Is India a Growing Market for Beauty Startups?

While the pandemic did impact people, brands and spending, the beauty industry was fast to read and analyze consumer behavior - they made an interesting pivot and re-strategized both product innovations and marketing strategies.
Is India a Growing Market for Beauty Startups?

India is a country where beauty is steeped in the very roots of our being. The inventors of Ayurveda, the lovers of DIY and to now the era of experiential consumers who are constantly looking for something new and innovative to catch their eye. It’s no surprise that estimations suggest India to expect an annual growth rate of 25 percent in the cosmetic industry, going up to a projected size of US$ 20 million. 

While the pandemic did impact people, brands and spending, the beauty industry was fast to read and analyze consumer behavior - they made an interesting pivot and re-strategized both product innovations and marketing strategies. To top it off, if the digital revolution wasn’t already on its ultimate high, this year took it to a leap that was unimaginable. So, if there was a time for you to consider entering the beauty industry as a startup, it is now. 

E-commerce Continues to Boom

A growing demand for convenience and product availability made it imperative for businesses to have an online presence. Today’s consumer is always online, they no longer depend on local beauty stores for research, but in fact look at social media, online marketplaces and websites.There is a surge in e-commerce sales which will continue to accelerate in the post-pandemic world.

Studies show that 19 percent of the people bought beauty and personal care products online for the first time during the COVID-19 crisis. This beauty digitalization through apps is a great opportunity for beauty entrepreneurs to bank upon. Consumers prefer apps for a convenient purchase, virtual try-ons and consumer reviews have become an alternative to the in-store experience. What’s more, technology has given a headway to personalization and thorough research, giving consumers an experience like never before. 

Conscious Consumerism

Rising awareness of beauty products, increasing attention on personal grooming, changing consumption patterns and constant dialogue towards sustainability has given rise to today’s conscious consumer. They are becoming more concerned to avoid nasty chemicals and companies whose methods are harmful to the environment. With the growth of organic products, synthetic compounds like propylparaben and butylparaben are not considered to be safe to be used. Just 35 percent of beauty products today contain parabens, down by nearly 7 points over the last two years. This shift in consumer behaviour has urged startups to market themselves accordingly. The outbreak of Covid-19 has also resulted in changing consumer preferences and are proactively seeking for clean labelled and functional skin care products, which in turn is expected to accelerate the growth of brands that offer them.

Skincare: The Top Priority 

Beyond the usual requirement of everyday makeup products, there is an increasing demand for skincare products. Demand for products like sunscreens, body lotions, face serums, and creams is expected to have a positive impact on the beauty market providing the perfect opportunity for new businesses to grow. Skincare sales increased from 81 percent to 84 percent during the lockdown worldwide.  

With growing awareness and accessibility, consumers are opting for products that are natural and organic and most of all, suit the Indian skin types. Beauty startups can take these needs into consideration, which largely remain unfulfilled by international brands. Home-grown brands that promise to pamper the Indian skin with natural and organic products have gained immense popularity and with the right marketing and scaling strategy, can be seen as a business opportunity for beauty entrepreneurs.

Challenges and Future Prospects in the Startup Beauty Space

To reap the rewards of having something of your own, there’s no doubt that you will meet challenges on the way. Along with creating products that attract your audience, there are aspects of trust and transparency that are paramount. Many shoppers who turned digital in the pandemic still fear the risk of buying cheap, counterfeit products. Thus, the one of the most important things for any brand to do is to win the faith of their audience by connecting with them through multiple touchpoints and constantly communicating with them. 

Startups will have to step away from the conventional norms of launching a beauty brand and understand the evolving nature of the industry. In order to strive in the beauty industry today:

●    Build a Niche Brand - Develop products or services that are unique, effective, and reliable. This will help you stand out from your competitors and attract attention to your brand.

●    Mobilize the Power of Digital Communication to Engage their Audience - Branded content on digital platforms can create trust and provide a connection with the audience. Instagram and Facebook have launched features that enable users to make purchases from the platform directly, without having to leave the page. Build a marketing strategy using these features for a boost in sales.

●    Invest in Technology and Research - The world of beauty is constantly changing and requires innovation and research to keep up with the emerging trends. Keeping up with the latest innovations and constantly offering the market with something new and experimental will attract consumer’s attention. For example, AR/ VR enables users to try on various products through images and live videos, before making a purchase. Leading brands are using this technology to give their consumers a personalized experience. An in-depth research about the market will help you understand what your competition and the industry are working towards to stay relevant.

●    Consider Indian Skin Types and Tones while Developing the Product - Brands are turning hyper-local to provide personalized beauty solutions. A startup in the Indian beauty industry will have to ensure that its product range and services are in the line with the needs of consumers. A localized approach to beauty has proved to be successful.

●    Identify and Approach New Target Audiences - Expand your customer base by identifying and attracting new target audiences. Beauty is no longer confined by the limitations of gender. There is a growing market for men’s beauty products, moving beyond basic grooming and styling products. Investing in men’s beauty now can give you a headstart in the industry. Adopting a new and innovative approach to men’s beauty will be imperative for success.

Covid-19 had a significant impact on the beauty market and it is safe to say that the beauty industry has bounced back. The startup beauty market in India deserves praise for its ability to successfully launch innovative products at high frequency and for being able to identify and leverage nascent growth opportunities. Upcoming brands will have to put efforts in order to understand the needs of the Indian consumer in-depth and put them to use.

In conclusion, an innovative way to approach the consumers along with a great marketing strategy will ensure success to startups in the beauty world. India is set to become one of the top five global beauty markets by 2025, don’t stop yourself from becoming a part of the wave- jump in and join the hustle.
 

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