Why Amazon’s Private Label Beauty Brand Matters
Amazon has launched private-label beauty, and U.S. retailers need to be paying attention.
Amazon's first private-label skin-care line, called Belei, has 12 stockkeeping units that hit all major trends: free-from, earth-friendly packaging and affordable price points, said Wendy Liebmann, chief executive officer at WSL Strategic Retail.
"They have ticked a lot of boxes in terms of hot trends," she noted. And while they may not have nailed it in terms of branding — Liebmann referred to the line as "generic" and compared it to Target's private-label efforts 15 years ago — it's likely the hordes of shoppers that are already on Amazon will be willing to give it a go, she said.
She cautioned that for Belei to last it will need a distinct brand identity, plus the levels of in-house brand support found at places like Sephora or Boots.
"Can they do business? Of course they can, it's Amazon," Liebmann said. "The beauty world has become so fragmented and shoppers are so informed and smart about what's out there, and also willing to expand their interests and try new things. If I'm Ulta, if I'm Sephora, if I'm anybody who is selling beauty as a retailer, I'd be foolish not to pay attention."
It remains to be seen how successful Belei will be. The line launched on March 20, supported by coordinated press efforts and an event that influencer Olivia Culpo posted about on Instagram.
But according to Liebmann, even if this particular beauty project doesn't take off, Amazon is likely to try and try again — like it has in fashion. "If it's not this time, it's next time or the time after, and that's one trip that goes out of the skin-care aisle," she said.
Liebmann also noted that efforts around Belei are similar to Sephora's early-day private labeling. "When Sephora really struggled to get some of the big luxury brands to go there in the early days because the department stores said no.…Sephora decided not only would they have the LVMH brands, but they would incubate their own brands, and that's been a massive driver," Liebmann said.
Thus far, Amazon has had a hard time luring brands, especially high-end lines, to its platform. Many of those lines have hesitated to partner with Amazon because of retailer conflicts, and concerns over control and data. Amazon has been able to lure some brands with the promise to shut down gray market sellers. Today, Amazon Luxury Beauty sells products from Sunday Riley, Oribe, BeautyBio and Burberry, and other brands. But some of the bigger brands, including all of the Estée Lauder Cos. Inc. lines, still do not sell directly on the platform.
“To date, Amazon uptake by prestige beauty brands has been insignificant, although we are hearing from more indie brands that exploring and distributing on Amazon has proven productive,” Jefferies analyst Stephanie Wissink wrote in a note. “It’s become increasingly competitive to get into places like Sephora and Ulta; as a byproduct, we expect Amazon to gain access to a growing number of small brands, those desiring to take back volume control from marketplace sellers.”
Wissink estimated that as Amazon develops in beauty, it could potentially scale up to 10 percent market share.
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