In particular, health and beauty businesses had to evolve rapidly to accommodate the massive shift in consumer values and expectations. After a sharp decline in sales, these industries bounced back to become two of the largest growing areas of e-commerce. Both buyers and sellers in health and beauty have an opportunity to take advantage of these changes to make the most of their sales.
THE RISE OF E-COMMERCE
Before COVID-19, indie brands dominated Amazon, but when department stores closed, big-name brands saw the writing on the wall. They geared up their websites for online sales, went to Amazon and negotiated deals. Amazon started upping minimums, and its advertising prices doubled. Meanwhile, manufacturers freed up space for the production of pandemic-related products by cutting off smaller companies that ordered less. Without the financial wherewithal, many indie brands were unable to pivot. It became harder for them to get supplies, and many were crushed. With less competition, however, those that survived now have the perfect opportunity to sell, merge, or even put things into overdrive.
E-commerce is the fastest-growing segment of health and beauty, so buyers or sellers can add value to a business by investing in its internet presence. If your sales are naturally growing, jump on those areas where your business is doing well. If you’re already online but make your bread and butter mostly on Amazon, reinforce that advantage with more knowledge, more training, and a more competitive understanding of how Amazon works. Or, build up a Shopify store. Add new products, a better SEO strategy, or new advertising methods, and find new ways to drive business to your e-commerce stores. Reinforce the market’s natural growth toward e-commerce by upping your e-commerce game.
BRICK AND MORTAR IS ON SALE
With brick and mortar (B&M) sales declining, especially in the health and beauty industries, yours can be the business that finds less resistance and more opportunity by opening up sales at a B&M venue. Despite e-commerce booms, most customers still prefer an omnichannel experience with both physical and online fulfillment options, so consider adding a B&M presence to your e-commerce strategy. The brands that best combine the online and in-store experiences will do a better job of drawing customers into their physical location and collecting valuable data to keep improving their offerings.
While prices per square foot may have gone down, not every small business can buy its own retail space, so take advantage of existing powerhouses like Costco. Since the pandemic, Costco has amped up its health and beauty offerings with an eye toward indie brands, so even if you’ve never gotten into Costco before, the opportunity now is prime. From Whole Foods to your local neighborhood pharmacy, businesses are having a harder time stocking their shelves, which gives you an opportunity to swoop in with something to fill them. With everyone else focused on e-commerce, now can be an easier time to get your foot in the door.
PAY ATTENTION TO WHAT’S NOT MAKING MONEY
In business, we have a natural tendency to keep doing whatever makes the most money, but the other side of that is ignoring areas that could be making us more money. A company might only choose to reinforce Amazon and Shopify because 90% of its income comes from five SKUs on those sites. While you should be focusing on what works, the hidden gems where your company is missing sales can bring in big rewards.
If 90% of our income is coming from five SKUs on Amazon and Shopify, I can keep boosting those areas, but growth is limited and harder to come by. That other 10% coming from another 50 SKUs through other avenues, however, has a lot of room for improvement, especially if they’ve long been ignored. A bump from 10% to 50% would lead to huge growth. Don’t drop what you’re doing, but put some time and attention into those other products, projects, or distribution methods. Maybe they weren’t really doing anything for you before, but now is the time to get them started.
DECREASING SALES IS A HARD NO
Never sell or buy a brand with declining sales—you’ll get hammered. Declining sales might be administrative rather than market-based, but you can never know for sure. I recently turned down a small brand doing about $1 million a year and making $100,000 in profit because its declining sales made it worthless to me. If I can do enough research to guarantee that the sales dip is because people are doing a bad job, I can buy that brand, do a good job myself, and double it overnight. But spending money to boost sales if the market is no longer interested in a company or its products would be like throwing money away.
If you’re selling and see reasons why your brand is starting to slip, now is the time to fix it, or none of the above will matter. A brand I once bought with only slightly increasing sales is now roughly 20 times the size today because even a small increase can make the difference. An upward trajectory, no matter how small, shows the buyer that the market generally accepts a company and its products.
THE RISKS ARE WORTH THE REWARD
It can be scary to take risks in the face of so much change. Sticking with what’s working may not hurt your health and beauty business, but with so much excitement in the industry, it probably won’t help, either. Trends in e-commerce and in-store shopping both bode well for health and beauty sales, making it the best time to overcome your fears, take some risks, and find success. The sooner you jump on these opportunities and adapt, the sooner they can benefit your business.