The online beauty category among Internet Retailer’s Top 1000 retailers grew 23.6% in 2017 to reach more than $5 billion in web sales, according to Internet Retailer data. It outpaced the U.S. e-commerce market’s 15.6% growth rate in 2017 and the overall Internet Retailer Top 1000’s 18.5% growth rate. However, online sales in the beauty category make up just 4.0% of the category’s overall sales.
Among the 27 retailers in the beauty category in the Internet Retailer 2018 Top 1000, Glossier Inc. had the highest growth rate at 275%. Online sales accounted for 97.1% of Glossier’s total sales in 2017.
Leading online retailers in the beauty category
Glossier, No. 175 in the Internet Retailer 2018 Top 1000, launched in 2014 as a spinoff of Into The Gloss, a blog that features interviews with models, makeup artists and other influential women. Over the past four years, the beauty “mostly digital” retailer has evolved into a maker of a wide range of beauty products.
The next-highest growing beauty retailer in the category is Kosé Corp., No. 370. The Japanese skincare and cosmetics retailer grew web sales 125% in 2017 and 85% in 2018. Kosé launched in 1946 and expanded into North America and Europe in 2014 after acquiring cosmetics retailer Tarte Cosmetics for $135 million. Since then, Kosé has grown consistently year over year, with a compound annual growth rate of 59%. But overall, the skincare retailer’s online sales accounted for just 12.4% of its total sales in 2017.
Harry’s Inc., No. 218, which was founded as an online-only subscription service in 2013 for men’s grooming products, grew web sales 95.0% in 2017 year over year. It has also expanded from selling only online to having a selection of products available in Target (No. 17) and Walmart (No. 3) stores.
Cosmetics retailer Ulta Beauty, No. 91, had the fourth-highest growth rate in the beauty category, increasing web sales 64.7% in 2017 year over year. Still, web sales only accounted for 9.7% of overall sales. Mobile now accounts for 54% of Ulta’s total e-commerce sales in 2018, up from 46% a year earlier, the beauty retailer says. Purchases in 2018 from its Ultamate Rewards loyalty program members now account for more than 95% of its total company sales. In 2017, Ulta grew its active loyalty members by 18.8% to reach 27.8 million active members. It now has around 30 million active loyalty members.
Beauty brands make up nearly half of the category
The beauty category also encompasses 13 cosmetics and skincare consumer brands such as the Estee Lauder Cos. Inc. (No. 70), Chanel S.A. (No. 171) and L’Oréal S.A. (No. 288). The latter of which is making waves with technology: L’Oréal in March 2018 acquired Canadian beauty tech company ModiFace for an undisclosed amount, gaining tools for customers to test make-up and lipstick online and turning smartphone cameras into mirrors to predict how products will look on their own skin. Modiface also powers mobile apps for LVMH-owned Sephora (No. 131) and Estee Lauder.
All together, beauty brands make up 41% of the total beauty category online sales.