According to the consulting firm EY, the market for cosmetics is expected to grow by a factor of two over the next ten years. It should be excellent to jump on board and launch your own cosmetics company… Or not? What will be the biggest challenges for beauty brands in 2021?
Competition Pandora’s Box
Cosmetics brands now compete with national and international businesses due to the recent increase in new cosmetics brands and the growth of e-commerce. Everybody that ships to the same nation is in competition with them. The choices are expanding dramatically as more people gain access to websites like Amazon, eBay, Allegro, Souq, Alibaba, and others.
As cosmetics costs decline, it becomes more challenging to provide something special to your customers.
Need for an omnichannel retail strategy
Cosmetics are not currently available only in drugstores. They can be purchased anywhere! From pharmacies, shops selling their own brand of cosmetics, various locations, and newspaper shops to online pharmacies, pure players, the manufacturer’s own e-commerce, Instagram shop-now postings, Facebook shops, and selling straight via live chat…
Are you need to be accessible everywhere? No, but you can increase your sales by using more platforms to market and/or sell your products. As a general guideline, go where your audience is!
The loyalty programme KIKO Rewards was in operation from 2017 until July 20, 2018. Currently, it is being updated, and a new programme called KIKO KISSES is being introduced; it is already available in the UK. Once further details about the new loyalty programme are revealed, including if it will be launched in all of their nations, we will update the post.
Either offline (in the store) or online registration is available for the KIKO Rewards programme (on the website or by downloading their app).
The programme offers two key advantages:
All registered users receive exclusive discounts by email or app, occasionally with free gifts, free shipping, and occasionally with a specific in-cart discount (usually they last 1-3 days maximum). These promotional offers DIFFER from those delivered to subscribers who sign up for the newsletter. In my opinion, the KIKO Rewards programme offers better/more frequent discounts than merely signing up for a mailing.
Getting points: You can later use them to buy certificates (and combined with other promotions)
Your accumulated points can be used on a physical KIKO Card (which can be used in physical stores) or an online KIKO profile (which can be used for an online store or as a phone app card that you can use in physical stores instead of a physical card).
How do they manage their budget for promotions?
Promotions are routinely A/B tested in both the same nation and elsewhere. For this reason, they have created various promotions with various durations in various nations.
Some nations offer more free gifts, more free shipping, and more discount vouchers. Everything is continually tested and improved, taking campaign ROI into account as well.
Discounts of up to 70% of the product price are offered to some nations, but only to 50% in others.
In essence, KIKO has created an omni-channel approach with a low-cost customer acquisition as its main goal (placing shops in popular places, a wide online presence, a newsletter optimised for conversion, working with influencers, and user-generated content to bring brand awareness – which are, indeed, cost-effective methods). They continually update their portfolio, optimise it, and add a mid-priced innovation. A smart price approach (discount coupons, targeted promos, in-cart discounts) and a gamified rewards (loyalty) programme are what actually assist them to survive in those competitive times (which helps them to retain the customers and convert them in free brand ambassadors). This case study demonstrates a solid method for fostering client loyalty, in my opinion.