There is nothing new under the sun.

This age-old adage stays true even today. However, the way we approach old concepts keeps changing as technology evolves. Brick-and-mortar stores became e-commerce stores. How brands identify loyal customers changed from knowing them on a first-name basis to identifying them by loyalty cards. Now, brands can identify customers and get a detailed journey summary with just an email or a phone number. 

As the e-commerce best practices advance, how do you stay ahead of the curve? Like you focus on launching new product lines for your beauty brand, should you incorporate fundamental changes in such a competitive market to ensure your beauty e-commerce brand stands out?

As someone who’s been in the trenches of the DTC beauty industry, you know that staying ahead of the curve is essential for success. With acquisition marketing, your goal is to acquire new customers, whereas with retention marketing, your goal is to retain those customers. In this comprehensive guide, we’ll explore the key trends that will address both the acquisition and retention of customers, shaping the landscape and providing you with practical strategies to help your brand thrive.

Top 2024 e-commerce trends in the beauty niche to watch out for:

1. Understand your customer and deliver hyper-customized experiences
2. Surprise contender and a can’t-miss entry! Check it out below
3. Turn influencer marketing into brand advocacy
4. Intrinsic incorporation of diversity, inclusion, sustainability & ethical practices 
5. Invest in AR and virtual experiences for exponential ROI
6. Reduce churn rate with a subscription model
7. Data, data, and more data! Take strategic decisions based on data-driven insights.

Personalization: Unlocking Customer Engagement

What is personalization? The term has been making the rounds for a while now, but everyone has a varying understanding of what it entails. Personalization is a brand's effort to be remembered as a person rather than a faceless conglomerate. Do you know how your best friend remembers your favorite drink?

Similarly, with personalization, brands can communicate to particular segments in a specific way based on their unique needs, preferences, and desires throughout the customer journey. By leveraging data and AI, you can create customized experiences that make your customers feel valued and understood. Customized experience have been a game-changer in beauty e-commerce websites.

Implementing Personalization Strategies

Beauty shoppers increasingly seek personalized skincare routines to enhance their customer experience. By understanding each customer’s unique skin concerns and preferences, you can recommend products that address their specific needs. It’s like having a skincare expert on call, ready to provide tailored advice and recommendations. Check out the True Botanicals quiz that delivers a customized skincare routine to consumers by answering a few questions.

Hyper-personalization using AI

Hyper-personalization takes things a step further. You can analyze vast customer data by leveraging AI algorithms to provide ultra-targeted recommendations to online shoppers. It’s a powerful way to show your customers that you genuinely understand them and care about their individual needs.

Did you know that the latest New Epsilon research indicates that 80% of consumers are more likely to purchase when brands offer personalized experiences? It’s a compelling statistic highlighting personalization's importance in today’s e-commerce landscape.

Creating Personalized Experiences in the Cookie-less Era for Online Beauty Shopping

As Google starts phasing out the usage of third-party cookies, personalization strategies must evolve to enhance the online shopping experience. Tools like Peel’s RFM Analysis (Recency, Frequency, Monetary) provide a cookie-less solution by segmenting your customer database based on loyalty, purchasing behavior, and engagement levels.

By understanding your customers’ behavior, you can tailor your marketing efforts to create resonant experiences. For example, you can:

• Reward your loyal customers with exclusive perks, early access to new products, and personalized recommendations.
• To prevent churn, engage at-risk customers with targeted campaigns, incentives, and personalized content.
• Reactivate hibernating customers with tailored offers, reminders, and personalized messaging based on their previous interests.

The primary customer segments that Peel’s RFM Analysis showcase are:

1. Champions
2. Loyal Customers
3. Potential Loyalist
4. New Customers
5. Promising

You can create customized campaigns to target each segment by turning these segments into an audience set with just a click of a button.

Approaching Personalization

To differentiate themselves in a crowded market, DTC brands should focus on segmentation and crafting content that reflects their conversations with their audience and those created by their customers.

Learning about your client's needs through popup polls, implementing quizzes, or analyzing which customers are clicking on which ads is an excellent place to start. Design Rush’s article ‘What Does It Take for a DTC Brand to Stay Competitive?’ explores how web design agencies use quantitative and qualitative analytics to shape DTC strategies and determine areas of the customer journey that need improvement by focusing on solutions that deliver value.

By leveraging tools like Peel Insights' RFM Analysis and other personalization techniques, you can create a truly memorable experience for each shopper, driving engagement, loyalty, and revenue growth. It's about understanding your customers deeper and using that knowledge to create meaningful connections.

Personalization is no longer a nice-to-have; it's a must-have for beauty e-commerce brands looking to thrive in 2024 and beyond. By embracing the power of data, AI, and customer segmentation, you can unlock new levels of customer engagement and build lasting relationships with your audience.

Social-First Commerce: The New Way

Online beauty is modifying how beauty brands engage with customers through social-first commerce. This approach prioritizes social media platforms as the primary channel for driving sales and engagement.

Social-first commerce uses social media platforms for marketing and as the primary transaction channel. Platforms like TikTok, Instagram, and Facebook are becoming integral to the shopping experience, allowing users to discover, engage with, and purchase products seamlessly.

How It Works

• Integrated Shopping Features: Platforms like TikTok Shop integrate shopping features directly into the social media experience, allowing users to purchase products without leaving the app. TikTok Shop has significantly boosted online sales in the beauty industry, transforming consumer behavior towards buying beauty products online.

The New Consumer publication notes TikTok Shop has seen significant success, with young consumers willing to shop and spend on the platform. This integrated funnel of audience, talent, videos, feed, storefront, and payments has proven effective.

• Engagement and Discovery: Social commerce sales in the US will reach $79.64 billion by 2025, accounting for 5.2% of total e-commerce sales. Social-first commerce leverages the high engagement rates of social media to drive product discovery and sales. Users are more likely to discover new products through social feeds and influencer recommendations.

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• User-Generated Content: The beauty of UGC content lies in the power of community. That what makes it beautiful, makes it stronger too. Which is why sharing UGC content as part of your brand communication works wonders for brands. It puts the brand in front of a community of people consisting of new and potential consumers, existing customers, and even customers who have dropped off the funnel with engaging, authentic content. 

According to Social Media Today, UGC is 8.7x times more powerful than influencer content and 6.6x more influential than branded content.Do you own or atleast know what a Stanley is? The tumbler that gained popularity across continents just through social media. That is how ingrained and persuasive UGC content can be. Now other brands who follow the initial design are often called the ‘Stanley’; and there are a set of consumers who choose the Stanley brand solely because of word-of-mouth and social media trends. As beauty brands, how do you do that without additional effort? Lynott Jewellery, a leader in the jewelry industry, was able to deliver social proof and enrich the shopping experience with Flockler. Through a customized plugin, Flockler was able to bring Lynott’s Instagram feed to WordPress.

Beauty brands and skincare have a massive following of people who are keen on staying up-to-date with the latest makeup trends and skin care routines. By adding UGC to your brand communication, you are not just building engagement but also driving sales. The authentic user generated videos act as a common thread binding customers together, making them feel seen, heard, valued, and connected; which in turn promotes brand loyalty.

Motivate customers to post about their shopping experiences and product purchases on social platforms. This creates a continuous loop of interaction and establishes credibility, as these authentic posts serve as powerful testimonials for the brand.TikTok, Instagram, and YouTube have risen from just a place for likes and shares to a platform where people integrate self-care and wellness trends into their real lives and, consequently, a shopping destination. Some nano influencers or UGC content may not have UTM or affiliation links embedded, but their videos do bring in revenue.

Additionally, the new medium on the block, TikTok Shop, has reshaped influencer marketing by seamlessly integrating audience, talent, content, and e-commerce. Seeing how many people have purchased each product creates a sense of social proof and virality. Beauty brands can partner with TikTok creators to showcase products directly to their engaged followers, driving discovery, engagement, and sales within the app.

Influencer Marketing: Harnessing Social Proof

“When you say it, it’s marketing. When your customer says it, it’s social proof.”

– Andy Crestodina, Co-Founder and strategic director of Orbit Media Studios, an award-winning digital marketing agency

In the age of social media, influencer marketing has become the new word-of-mouth in the cosmetics industry. It’s all about creating authentic connections and leveraging the power of social proof.

1. Collaborating with micro-influencers who align with your brand values can help you reach new audiences and build trust. Their genuine endorsements feel more relatable and trustworthy than polished ad campaigns. Partnering with these influencers can help you create content that resonates with your target audience. Authenticity is vital, notes Raven Benwait, Founder of Bold X Collective, an Ontario-based creative and digital marketing agency. Encourage influencers to share their real experiences with your products. Followers can spot a fake endorsement from a mile away, so it’s crucial to collaborate with passionate creators who genuinely love your brand.

2. User-generated content (UGC) is another valuable asset. Encourage customers to share their experiences on social media and repost their content (with permission). These real-life testimonials build trust and credibility in a way that traditional marketing can’t match.
3. With smaller but dedicated followings, nano-influencers emerge as cost-effective partners for reaching niche audiences. Their endorsements feel authentic and relatable, like a trusted friend’s recommendations.

Case Study: Prima's Success with Influencer Marketing

Prima, a science-backed wellness brand, has seen success with influencer marketing. Using Peel’s Cohort Analysis metrics, they accurately measured campaign effectiveness, tracking metrics like lifetime value, repurchase rate, and beauty sales. Their data-driven approach optimizes partnerships and creates resonant content. Check out the entire case study here.

Embracing Diversity, Inclusion, Sustainability, and Ethical Practices in the Beauty Industry

Health and beauty consumers are becoming more conscious about the impact of their purchases on the environment and society. They’re looking for brands that align with their values and prioritize diversity, inclusion, sustainability, and ethical practices.

The beauty industry hasn’t escaped this transformative shift, with consumers increasingly prioritizing brands that incorporate these practices, not just superficially. Today’s conscious consumers seek brands that positively impact society and the environment.

Reflecting Real Beauty

Health and beauty brands embracing diversity means showcasing a wide range of skin tones, genders, ages, and body types in product ranges and marketing. By championing inclusivity, brands can engage with a broader audience and foster an industry where every consumer feels seen and valued.

However, there’s still work to be done. A McKinsey & Company study reveals Black consumers are 5.7 times more dissatisfied with makeup products and services than non-Black consumers and 2.9 times more dissatisfied with skincare. Additionally, an AARP survey found that women over 50, who spend $22 billion annually on beauty products together as a cohort, often feel overlooked by the industry.

Innovative tools like Arbelle’s Shade Finder, which leverages the Monk Skin Tone Scale, offer the first truly inclusive virtual foundation shade finder, addressing the disparities highlighted in McKinsey’s research.

Sustainable Practices Matter in Beauty E-commerce

Consumers are looking for brands prioritizing sustainability and ethical practices, which is crucial in driving global beauty sales. Implementing eco-friendly packaging and transparent ingredient sourcing can help you win these conscious consumers' hearts (and wallets). Key Strategies include:

• Eco-Friendly Packaging: Choose biodegradable or recyclable packaging materials. An overwhelming 76% of consumers – that’s 3 in 4 consumers – expect companies to reduce their environmental footprints proactively, as per Nielsen IQ.
  
  One of the prominent brands in offering eco-conscious packaging for beauty brands is Woola. Made out of waste wool instead of cheap and harmful plastic packaging, Woola packaging solutions are used by luxury and ecommerce retailers.
  
  Eco-friendly packaging shouldn’t be an afterthought but a conscious choice for growth-focused brands. 

• Transparent Ingredient Sourcing: Share the story behind your ingredients and supply chain. Let your customers know you’re committed to ethical sourcing and sustainable practices. A brand that does this beautifully is The Body Shop. With dedicated pages to suppliers, brand values, mission statements, and corporate governance, they have been among the pioneer brands to commit to ethical sourcing and sustainable practices.

Why does Inclusivity Matter?

Brands that are early adopters of this shift in the beauty industry will gain a competitive advantage and earn customer loyalty. Inclusive beauty goes beyond shade ranges; it embraces a holistic approach to cater to all consumers’ needs.

Take Fenty Beauty, for example. They paved the way for inclusive marketing with their “Beauty for All“ campaign and the launch of 50 unique foundation shades. This approach has set a new standard for inclusivity in the beauty industry.

Augmented Reality (AR) and Virtual Try-on: Enhancing the Shopping Experience

Gone are the days when customers had to go to physical stores to try on makeup. Thanks to AR technology, virtual try-on experiences allow customers to experiment with different looks from the comfort of their homes. Brands like Sephora and L’Oréal have already embraced this technology. It’s a fun, interactive way to explore new products and find the perfect match.

Granted that AR and Virtual Try-on may seem like an expensive route, a recent Reydar study found that “61% of shoppers prefer retailers with AR experience, and 71% said they would shop more often if they used AR”.

That percentage proves AR is a worthy investment that will provide 10X ROI in the years to come.

Best Practices for AR Implementation

• Offer virtual makeup try-on and hair color simulation to give your customers an immersive shopping experience. Optimize these features for mobile usage to ensure accessibility and convenience.
• Make sure the AR interface is intuitive and works seamlessly across all devices. A smooth, user-friendly experience is crucial for customer satisfaction and engagement.

Case Study: L'Oréal's Success with Virtual Try-On Tools

Subscription Models: Fostering Loyalty and Recurring Revenue

Subscription models are becoming a go-to strategy for nurturing customer loyalty and generating reliable, recurring revenue in the beauty industry. These models tap into the modern consumer’s desire for convenience, personalization, and value, making them a win-win for brands and customers.

Strategies for Creating Compelling Subscription Offerings

Subscription-based businesses grow a staggering 5-8 times faster than traditional businesses. This growth rate highlights the immense potential of subscription models in the beauty e-commerce industry. To create successful subscription models, consider these strategies:

• Personalized Subscription Boxes: Curate subscription boxes tailored to individual preferences, giving your customers the feeling of having a personal stylist.
• Exclusive Benefits and Discounts: Make your subscribers feel special by rewarding them with exclusive perks, discounts, and early access to new products. Who doesn’t love being part of an inner circle?

Data-Driven Insights: Leveraging Analytics for Informed Decision-Making

Data is the new currency in the world of e-commerce. You can gain valuable insights into customer behavior, preferences, and trends by leveraging analytics. These insights can help you make informed decisions and advance your marketing strategies and product offerings.

The Power of Data Analytics

Tracking and analyzing customer data can uncover valuable insights that would otherwise remain hidden. Use these insights to optimize your marketing campaigns and product development, aligning your strategies with what your customers tell you through their data.

Krish Das, VP, Enterprise Data Officer at Ulta Beauty in a chat with Evanta, shares how data and data analytics helps Ulta Beauty service their customers better, while retaining efficiency:

“You need to know your customers really well. What their purchase pattern is, what they like, what don't they like, what their feedback is… We can start to gain deeper insights into the customer and that can help you market your product much better and provide a much better, more customized customer experience."

By leveraging the power of predictive analysis, beauty brands can stay ahead of the curve and anticipate customer needs. This data-driven approach allows brands to predict emerging trends, modify product plans based on potential trends, identify existing customer preferences, and optimize inventory management. A proactive way of doing business, rather than a reactive way. Saves time, and offers you the opportunity to be pioneers in the beauty industry, if done well. 

Peel provides valuable insights into customer behavior, helping you identify and deliver curated customer experiences based on the segment they belong to! Win back at-risk subscribers, ultimately increasing customer lifetime value.

Take Bubble, a DTC skincare brand, for example. By fine-tuning their retention marketing strategy and leveraging their loyalty program, they increased revenue per customerby a whopping 171% and repeat purchase rate by 73% – all in just six months!

Potential Return-on-investment (ROI)

While these trends appear exceptional in theory, knowing a benchmark on what kind of ROI you can expect by incorporating these trends is pivotal. Fret not; we’ve got you covered!

* Please note: These are rough statistics and will vary based on other factors

Growth-driven Approach: Partner with Peel Insights to Refine Buyer's Journey

Navigating the beauty e-commerce landscape of 2024 demands a customer-centric approach. By embracing insights from analytics and leveraging progressive trends, beauty brands can optimize their operations, tailor their offerings, and achieve unparalleled success in the competitive e-commerce arena.

Discover how Peel Insights can empower your brand with actionable insights and tailored solutions. Embrace the power of data and watch your beauty brand soar to new heights!