Is the Beauty Industry at Risk?
By: Agnes Rey-Tinat
Director, Business Development, MonarchFx
The growth of the beauty industry is staggering. Beauty, whether green, prestige, or mass is on the rise, as is Amazon. It is not farfetched that beauty may be Amazon’s next big play.
According to One Click Retail, as of the second quarter of 2017, Amazon’s total beauty sales in the U.S. increased 40% year over year (YoY). Amazon’s fastest growing beauty category was mass cosmetics, with an increase of 60%. No doubt Amazon is paying attention to this increase and growth.
Jim Tompkins, CEO of Tompkins International and MonarchFx, is a thought leader on the Amazon effect. Amazon has reshaped the way that retailers and eCommerce companies do business. It usually starts with an acquisition or a patent of some kind. Just this month Amazon patented an augmented reality (AR) mirror, and while it is targeted for the apparel industry, we are already seeing beauty companies, such as Sephora launching their own versions of AR mirrors and other augmented reality solutions.
What should beauty brands do to protect and ensure their continued growth? Many beauty brands have excelled at social selling, superior in-store experiences, and technology. The challenge for beauty brands and other product brands is supply chain logistics, keeping up with the Amazon effect.
To compete brands must have a distributed logistics ecosystem that is easily deployed at very cost-effective means. MonarchFx, a new division of Tompkins International, represents the alternative to brands who want to provide Amazon like service to the entire U.S. MonarchFx allows brands to maintain a direct relationship with their customers and protects their brand from private labels and counterfeiting.
Amazon Prime’s current delivery paradigm of two-day delivery is quickly evolving to next-day and same-day for the top-40 markets (about 60% of the U.S.). The MonarchFx network was created to help sellers reduce both the delivery time and delivery costs of eCommerce fulfillment through a distributed fulfillment approach. With locations closest to high population density hubs, MonarchFx is the solution to throughput and capacity concerns, is cost effective augmentation of current capabilities, and supports eCommerce growth for brands.
We have already seen several other market segments threatened, along with the proliferation of private-label lines by Amazon. For now, it appears the beauty industry has not been affected by Amazon. Now is the time to re-imagine your growth and distributed fulfillment.