Unlocking Growth for Beauty Brands on Amazon in Q4

Author: Libby Holsan, Account Manager at Luminary Retailers

With Q4 here, now is the time for beauty brands to tap into the massive potential of Amazon's marketplace. With holiday shopping, gifting, and seasonal promotions ramping up, the platform becomes a goldmine for both customer retention and acquisition. For brands ready to make the most of this peak season, it’s essential to focus on meeting current customers where they shop and attracting new ones through smart marketing, promotions, and advertising. Here’s how beauty brands can maximize their growth on Amazon during this crucial time:

1. Meet Your Customers Where They Are

In today’s omnichannel world, customers are already shopping on Amazon. With its vast selection, fast shipping, and seamless customer experience, Amazon has become the go-to marketplace for beauty shoppers looking for everything from everyday essentials to giftable holiday sets. Beauty brands should take advantage of this by optimizing their presence with Enhanced Brand Content (i.e. A+, Brand Story) and Amazon Stores.

• Optimize Your Product Pages: Use high-quality images, engaging product descriptions, and videos that highlight unique selling points. Make sure your products stand out visually and that their benefits are clear to potential buyers. Don’t leave money on the table by underutilizing the A+ and the Brand Story sections of your listings. These are areas where you can expand on product benefits, unique selling points and give a background on your brand which helps to form a connection with your customers. 

• Leverage Customer Reviews: Ensure your existing customers’ positive reviews are featured and that negative feedback is addressed. Social proof is a powerful tool on Amazon, especially in the beauty industry where trust in product effectiveness is crucial.

The Beauty Category Growth on Amazon:
Amazon’s beauty category has experienced significant growth year over year. In fact, the beauty and personal care category on Amazon grew by over 30% in 2022, continuing a trend that has seen annual growth rates between 20-35% since 2019. This surge is driven by increasing consumer trust in online beauty purchases and the convenience Amazon offers with fast shipping and a wide array of products. With beauty brands being one of the fastest-growing segments on Amazon, now is the time to take full advantage of this trend.

2. Boost Your Brand with Strategic Marketing & Promotions

The holiday season is prime time for special offers, bundles, and promotions. Beauty shoppers are always on the lookout for a good deal, especially during Q4 when they’re buying gifts or restocking essentials for the winter months. If looking to utilize this tactic, be sure you’ve set up any new listings and sent inventory well before Q4 to ensure you can beat any inventory restrictions. 

• Run Amazon-Specific Promotions: Use Lightning Deals, Coupons, Subscribe & Save options as well as Brand Tailored Promos to incentivize repeat purchases and drive traffic. Consider offering exclusive, limited-time holiday bundles that are only available on Amazon to create a sense of urgency. If opting for seasonal sets, don’t forget to send inventory in before Q4 to avoid any disruptions with inventory receipts or storage limitations. If possible, utilize the Vine program to get those crucial initial reviews.

• Capitalize on Holiday Shopping Events: Take advantage of Amazon’s major sales events like Black Friday and Cyber Monday. These days are not just about discounts—they’re also huge discovery opportunities for new customers who might not have tried your brand yet. Customers who shop these events are looking for DEALS. If your product isn’t on sale, they will gravitate towards one that is. 

Stat Spotlight:
In Q4 of 2022, Amazon's total sales during Black Friday and Cyber Monday increased by 7% year-over-year, and beauty brands saw some of the largest spikes in sales during this time. Promotions and deals, especially on these key shopping days, can drastically increase brand visibility and customer acquisition.

3. Drive Growth with Targeted Advertising

Amazon’s robust advertising tools can help you get your products in front of the right customers. By focusing on data-driven campaigns, you can increase visibility and conversion rates during this busy shopping season.

• Sponsored Products & Brands: Promote your top-selling items or new launches with Sponsored Products ads that appear in search results or on product pages. Sponsored Brands ads are also great for increasing brand awareness by showcasing your logo and a curated selection of your products.

• Amazon DSP (Demand-Side Platform): Use Amazon’s programmatic advertising platform to reach both in-market and lookalike audiences outside of Amazon. This is especially useful for retargeting customers who have visited your product pages but haven’t yet made a purchase.

• Use Data to Your Advantage: Amazon’s Brand Analytics provides insights into customer demographics, purchase behavior, and keywords that are driving traffic. Use this data to fine-tune your campaigns and target the most relevant audiences. You can take it one step further and run Brand Tailored Promotions that target your selected audience to help reingage declining or disengaged tiers of customers.

4. Don’t Worry About Amazon vs. Your D2C Website

A common concern for beauty brands is that by selling on Amazon, they might be cannibalizing sales from their direct-to-consumer (D2C) websites. However, the data shows that these channels can coexist and even complement each other. According to a study, 66% of online shoppers start their search on Amazon, even if they discover a brand elsewhere. Many customers will continue to purchase on Amazon due to its convenience, fast shipping, and trust in the platform, even if they first encountered the brand through other channels.

Additionally, the typical Amazon customer often looks for entry-point products like sample sizes, travel kits, or bestsellers. These entry-level products create brand awareness and serve as a gateway for customers to explore a brand’s full range - potentially leading them to the D2C website for larger or more specialized purchases.

Maximizing Both Channels:
By using Amazon to acquire new customers with introductory products, brands can guide them to their D2C channels for a more premium experience, exclusive collections, or subscriptions. Each platform serves different types of shoppers, with Amazon attracting convenience-driven consumers and your D2C site offering a more personalized, brand-centric experience.

5. Deliver an Exceptional Customer Experience

Customer retention is just as important as acquisition. Make sure your existing customers are delighted with their experience on Amazon by offering exceptional customer service and engaging with them through post-purchase follow-ups.

• Streamlined Fulfillment: If you haven’t already, consider enrolling in Fulfillment by Amazon (FBA) to ensure fast, reliable shipping and take advantage of Amazon Prime’s customer base. Quick, efficient shipping is a major factor in customer satisfaction and can drive repeat purchases.

• Engage with Your Audience: Use Amazon’s Customer Engagement tools to stay connected with buyers and build loyalty. Send follow-up emails or request reviews to keep your brand top-of-mind, even after the purchase.

Conclusion

Q4 offers beauty brands a prime opportunity for growth on Amazon. By optimizing your brand presence, running strategic promotions, leveraging Amazon’s powerful advertising tools, and delivering an exceptional customer experience, your brand can capture the attention of both loyal customers and new shoppers. With a data-driven approach, your beauty brand can unlock significant revenue growth and build lasting relationships with Amazon’s vast audience during the busiest shopping season of the year.

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The Price Of Amazon Advertising Success

Author: Lauren Houseman, Amazon Advertising Specialist at Luminary Retailers

In online commerce, Amazon holds a significant sway, excelling in both e-commerce and advertising. This dual role has profoundly reshaped how businesses engage with their audiences, especially within Amazon's ecosystem. As businesses seek to make their mark, Amazon advertising has emerged as a leading platform, providing unparalleled chances to connect with a highly converting audience. Yet, underneath this advertising dominance, a concern looms – the relentless rise in advertising costs on the platform. 

INCREASED SATURATION & RISING AD COSTS

In 2022, Amazon's advertising revenues reached $37.7 billion, marking a shift from historical growth trends. The rise in ad sales from 2021 to 2022 was 20%, notably below the impressive 58% growth in 2021 and the substantial 147% surge in 2020 according to JungleScout. This shift urges brands and sellers to diversify their advertising investments, looking further into holistic efforts of advertising in order to drive success on Amazon. 

While the growth of Amazon as an advertising platform is promising, for small and medium-sized brands, the rising costs of advertising on the marketplace pose steep distinct challenges. Over the last few years, Amazon CPC prices have steadily increased year over year, in more recent years, CPCs have increased by almost 22% from 2022 to 2023 stated in an Add People post. With an average CPC of $1.35 already in March of 2023, the escalating competition on Amazon continues to reflect on these costs creating the need for more adaptation for smaller businesses in order to remain competitive with those with larger advertising budgets. 

HOW ORGANIC IMPACTS PAID

To help achieve sustainable paid advertising efforts on Amazon, striking the right balance between paid advertising efforts and organic search visibility has proven to provide stronger results than relying solely on either approach. Bids alone will not ensure optimal advertising performance, it is also vital for brands to take customer reviews, star ratings, product relevance, and sales history under consideration as all of these can impact how paid advertising performs. Amazon strives to help contribute to a happy overall customer experience meaning, they will select and show the most applicable ad to a customer if it means it will result in a conversion.

For example, when a relatively smaller, lesser-known company enters an ad auction and targets the same audience as a larger, more established brand with better consumer and historical sales performance, Amazon’s algorithm is likely to prioritize displaying the ads from the brand with more sales history associated with the ad target while the lesser known brand with limited sales history for the ad target will likely populate in lower ad placements until it can establish historical data. This is because the algorithm anticipates a higher probability of conversion stemming from the brand with more historical sales data. 

Having said that, smaller brands especially new-to-market brands must invest greater effort in organic support to enhance the desired visibility of their ads. Strategies like PR or influencer collaborations along with product awards, accolades, and even clinical research stand out as essential to enhance platform traffic and boost brand trust and familiarity. Our research indicates that when these strategies operate together, advertisers experience 30% lower advertising customer acquisition costs, with ads converting 28% higher for brands implementing a holistic brand strategy integrated with Amazon. These efforts paired with consistent promotional efforts, well-optimized product listings, evolving SEO strategy, and ongoing customer care efforts contribute to the credibility needed for long-term sustainability. 

ACHIEVING SUSTAINABLE METRICS

Another critical aspect of achieving sustainable advertising performance on Amazon is embracing specialized strategies tailored to the platform and the ideal customer of the brand. These approaches may involve ultra-refined ad objectives and campaign structures to optimally segment data for better insights. This aids in a more comprehensive comprehension of performance metrics, allowing businesses to make accurate adjustments in line with KPIs and ad budgets that cater to both new customer acquisition and the retention of the existing customer base. Other approaches include optimization processes that assist with budget absorption such as day parting, negative keyword refinement, and placing maximum bidding thresholds. 

To accommodate the rise in optimization practices needed for sustainable advertising performance, many third-party PPC software partners have scaled and allowed for the automation of these optimization processes, providing more meaningful ad insights than the native platform itself can give. Many of them also allow for customized metrics utilizing product COGS which provides an essential view when it comes to advertising sustainability. 

Lastly, another tool to consider when achieving sustainable ad practices and overcoming the rising ad costs is  Amazon Marketing Cloud, which is an Amazon tool that provides the opportunity for advertisers to create connective advertising strategies. AMC provides critical high-value consumer metrics, both paid and organic, that are associated with your paid efforts.  Data such as catalog entry points, path to purchase, new-to-brand customers, and customer lifetime value metrics all can be used to identify which ad types, strategies, and products can help bring in new customers and support long-term growth for the brand. 

As the Amazon advertising landscape evolves, these approaches empower businesses to navigate challenges and flourish in the competitive environment. New dynamics on the platform have amplified competition among sellers and brands, driving them to explore innovative stand-out methods. While the rising costs on Amazon may seem daunting, it’s essential to remember that with the right strategies and insights, businesses can not only survive but thrive in this dynamic ecosystem by employing a well-rounded approach that includes both organic and paid methods that brands can use to mitigate the impact of increasing cost and also gain a competitive edge.

LETS CHAT

We’d love to hear from you and align our expertise in advertising beauty and skincare products on Amazon. We specialize in beauty and are obsessed with knowing the evolving beauty consumer and ensuring ads capture the right customers for your brand.

ADVERTISING PREMIUM SKINCARE PRODUCTS ON AMAZON

Author: Rachel Street, Advertising Director at Luminary Retailers

We’re not in the business of selling protein powder. Nothing against protein powder; we love seeing all brands succeed on Amazon. It’s simply not our expertise, and your brand deserves industry expertise.

Luminary has worked tirelessly to test and scale the customer experience needed specific to the beauty category on Amazon. Combining over two decades of retail experience and six years of working with prestige and masstige skincare beauty brands on Amazon that range from formerly in-spa only to in-store distributions in major retailers like Target, Sephora, and Nordstrom.  

WHY OUR  BEAUTY EXPERTISE MATTERS

The core of our passion is aligning customers with products based on proven ingredients to help their specific skincare needs. However, when it comes to skincare, the path to purchase is often longer, winding around product research, ingredients, and industry terminology that overwhelms customers when shopping online. This is why so many of us love the attention and insight we can get from our favorite esthetician or even at a local beauty counter.

But that’s not always available. Given 63% of online customers are going to Amazon first, it’s our job to attract customers and provide them with the information needed to keep them in the sales funnel with limited distractions.

KNOWING THE PREMIUM BEAUTY CUSTOMER

With the average product on Amazon in the beauty category being $37 (SemRush, May 2022), we have to carve out a path to purchase through the clutter of the market featuring thousands of brands priced to meet the typical customer at an agreeable price. That path has to clear the noise for the premium shopper who prioritizes ingredients, sourcing, potency, and efficacy over price and is willing to spend 40% to 60% more than the market average.

With demographic, lifestyle, and socio-economic insights limited by Amazon in most consoles, we’re forced to develop a customer profile based on their likely lifestyle choices, shopping habits, and product interests. The insight from this research helps us target qualified audiences and generate viable ad visibility conducive to the long-term ad strategy of acquiring new customers.

INGREDIENT AWARENESS 

Skincare is complicated and requires greater specialization and understanding of ingredients and how they work. Unlike categories that are low-risk purchases, like maybe a new snack, or products that serve a single purpose, like noise-canceling headphones, skincare requires the marketer to know how and why an ingredient is used. Hyaluronic acid, for example, can be used for anti-aging, plumping, and hydration retention, giving way to many uses and benefits. Knowing how these benefits play into Amazon discovery and search successfully helps ads get to the right customer faster.  This is why it’s critical for your agency partner to have extensive knowledge of product ingredients and uses to attract customers and keep them in the sales funnel. Otherwise, your ads are missing qualified audiences if you’re focusing on only the root term and single use of a product.

Root Term: Vitamin C Serum

Use Cases: Skincare Serum Routines, Pregnancy Safe Skincare, Even Skin Tone, Facial Serums, Brightening Skincare Products, Layering Serums, Collagen Booster, Appearance of Under Eye Circles

PRICE POINT

Another important aspect we frequently have to navigate is advertising products typically priced higher than the average purchase on Amazon, which impacts advertising in many ways, from lower click-through rates to longer conversion windows and higher new customer CPAs. Over the years, we have built out best practices for advertising, knowing what beauty customers are looking for by product type and what it takes for them to consider a product priced 60%+ over the category average.

The numbers don’t fit the typical PPC mold and thresholds standardized across Amazon or what you might experience at an agency managing multiple categories/products. With our collective experience and historical performance data, we’re better able to determine the path to purchase for the skincare shopper and utilize advertising to stay close to the most qualified shopper consistently.

Brands priced in the top percentile on Amazon have to understand that new customers will cost more than brands that hover at or below the market average– up 7x to 10x what it will cost to retain your existing customers, especially with the cost of Amazon CPC’s increasing by 20% on average in 2022. Focusing on developing metrics that show the more significant impact of advertising long-term; on new customers, repeat purchases, new subscribers, and market share. 

BUILDING TRUST

Advertising will get customers to your page, but having the right content and incentives will get those customers to convert. Skincare and beauty products require delicate care when it comes to utilizing the right content in the right places. Customers are looking for validation that this product will meet their needs, and we only have so many seconds to align the content to those needs. 

We work to insert content into your titles, thumbnails, bullet points, and A+ content that proves to the customer your brand’s product is the perfect fit for them. Specifically for skincare products, we must build efficacy through citable clinical research, consumer studies, accolades and awards, esthetician verifications/recommendations, and substantiated product claims. All of these aspects are incredibly important for demonstrating the potency, concentration, and viability of your products and positioning your brand for high organic and paid conversion rates on Amazon. 

LETS CHAT

We’d love to hear from you and align our expertise in advertising beauty and skincare products on Amazon. We specialize in beauty and are obsessed with knowing the evolving beauty consumer and ensuring ads capture the right customers for your brand.

Gen Z: The Digital Discerners of Skincare Brands

Authors: Luminary Retailers in Collaboration with the CU Digital Marketing Team including, Jacob Allington, Graham Bryant, Alia Burton, Emmily Chang, and Joelle Trubowitz

Gen Z is revealing itself to be a fascinating marketing conundrum: they have a combined spending power of $360 billion, yet are reported to save an average of one-third of their income (source). This thriftiness is attributed to growing up during the 2008 recession and graduating into the economic uncertainty of the COVID-19 pandemic. 

In spite of this, Gen Z is the generation that spends the most on skincare products (source). Of all things, why does this industry thrive among the younger generation while so many other products flounder? This demographic’s purchasing behaviors are driven by many factors, but first and foremost Gen Z cares about quality and the science behind their products of choice (source). The importance of quality is evidence of the market’s willingness to purchase products with higher perceived efficacy. As the first generation to grow up immersed in social media, they are well-equipped to identify hollow marketing and, instead, favor data-driven results. More than any other generation, Gen Z wants to look behind the curtain and see the truth of what they are buying.

Research conducted by Luminary Retailers revealed several insights on Gen Z purchasing patterns. They  prefer spending their beauty budget on skincare, with an average of 3-4 products in their routine.

When deciding on products to add to their beauty shelves, Instagram is the most influential social media platform, with TikTok coming in a close second. Gen Z shoppers are also highly likely to navigate directly to Amazon when they see a product they are curious about on social media. And the top motivator for them to finally hit that “Add to Cart” button: Product reviews from shoppers just like them, as cited by 67% of survey respondents. 

In fact, when looking at successful beauty brands in the Amazon landscape, we have found that brands with a stronger efficacy validation perform much better with customers than brands without. Beyond customer reviews, consumer efficacy validation may include:

• Verified clinical studies (Amazon requires sources for studies as part of their policy)

• Recent industry accolades (less than 18 months old, such as yearly or top beauty awards from media outlets such as Allure, Byrdie, Women’s Health, etc.)

• Dermatologist/Esthetician formulated or recommended

• Consumer studies featuring before and after pictures (sources required as well)

These features can result in significant improvement in performance metrics such as:

• 18% higher average daily sales per product

• 7% higher review rating

• 13% higher repeat purchase rate

• Higher growth rate in YoY Subscriptions, by up to 60%

     Further research from Luminary Retailers showed that 72% of respondents are enthusiastic about repurchasing effective skincare products and an increasing 59% stated that their skincare budgets are on the rise. This further supports that Gen Z is willing to invest in high-quality products when they are proven to deliver results, despite their economic prudence. With Gen Z's spending power continuing to rise, brands who have an effective Amazon presence can significantly improve brand awareness within this demographic, resulting in increased topline sales and loyal, repeat customers.

Brand Spotlight: Mother's Shea Founder Naa-Sakle Akuete on the Amazon Black Business Accelerator Program

Authors : Luminary Retailers in Collaboration with the CU Digital Marketing Team including, Jacob Allington, Graham Bryant, Alia Burton, Emmily Chang, and Joelle Trubowitz

Naa-Sakle Akuete couldn’t help but notice a concerning statistic: shea butter was on its way to being a 3.5 billion dollar industry by 2028, yet the 16 million women harvesting the nuts to make the butter rarely saw any of the profits. Unwilling to let this industry continue to leave women behind, she launched Eugenia Shea and Mother’s Shea. These two personal care brands focus on the entire supply chain of their products, working directly with the nut pickers, buying at a premium price, and channeling 15% of the profits back to the families of the pickers.

In order to grow her business and reach more customers, Naa-Sakle turned to Amazon. This decision led her to Jessica Lukon and her company, Luminary Retailers, an Amazon Account Management agency that helps brands elevate their Amazon presence. Luminary immediately recognized the potential of Naa-Sakle's mission-driven business and was eager to help her succeed on Amazon.

The partnership between Mother's Shea and Luminary has been a game-changer for the brand. Luminary connected the brand with the Black Business Accelerator program, which provides grant support, visibility, and additional marketing opportunities for Black-owned businesses. This partnership has given Mother's Shea access to resources and support that they may not have had otherwise.

“Working with Luminary has revolutionized my Amazon game. I found Jessica after at least three failed Amazon consultants/agencies, and I was drawn to her and the team immediately. No shade at the men out there, but I love working with female led teams — in addition to being driven and talented, they are often able to combine their industry intelligence with an incredible level of emotional intelligence. The resulting partnership has been flexible, seamless, and cognisant of everyone’s needs.”

— Naa- Sakle Akuete

In  partnership with Amazon's Black Business Accelerator program, Luminary has helped Mother's Shea increase brand exposure and awareness. Amazon’s Black Business Accelerator (BBA) supports Black-owned businesses to build sustainable growth by offering limited opportunities, strategic business guidance, financial assistance, and marketing and promotional support. While participating in the program Mother’s Shea has seen a 36% increase in sales.

Over the last year, Amazon’s Black Business Accelerator provided Mother’s Shea with numerous exclusive opportunities including site banners and primary page placement, marketing and advertising support, access to limited promotions, influencer opportunities and deeper dive listing analysis. For example, actress Tracee Ellis Ross live streamed the product and Mother’s Shea saw a 5% increase in order item session percentage during black history month.

When asked about the support and benefits provided by the Black Business Accelerator program, Akuete highlighted the 1:1 guidance, access to consultants, courses in business management, grants, and contributions to Amazon ad spend: “All of these resources have been incredibly helpful in understanding how Amazon works and optimizing the available tools.”

Akuete has been impressed by the impact Amazon has had on her business. The platform has given her access to a massive audience and allowed her to reach customers who may not have discovered her brand otherwise. Mother's Shea is currently available in about 5000 retail stores nationwide and Amazon is projected to make up about 20% of the brand's total sales in 2023.

When reflecting on the impact Amazon has had on her business, Akuete noted:

“Literally hundreds of millions of people use Amazon not just as their first shopping source, but also as a product search engine and source of discovery. It’s the difference between essentially only being visible to someone typing our specific url into their browser to find us vs searching ‘body moisturizer’ in Prime and finding us — Luminary gave us access to a source of revenue that was completely untouched for us before.”

— Naa-Sakle Akuete

The partnership between Mother's Shea and Luminary Retailers is a great example of how a mission-driven business can succeed on Amazon with the right support and guidance. By working together, women-owned business, Luminary, is helping to empower women in the beauty industry and create a more sustainable and equitable future.