufacturers. And the kinds of shops manufacturers are distributing in usually is determined by their product class, with status beauty manufacturers tending to put merchandise in beauty specialty shops, whereas mass beauty manufacturers keep on with massive field and drug retailer chains. 

With quite a few conventional and e-commerce distribution channels obtainable to manufacturers and with the pandemic section of Covid-19 reportedly drawing to a detailed, Glossy’s Annual Report examines the state of beauty gross sales and distribution channels to grasp rising tendencies and to offer manufacturers with the intelligence wanted to form advertising and merchandise planning for 2022 and past.


To assess the present state of beauty product distribution and to grasp which channels might drive success in a post-pandemic world, Glossy requested business professionals how merchandising efforts have modified up to now two years, the place they see the intersection between e-commerce and in-store procuring main and which of the next distribution channels they’re utilizing:

social commerceretail companions’ web sites and storesowned-and-operated platformsbrick-and-mortar storeslivestreaming platformsgaming platformsdirect sellersthird-party sellerspop-up storesblockchain-based marketplaces

Glossy collected responses via an internet survey of beauty manufacturers and retailers and a spotlight group of senior administration executives who oversee advertising, gross sales and retail partnerships at beauty corporations. For extra perception, we additionally constructed a database of 32 manufacturers throughout status beauty and mass retail worth factors and shade cosmetics and skin-care classes to investigate brand distribution channels, assess the rise of social commerce and map out brand presence throughout platforms.

Prestige beauty was outlined as manufacturers with merchandise at a better worth level that primarily goal shoppers with above-average expendable earnings.Mass beauty was outlined as manufacturers with merchandise at an reasonably priced or entry-level worth level that primarily goal shoppers of any earnings degree.

Our database included the next manufacturers:

Online marketplaces, e-concessions and drop-shipping broaden beauty manufacturers’ distribution choices

Glossy’s survey requested manufacturers what channels they use for beauty product distribution. As anticipated, manufacturers stated retailer shops and brand-owned web sites are their most typical distribution channels. But more and more, manufacturers are additionally leaping into promoting on market channels, resembling Amazon or Walmart’s Marketplace, with 58% of respondents saying they promote via a market. In explicit, market choices have inched previous brand partnerships with retailer web sites, signaling a significant shift in conventional retailer-brand relationships.

Retailers themselves have been main drivers of that shift, as they now supply e-concessions and drop-shipping market distribution choices for manufacturers. Both choices permit manufacturers to promote via a retailer’s web site whereas stock storage and success is accomplished by the brand. Also in each choices, the retailer takes a fee from product gross sales, however usually the brand sees higher margins than conventional retailer-brand partnerships since manufacturers should not promoting at wholesale costs. E-concessions and drop-shipping differ in branding — for e-concessions, manufacturers should keep the digital storefront and merchandising; for drop-shipping the retailer handles each. 

Brands contemplating utilizing these market distribution choices should weigh the professionals and cons of e-concessions versus drop-shipping. E-concessions permit for extra branding management by permitting the brand to handle its digital presence on the retailer’s website. Drop-shipping, however, provides the retailer branding management, however, as a result of manufacturers have decrease involvement, manufacturers have extra bandwidth to broaden drop-shipping to a number of retailers for wider distribution. Prestige beauty manufacturers discover e-concessions a more sensible choice to keep up brand consistency, however mass manufacturers might want drop-shipping to offer extra widespread product distribution. Regardless, each of these newer distribution fashions give manufacturers, particularly smaller ones that may in any other case have a barrier to entry to conventional retailer-brand contracts as a result of decrease margins and increased product amount necessities, extra channel choices to achieve shoppers.

Social commerce and marketplaces are in style, however tried-and-true channels drive the best income

As seen within the earlier chart, 50% of the surveyed manufacturers additionally promote via social commerce platforms, resembling Instagram or TikTook. With the current growth of social commerce and its decrease prices of entry, this distribution channel has surpassed owned brick-and-mortar shops as a number one pathway to offer merchandise to prospects. And it’s beginning to catch as much as retailer web sites, too: Only about 57% of respondents stated they distribute via that channel. 

With this pace of adoption, social commerce might quickly turn into as ubiquitous as retailer partnerships. Below, Glossy lists the social commerce choices of the 4 main social media platforms — Facebook, Instagram, Pinterest and TikTook.

But regardless of the excessive adoption charges of each social commerce and market platforms, the 2 channels nonetheless lag behind extra conventional channels in a key space: profitability. In Glossy’s survey, respondents by far stated that brand-owned web sites are most worthwhile — possible as a result of extra favorable product margins — adopted by retailer shops and web sites. While market channels are shut in revenue to retailer web sites, established retailer partnerships nonetheless exceed each by offering clearer distribution processes to which manufacturers are accustomed.

According to NielsenIQ, 29% of whole beauty gross sales got here from on-line procuring in 2021, and 65% of shoppers have by now ordered beauty merchandise on-line. Estée Lauder echoed that sentiment in its monetary report — for its fiscal yr ending June 30, 2021 — wherein it famous that digitals gross sales grew for almost each brand as the corporate continued its on-line platform growth throughout owned web sites, retailer websites and digital market choices. 

While brand-owned web sites characterize the best charges of revenue and, consequently, are the main distribution channels for beauty manufacturers, newer on-line distribution channels also can anticipate to see progress as shoppers proceed to extend digital purchases.

Brands are engaging prospects on shoppable livestreams

Brands additionally famous that livestreaming is a rising house in its skill to draw new prospects. In truth, livestreaming exceeded social commerce areas in our survey outcomes because the distribution channel wherein corporations suppose they need to make investments most to draw new prospects. 

In a spotlight group of senior beauty brand executives carried out by Glossy, many of the members echoed the concept livestreaming was the following sizzling spot for promoting client merchandise. “We’ve seen large success on livestreaming via our ‘Blooming Skin Show,’” stated Brad Farrell, CMO of Beekman 1802, a skin-care brand. “It’s an amazing combine of promoting unique merchandise and presents and [offering] unique entry to issues.” 

Beekman 1802 has been working with livestream procuring software program firm Livescale to host its livestreams (with a devoted touchdown web page) on the Beekman web site, and it additionally livestreams Facebook and Instagram, as properly. It treats livestreaming as a distribution channel relatively than a pure advertising channel by including unique merchandise and completely different product assortments to entice shoppers to hunt out and store within the house.

Among the highest three social commerce platforms, every gives livestreaming capabilities, however solely Facebook and Instagram supply shoppable options throughout livestreams. In Glossy’s survey, manufacturers famous that they use Meta-owned platforms for social commerce essentially the most. 

TikTook, however, solely permits non-shoppable livestreaming; however Douyin, its Chinese counterpart, does supply shoppable livestreams, a function TikTook customers will possible see within the future. Pinterst additionally added a livestreaming function, Pinterest TV, in 2021. Pinterest TV differs from the opposite livestreaming choices in that Pinterest selects manufacturers and creates particular reveals to function them relatively than permitting the manufacturers to stream on their very own schedule. 

While the traditional social platforms are constructing out livestream options, opponents like Twitch, which till now has centered on online game livestreaming and artistic content material, are starting to see the sunshine — or no less than the inexperienced. Beauty manufacturers have began partnering with influencers on Twitch to introduce themselves to the Twitch viewers, as with Charlotte Tilbury’s partnership with the Girlgamer Twitch channel. Other manufacturers like E.l.f. have launched Twitch channels of their very own. 

Brands and influencers alike are seeing excessive viewership on Twitch and different livestreaming platforms and companies, with Twitch viewership rising by 83% from 2020 to 2021. As livestreaming turns into a extra frequent advertising and commerce tactic, platforms like Twitch might enhance their choices and turn into as central to manufacturers’ and influencers’ playbooks as different social platforms. Old-guard platforms may also possible develop their livestreaming capabilities to compete for consideration and funds, as seen with the current growth of Pinterest TV.

With the rising recognition of social commerce and manufacturers eyeing the future of livestreams, manufacturers have allotted main parts of their advertising budgets to social channels. More respondents to the Glossy survey allotted 41% or extra of their funds to social media promoting than did for both different digital promoting or offline advertising — although, to be famous, offline advertising resembling in-store occasions was paused abruptly through the pandemic and has solely began to trickle again into manufacturers’ advertising methods.

As manufacturers spend extra on social, they’re experimenting with completely different platforms and methods past the same old suspects. Among others, executives in Glossy’s focus group talked about the Flip app. A social app that launched in 2019, it mimics TikTook’s short-form video format however focuses particularly on procuring, primarily working as a digital retailer. This new participant solely works with beauty manufacturers, and by September 2021, it had over 1 million downloads and had shipped over 30,000 orders. In the main target group, Amanda Kahn, svp of advertising and e-commerce at RéVive Skincare, highlighted the app. “Flip has been very profitable,” she stated. “And now Flip is basically beginning to scale as a result of it has a way more loyal following.” 

Executives additionally highlighted “influencer immersion” as one other notable social technique. “We invite influencers into retailer companion shops to expertise the brand,” stated Dawn Hilarczyk, head of international gross sales at Noble Panacea, a skin-care brand. “It permits us to make use of their social community to offer us visibility and brand consciousness, and to coach.” The technique merges influencer technique with retailer technique — a robust play, as retailer shops and web sites have increased profitability than social commerce, as talked about in our earlier evaluation.

With the quantity of platforms rising, every with its personal set of efficient methods, Akash Mehta, CEO and a progress and digital advertising specialist at Fable & Mane, a hair-care brand, spoke about social media from a cross-channel perspective. “Don’t sleep on the TikTokers on Instagram,” he stated. “They may need 3 million followers on TikTook and 16,000 followers on Instagram however the duality of briefing influencers to repost TikTook content material on Instagram has led to so much of success [for us]. 

“TikTokers can cost so much, however a narrative with a checkout code on Instagram is so much cheaper and can have large conversion, as properly. There are artistic methods to not isolate the 2 entities however as an alternative suppose of them as one and make it much more reasonably priced for manufacturers.” 

This method to social as a set of platforms with overlapping customers that increase one another, relatively than separate areas with area of interest markets, underscores the necessity for the complicated advertising plans that beauty manufacturers are placing behind social media promoting.

Shifting tendencies have an effect on not solely social methods, but in addition  distribution: Prestige beauty expands, whereas mass nonetheless sees wins in old-guard channels

As manufacturers broaden their social methods, they’ve additionally been solidifying their distribution methods because the pandemic and client shopping for tendencies have modified up the beauty retailer panorama. In Glossy’s survey, greater than half of surveyed manufacturers retail with department shops, and an amazing 81% of respondents stated they distribute via beauty specialty shops resembling Sephora or Ulta. Brands are inclined to favor particular retailers relying on their pricing class — status being increased worth factors and mass being extra reasonably priced costs.

In analyzing Glossy’s database of 32 manufacturers inside status beauty, Sephora is the most-common retailer distribution channel, carefully adopted by Ulta. Both retailers supply shop-in-shop partnership packages and, via these partnerships (each on-line and in-store), manufacturers taking part within the partnership program at Sephora and Ulta have been capable of attain new audiences. In explicit, status beauty manufacturers noticed the technique unlock a bounty of status beauty shoppers who had been inaccessible when these merchandise had been confined to conventional department shops and high-end shops. 

Sephora’s partnership with mass-oriented retailer Kohl’s has allowed Kohl’s to interrupt into the status house — though not all Sephora-distributed manufacturers permit gross sales via Kohl’s. Ulta’s partnership with Target has not been as profitable at convincing as many status manufacturers into that mass retailer. Despite its decrease quantity of status beauty manufacturers, Heather Duchowny, govt director of international engagement and digital advertising at Smashbox, a shade cosmetics brand, famous the advantages of its Target distribution technique. “We launched with Ulta and Ulta at Target,” she shared throughout Glossy’s focus group. “We discovered it extremely profitable in reaching a very new viewers. We’ve discovered that so much of our gross sales there are Gen Z.” 

When viewing distribution by manufacturers throughout the mass beauty worth level, Ulta is the one specialty beauty retailer current within the distribution combine, indicating its big selection of product sorts and the various demographics of the beauty consumers it attracts in comparison with different retailers. Aside from Ulta, extra customary mass retailers like massive field and drug retailer chains make up the highest retailer partnerships, indicating that buyers nonetheless want to buy mass beauty merchandise in accessible settings like Walmart or Walgreens. 

During the pre-vaccine period of the pandemic, massive field and drug shops had been marked as important shops, permitting them to stay open whereas many department shops needed to shut store. As a outcome, manufacturers current in that house had extra alternative to achieve shoppers, as they had been some of the only a few permitting in-person procuring. “What’s attention-grabbing is launching throughout Covid,” stated Aleesha Worthington, vp of advertising and e-commerce for males’s hair-care brand Scotch Porter, on the significance of having a presence at these important shops, throughout Glossy’s focus group. “Target and Walmart turned the brand new date night time spots. So for us, they truthfully had been the best locations to talk to prospects.”

Skin-care manufacturers want owned web site distribution, whereas shade cosmetics have turned to

When viewing distribution by product class via Glossy’s database of manufacturers, a number of extra clear methods emerge. For measured shade cosmetics manufacturers, a transparent desire seems for beauty specialty shops, which, as talked about within the earlier sections, a major quantity of manufacturers distribute via. Among the beauty specialty shops, Ulta outranks brand-owned web sites as a distribution channel and claims the spot of prime distribution companion for shade cosmetics manufacturers. Sephora, the opposite prime performing beauty specialty retailer, lags behind drug shops and massive field shops as a distributor — although bear in mind, Sephora solely distributes status beauty whereas Ulta carries each mass and status permitting for a bigger quantity of manufacturers. 

On the opposite aspect, measured skin-care manufacturers overwhelmingly depend on their very own web sites. The skin-care class has a steeper studying curve for product utilization, and consequently, brand-owned web sites are a most important distribution level of each merchandise and product info. In the skin-care house, not like in shade cosmetics, Ulta and Sephora are neck-and-neck, with each at 63% illustration. While shade cosmetics manufacturers have a transparent bias towards Ulta, skin-care manufacturers stay break up.

Conclusion and key takeaways

After an array of pandemic-related challenges in 2020 and 2021, the beauty market is on monitor to have a wholesome 2022, with U.S. beauty and private care income projected to achieve $88 billion, based on Statista. E-commerce is predicted to proceed main the best way as manufacturers proceed to experiment with social distribution channels. According to McKinsey, e-commerce is the fastest-growing channel for beauty gross sales and it is going to turn into an important channel by 2024. 

As members of Glossy’s focus group famous, the “retailer of the future” appears to be a merger of on-line and in-person choices, the place e-commerce and brick-and-mortar experiences mix to supply a seamless procuring expertise. That could possibly be something from scanning a QR code in-store with a purpose to learn an internet evaluation and make a buying resolution, to creating the bodily retailer an “leisure hub” by internet hosting occasions that convey on-line influencers in-store to pattern merchandise. The future appears restricted solely by manufacturers’ and retailers’ willingness to experiment.  

Here are some some key takeaways from Glossy’s Annual Report on the state of beauty gross sales and distribution channels in 2022:

Brands are more and more distributing via market channels, with 58% of respondents saying they promote on marketplaces, inching previous conventional brand partnerships with retailer web sites.More retailers now supply e-concessions and drop-shipping market distribution choices for manufacturers. E-concessions permit for extra branding management, whereas drop-shipping requires fewer workers to keep up merchandising in alternate for giving the retailer branding management.Despite the excessive adoption charge of social commerce and market platforms, brand-owned web sites take advantage of revenue, adopted by retailer shops and web sites. Newer on-line distribution channels can anticipate to see progress as shoppers proceed to extend digital purchases.Livestreaming exceeded social commerce in our survey outcomes because the distribution channel wherein corporations suppose they need to most make investments to draw new prospects.Newer livestreaming platforms like Twitch, which initially centered on online game streaming, are starting to companion with beauty manufacturers. Old-guard social platforms possible will develop their livestreaming capabilities to compete on this rising client house.More respondents to the Glossy survey allotted 40% or extra of their funds to social media promoting than did for different digital promoting or offline advertising. The rising use of social media as a most important advertising channel has known as for complicated advertising methods that experiment with social media.Within status beauty, Sephora is the commonest retailer distribution channel, carefully adopted by Ulta. Both have shop-in-shop partnerships and, via these partnerships, manufacturers have been capable of attain new audiences.For shade cosmetics manufacturers, Ulta outranks brand-owned web sites as a distribution channel. On the opposite aspect, skin-care manufacturers depend on their very own web sites.

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