Flipkart, Amazon ramping up their beauty business, eye small-town shoppers

Mumbai: E-commerce giants like Flipkart and Amazon are aggressively expanding their beauty and personal care (BPC) business. Their goal is to reach new customers in smaller cities and towns, and roll out new brands as the category witnesses explosive growth, driven by rising disposable incomes.

Flipkart could double the beauty and personal care category in terms of gross merchandise value—a key metric for e-commerce firms that measures the total value of sales—within the next four to five years, a senior company official said.

“I think the opportunity is humongous; only time will tell how fast it can grow. There is potential," said Manjari Singhal, head of business, FMCG and general merchandise, Flipkart, in an interview with Mint.

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The business could “absolutely” double in gross merchandise value in the next 4-5 years, she said. Innovation led by direct-to-consumer brands, and new launches will drive repeats on the platforms, along with higher adoption in tier-II and tier-III markets. Flipkart’s BPC business is up 1.3 times versus the same period last year, she said.

BPC is among the top-ten selling categories (by volumes) for Flipkart. Last week, the company hosted a large event to engage beauty influencers on its platforms as it finds ways to push sales of serums, anti-wrinkle creams and body washes on the internet.

Singhal said consumer demand is being fuelled by innovation across beauty categories such as skin care and coloured cosmetics, especially led by new-age brands proliferating online. 

"All these new innovations being done by new-age brands; traditional brands are also stepping up. With every passing quarter we are seeing newer innovations come in,” she said.

Beauty-focused businesses are launching more products and boosting online ad spends, as they expect e-commerce shoppers for the category to more than double in 4-5 years in India.

The world’s largest beauty products company L'Oréal expects 100 million new customers in India to shop online for beauty products in the next three-to-four years. The French company draws a fifth of its sales from its portfolio of brands such as Maybelline, L'Oréal Paris, and Garnier from online retailing.

“So what we expect is that the 50 million consumers in 2023, who are buying beauty online, would in the next three-to-four years become 150 million, at least. So there will be an addition of almost 100 million beauty buyers on e-commerce. We want to lead this consumer shift, with our brands and as a group in India. Our internal estimate is that 50% of our share of growth in the next four-to-five years is going to come from e-commerce,” said Aseem Kaushik, managing director, L’Oréal India.

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After expanding four times over 2006-22, India’s beauty and personal care market will grow five times in the next 15 years, reaching GMV (gross merchandise value) of $90 billion, up from $19 billion in 2022, according to a 12 June report by HSBC global research.

It cited the widening reach of e-commerce and rising income levels as reasons fuelling this growth in demand. Currently, e-commerce sales represent just 17% of the overall BPC market, but will rise to 45% by 2037, it said.

Influencer-led digital marketing is starting to have a significant impact in India, leading to increased fragmentation of categories and the rise of many new brands as consumer preference for sustainable products increases, it added.

Meanwhile, Amazon India said it plans to bring access to quality beauty products to the last pin code in India.

“Beauty is one of the top categories via which we recruit new customers. It's very strategic from a customer acquisition and repeat standpoint. We do expect it to be one of our top categories for the platform in terms of driving growth as well,” said Zeba Khan, director, beauty, luxury beauty and personal care, Amazon India.

The online marketplace is pushing quicker deliveries for the category as well as on-boarding new homegrown and international brands. It is also roping in more content creators.

“We want to democratize beauty. We want to get beauty and personal care to the last pin code in India, give access to high-quality domestic-trending brands and international brands in the fastest time possible because speed is equally critical in this category,” she said.

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To be sure, competition in India’s beauty and personal care market has intensified over the last decade, as more beauty brands as well as retailers have entered the market. More recently, retailers such as Reliance Retail as well as Tatas have entered offline and online beauty retail citing a growing demand for the category.

However, established and existing pure-play beauty retailers such as Nykaa and Purplle also draw a significant set of young shoppers. Last fiscal, listed retailer Nykaa's parent company reported a 24% surge in revenue from operations in FY24 to ₹6,385.6 crore, with a profit of ₹39.7 crore.

All executives Mint spoke to pointed to heightened competition, but argued that the market will continue to grow given the low penetration of products such as coloured cosmetics.