Melissa O’Keefe, Innotrac.

It’s not really news that online retailing is growing. For many years now and continuing through the third quarter of 2013, online retail sales growth (13%) outpaced total consumer retail spending (5%) by a wide margin, according to comScore, with ecommerce claiming an increasingly larger share of discretionary spending.

Similarly, Holiday 2013 stats show 2.7% growth in overall retail sales and 10% growth in online sales over 2012.

While online sales growth is spread across a wide variety of categories, this is especially true for Beauty and Personal Care, according to a study by the think tank L2, where 29.1% growth is expected online vs. 6% in total sales growth for the category.

Recognizing this trend, Innotrac conducted a study of beauty and personal care online retailers in September of 2013 to evaluate and analyze the consumer experience. Innotrac has been studying online consumer experience since November 2011, conducting benchmarking studies of the online retailing industry six times per year, evaluating how 230+ top retailers perform across 95 data points including retailer policies, shipping and delivery, packaging and other customer touch points, returns and live customer service.

In this special study, conducted in September 2013, orders containing beauty and personal care products from retailers from Health & Beauty, Mass Merchant and Housewares categories were evaluated and compared to orders against general online retailing industry studies, identifying trends, unique challenges and opportunities of Health & Beauty online retailing.

The study uncovered a few areas of particular interest for online beauty retailers:

1. Speedy Delivery – Health & Beauty retailers are speedy! 70% of orders in the study were delivered within 3 days while this

Consumers want speed, security and more when shopping online.

averaged 45% of retailers delivered in this timeframe in our standard studies. Why? While there is a small difference in the average number of days in transit (0.34 days), the real reason for the faster delivery times to consumers lies within the retailers’ ability to get the product out of their door and into the hands of the shipping carriers. Health & Beauty retailers were able to ship their products more than twice as fast with an average of 1.04 days from order placement to shipment, vs. 2.1 days.


2. Shipping Charges – A majority of Health & Beauty retailers (57%) did not charge for shipping. In general industry, studies showed 43% of orders with no shipping charges. The one notable exception is on Cyber Monday where 58% of orders had free shipping. If you exclude Cyber Monday orders, only 38% of orders have no shipping charges.


The average shipping charge in the Health & Beauty study was $2.55 less than the average charge in other studies. One reason for lower shipping charges and higher incidence of free shipping could be the size and weight of Health & Beauty products vs. products from all categories in the general study.

3. Order Packaging – Health & Beauty products can be smaller, lighter in weight and more fragile than products from other types of retailers. This impacts not only the shipping costs, and ultimately charges, it also impacts packaging.

The orders in our special Health & Beauty study:

• a. Were 25% more likely to include external branding – this demonstrates the importance of branding for Beauty retailers.


• b. Were twice as likely to be placed in an inappropriate sized box – retailers struggled with finding appropriate package sizes for smaller beauty products. Inappropriate package sizes lead to higher shipping costs and contribute to damaged packages and products.


• c. Were nearly twice as likely to include packing materials – the relative fragility of beauty products as compared with the products in our general studies together with the increased incidence of inappropriate sized packaging results in the need for more packing materials.


• d. Used different package types – a majority of packages were sent in corrugated boxes, which is always the case. However, we typically see 17-20% of packages sent in unpadded mailer bags. Because of the nature of beauty products, we saw only one of these in our study and that actually resulted in a damaged product. Beauty retailers in our study used more tri-fold boxes and padded mailer bags and less unpadded mailer bags.

4. Free Returns – A majority of Health & Beauty retailers, nearly 60% provided free returns. This is a stark contrast to the industry as a whole, where only 24% of orders had free returns.

Interestingly, only 53% of retailers mentioned free returns as a part of their returns policy. The 7% of retailers who did not advertise their free returns policy could be negatively impacting their conversion rates. A consumer behavior study conducted in 2013 found that nearly 70% of consumers report reviewing a retailer’s return policy prior to making a purchase and both the ease and cost of returns have been highlighted by these consumers as factors impacting purchase and recommendation decisions.

5. Auto-renewal – Health & Beauty products by their very nature lend themselves well to requiring replenishment. In fact, a study conducted by AT Kearny of online retailing in the beauty and personal care space evaluated the motivations, behaviors and preferences of online consumers. They categorized 56% of consumers as “creatures of habit” who value convenience and price.

This largest category of consumers is well suited to take advantage of auto-renewal or subscription models in which they will automatically be shipped replenishment of products on a scheduled interval, often at a discount. We found only 21% of retailers in our study offered auto-renewal, a potentially wasted opportunity to secure repeat orders.

6. Samples – Unique to Beauty retailers is the offering of samples as a part of the order process. In our study, 32% of retailers offered free samples or gifts as a part of the ordering process.

In this case the consumer is notified that samples will be included with the order and often allows the consumer to choose the sample from a handful of options. Upon receipt of our orders, we found that 59% of retailers included inserts or other items, such as perfume cards, samples and discount offers that were not selected at order time.


To sum it up…

Today’s online beauty retailers most often ship their products fast and free, offer free returns, use branded and appropriate type and size packaging, and provide samples. On top of that, the best retailers allow consumers to select their samples and provide auto-refill options.

ABOUT THE AUTHOR: Melissa O’Keefe is the senior director of marketing & eCommerce at Innotrac, a best-in-class commerce provider that integrates technology, fulfillment, contact center and business intelligence solutions to support global brands.