LONDON--(BUSINESS WIRE)--Technavio analysts forecast the global online beauty and personal care market to grow at a CAGR of close to 17% during the forecast period, according to their latest report.
The research study covers the present scenario and growth prospects of the global online beauty and personal care market for 2016-2020. To calculate the market size, the report considers the revenue generated from the online sales of beauty and personal care products to individual customers in the global market.
The key target group for online beauty and personal care products is consumers aged between 25-35 years. These consumers tend to purchase products online more frequently. Online specialty retailers such as Nyka, Sephora, and Purple are popular among consumers as these sites offer better product differentiation and price comparisons. Aggressive merchandising, discounts during flash sales and seasonal sales, and the emergence of online loyalty programs have led to higher demand and, consequently, revenue generation for online beauty and personal care products.
Technavio consumer and retail analysts highlight the following four factors that are contributing to the growth of the global online beauty and personal care market:
- Rising popularity of digital payment services through third-party providers
- Contribution of millennials to online growth
- Surge in demand for halal beauty and personal care products online
- High rate of internet and smartphone penetration and increase in online spending
Rising popularity of digital payment services through third-party providers
Digital payment services allow consumers to make payments at the point of sale through mobile devices. In 2014, total mobile payments in the US reached approximately USD 3.25 billion, and this is expected to grow to more than USD 110.5 billion by 2019. Many US consumers are reluctant to share their debit or credit card details online, particularly with small and lesser-known merchants. However, consumers rely on payment service providers such as PayPal, which allow them to pay without revealing their card numbers.
“At present, large players like Amazon, Google, MasterCard, PayPal, and Square have been investing heavily in digital payment services. Digital payment applications are being used to improve consumer experience,” says Brijesh Kumar Choubey, a lead analyst at Technavio for research on cosmetics and toiletry.
Contribution of millennials to online growth
In 2015, the millennial population accounted for almost 25% of the total population of the US. The millennials make up almost 21% of the overall consumer discretionary purchases. The rise in the number of millennial shoppers has been fueling the growth of online retail channels as most consumers belonging to this population segment are tech-savvy, price-sensitive, and prefer shopping online. As per Technavio’s analysis almost 86% of the millennial population owns a smartphone.
It has been noted that almost 41% of millennials visit physical stores to appraise merchandise they want to purchase for the touch-and-feel factor before purchasing it online at the lowest price. They purchase products online as they believe that this would save USD 10 to USD 50 on each product. Such contribution of millennials to online growth is a major factor to drive the global online beauty and personal care market during the forecast period.
Surge in demand for halal beauty and personal care products online
Although the market for halal cosmetics was a very niche one a few years back, it has been gaining traction in recent years, mainly in Southeast Asian countries like Indonesia, Malaysia, and Singapore. The market was valued at USD 20 billion in 2014, and is expected to double its revenue by 2019. A number of countries are now formulating regulations and making it mandatory for manufacturers operating in this space to certify their cosmetic products as halal. As such, many beauty companies have started adapting to the trend. For instance, L'Oréal has hundreds of its ingredients certified as halal. The halal beauty and personal care products segment is gaining traction in the US as well as in European countries. This trend is likely to gain traction in the coming years.
High rate of internet and smartphone penetration and increase in online spending
As of 2014, the internet penetration rate (percentage-to-population) in the US was 87.4%. Approximately 279 million people in the US were internet users; this number is the third-largest globally, after China and India. Users in the US spend more time online per capita than other users globally. This high amount of time spent by US consumers online is encouraging beauty and personal care marketers to expand their product offerings through digital platforms.
With e-retailers providing more security features for online payments, free delivery, improved online customer services, and customer-friendly, easy-to-navigate shopping websites, the number of consumers using online portals for shopping will likely increase in the next five years.
Browse Related Reports:
- Mass Beauty Care Market in the US 2016-2020
- Global Skin Care Products Market 2016-2020
- Personal Luxury Goods Market in the US 2015-2019
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