E-commerce and online sales channels for cosmetic products in the U.S. market

An analysis of the beauty product category in the United States

Published on December 1, 2023

In 2022, online sales of beauty products in the U.S. reached approximately $19 billion. The categories of cosmetic products included in the "beauty" segment are:

• Skincare products
• Fragrances
• Makeup products
• Hair care products

Total sales in the beauty sector for the U.S. market amounted to $96 billion. Therefore, the e-commerce sales percentage for the beauty sector reached 20%.

The beauty sector's online sales share in the U.S. compares to a 30% e-commerce share in the apparel sector and 60% in the footwear sector. There is still ample room to increase online sales of cosmetic products in America.

Worldwide, total sales of beauty products amounted to $430 billion. The United States held a 22% share. The primary market for beauty is China, especially in terms of the online sales channel.

Emerging trends in the beauty products sector

The beauty sector in the U.S. is undergoing significant evolution, characterized by emerging trends that will shape the industry's future. Below are the most relevant:

• Increased Focus on Wellness
  American consumers are increasingly gravitating towards products that combine beauty and wellness. Examples include the use of probiotics and Ayurvedic ingredients in skincare and makeup products, beauty-specific dietary supplements, and beauty devices like light therapy LED face masks. This trend reflects a growing awareness of the connection between health, beauty, and overall well-being.
• The Influence of Generation Z on the American Market
  Generation Z consumers are distinguished by their critical approach towards cosmetic brands, seeking value and authenticity. According to surveys, about half of them conduct thorough research on product ingredients and their benefits before purchasing, demanding transparency, efficacy, and brand commitment towards sustainability, diversity, and inclusion.
• Artificial Intelligence and Virtual Try-On Experiences
  Artificial intelligence and virtual reality are revolutionizing how consumers interact with beauty products, offering immersive and personalized trial experiences.
• Hyper-Personalization
  This trend goes beyond simple personalized promotions, aiming to provide relevant messages at specific moments of the customer's purchasing journey, increasing engagement and conversion rates.
• Subscription Services [Beauty Boxes]
  These services are gaining popularity, allowing consumers to explore new products at their convenience while getting personalized recommendations.
• The Role of Influencers on Social Media
  Social media marketing through influencers continues to be a fundamental tool for cosmetic brands seeking to connect with their target audience.
• Diversity and Inclusion
  Millennials and Gen Z demand a commitment to diversity and inclusion, rejecting unrealistic beauty standards and products unsuitable for certain skin tones.

Update as of July 21, 2021

The United States is one of the largest markets for the trade and use of cosmetic products. For European and foreign beauty companies, the U.S. market represents a strategic opportunity, contributing significantly to the global innovation and development of the cosmetics industry. In 2019, the market was valued at $101 billion, and by 2022, it is expected to return to an estimated $99 billion following the revenue decline caused by the pandemic. However, the attractiveness of the U.S. market should not overshadow the need for careful planning before entering this competitive and challenging landscape.

Competition is a crucial factor to consider when launching a cosmetic product in the United States. The presence of hundreds of well-established beauty brands forces international companies to develop cutting-edge proposals aligned with the needs of American cosmetic consumers.

Additionally, beauty product distributors in America willing to accommodate the needs of foreign companies are few and far between, often demanding prohibitive investments that could jeopardize export goals.

The expansion of international beauty brands in the U.S. can start online

Data on e-commerce in the U.S. demonstrate that selling products online can address the challenges of traditional retail sales

In 2020, online sales of physical goods in the U.S. amounted to $861.12 billion, a 44% increase compared to 2019, representing 21.3% of total retail sales. These numbers are expected to grow further, boosting the confidence of small foreign beauty companies looking to sell their cosmetics in the U.S. market.

Research reveals that American consumer expectations for e-commerce were redefined in 2020. Here are some insights into the purchasing drivers propelling beauty sales in the U.S.

American consumers prefer to buy cosmetics online

E-commerce is convenient for those looking to sell in America because digital consumers always search for new products. Online platforms allow sellers to offer discounts, showcase a wide range of products in limited space, and leverage positive customer experiences

Data clearly show high levels of satisfaction among consumers: 96% of Americans surveyed reported being satisfied with recent online shopping experiences. Key purchasing drivers include convenience, which significantly boosts sales, with the average American consumer spending $75 per month on beauty products.

Recurring motivations for e-commerce purchases in the U.S. include restocking (67%), replacing products (52%), and trying something new (33%). The latter is less frequent because some target consumers, like Gen Z, also enjoy shopping in physical stores.

Young Americans are natural experimenters: cross-selling and product samples are winning strategies

E-commerce users primarily buy from established brands (40%). However, 55% add a mix of well-known and untested products to their cart — a promising statistic for European exporters concerned about standing out in the American beauty market. When asked, "Why do you prefer buying beauty products online?" American consumers provided the following responses:

• Because it’s more convenient (47%)
• Because there’s more variety (42%)
• Because it’s faster (38%)
• To discover new brands or products (34%)
• Because some websites offer loyalty points (27%)
• For customer reviews (23%)
• For sign-up benefits (22%)
• Because some brands sell exclusively online (22%)

Convenience, variety, and pricing are key success factors for brands aiming to sell online in the United States. Equally important are rewards for newsletter sign-ups, the ability to collect loyalty points (which attract one in four online shoppers), and the website's and inventory's reliability, which are critical for retaining American customers.

For cosmetic companies interested in the U.S. market, opening an e-commerce store is essential

For a cosmetic company entering the U.S. market for the first time, finding a distributor is nearly impossible, making e-commerce the only viable solution

In the United States, many brands and businesses have benefited from strengthening their online presence, leveraging technology and a conscious use of the web to offer services tailored to the needs of American consumers highlighted in this article.

While not all traditional e-commerce and mobile commerce trends are necessary to start a business in the United States, following multiple strategies to enhance the overall shopping experience can yield far better results than relying on dubious importers or opening a traditional physical store in America.