Challenges and Tactics of E-commerce for Beauty and Wellness Brands

Online shopping for beauty and wellness products has emerged in India with great competition.
Challenges and Tactics of E-commerce for Beauty and Wellness Brands

E-commerce at the most basic level is empowering people with the ability to shop from the comfort of their homes. Online shopping has shaped consumer behavior across geographies and also vice versa. For example, online shopping in America has been a game of speedy delivery and great customer service for over a decade whereas in South Asia or the Indian subcontinent it is still more of a discounting game. But with more time being spent online and the audience maturity level getting increased across the globe, we can say that consumer behavior is becoming more fluid and people are adapting to trends from across the seas. 

The last decade has witnessed tremendous growth in the Indian e-commerce industry. On one hand, we have seen giants like Amazon and Flipkart taking a big chunk of the market share in terms of the total GMV being sold online, while on the other hand, we have seen the emergence of niche companies like Nykaa disrupting the beauty and wellness segment. The question here arises, is there still more room for disruption in online commerce specifically in the beauty and wellness category? 

Being optimistic that I am, I would say it’s just the beginning and there is a lot that has to happen under the Indian sky of online commerce. The pessimist in me says, although a lucrative segment, it is definitely not a cakewalk. 

What makes Indian e-commerce, especially the beauty and wellness segment attractive is the demographic richness and diversity in cultural values. India has seen a surge in both the spending power and also the trust for online shopping across all age groups and geographic locations across the country. A couple of years back online shopping was simply confined to the metros but things have changed and the next big hotspots are the tier-II cities. The pandemic has only increased the madness and spree of online shopping. 

So let’s deep dive into the challenges one is going to face while shifting to or starting an online commerce brand in the beauty and wellness segment. 

Niche & Value Proposition - With innumerous brands popping up every day and the existence of giants and almost monopolies in this category it is getting extremely difficult to get the attention of your audience and convert them into paying customers. Operating in a niche and identifying a unique value proposition in the B&W segment will give you a competitive edge over more generic brands. The niche could be gender-specific like men's care or concern-specific like hair care. It could also be category-specific like non-toxic alternatives to conventional personal care products.  In reality, everything would boil down to a real problem and identifying people who are ready to pay for the solution you are providing. This step is the most important as it would pave the way for your brand's core messaging and in turn your connection with the target audience. 

A very generic beauty and wellness brand will either need to have deep pockets for extreme discounting and ad spending or have a unique technology aspect like hyper-personalization to actually compete and stand out in this crowded market. Nykaa could compete with Amazon and Flipkart because of its unique business model (inventory model) rather than the conventional marketplace model. This helped them solve the problem of counterfeit products that were rampant in the beauty industry. 

Value proposition would also determine your pricing strategy which if not done correctly is definitely going to kill you before you even take off.  A right value proposition placed in front of the correct audience can help you demand a 25-30 percent premium over conventional products.

Acquiring the Customer - Identifying your brand's core segment is definitely half work done but not the tough work done. The tough part is reaching out to your audience with your brand's message and converting them into paying customers. 

-    Reaching Out: From search engine optimization to social media presence and paid advertisement, the modern world of e-commerce offers us a plethora of channels to broadcast our message to the world. The deep targeting and understanding of consumer behavior that is offered by social media and search engine giants have given every David a custom slingshot to fight the Goliaths of the business world. You will have to identify every channel where your audience hangs out and reach out to them with a 360-degree experience that is non-intrusive and is native to the platform you are using.  The challenge here is to build an authentic story that is appealing and attracts the attention of your target audience. The more genuine your story is, the more it will relate to your target audience. In all the fakeness of social media, there is still a price left for authenticity. 

-    Converting: Once you have already delivered your brand's message and the audience is on your website, the next big challenge is to help them make a purchase. This would require structuring your website through psychological insights and best web practices. It would entail endless experiments of A/B testing your different versions and seeing which delivers the best result. The standard conversion rate in  B&W e-commerce is 2 percent of conversion i.e out of every 100 audiences you will have 2 paying customers. The challenge would be to reach this standard and then beyond.  One of the best ways of converting your audience is to give them the solution to their problems then and there. This can be done excellently with real-time chat tools which can either deploy AI bots for an immediate reply or human consultants. The more personalized and real-time the experience is for an audience, the higher the chances of conversion. 

Customer Retention and Loyalty - What differentiates great and successful brands from mediocre ones is the ability to continuously bring their customers back and build a loyal fan base. Everything else will evaporate in thin air. 

Customer loyalty will depend on three different factors : 
1)    Genuineness of your solution/ product
2)    Customer experience
3)    How does he benefit from being your loyal customer

If we look at all these factors, the first is the most important as it will either make or break the trust your audience entitled you with when he made the first purchase. If your product really solves the problem, the customer is definitely going to come back, if it doesn’t no matter what you offer him, he ain't coming back.

The second factor is also important because even if your product is good but the overall customer experience including delivery of the product and post-delivery queries isn’t good enough the customer is less likely to be coming back. One of the other factors in this modern social world is how you engage with your audience on social media. You should align yourself with the thoughts and aspirations of your target audience. 

The third factor is a loyalty program which is definitely going to help you in the long run. Every returning customer should be rewarded and appreciated for believing in your vision of a better beauty and wellness world. 

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