It will be interesting in the days to come to see how Sally Beauty withstands the tide of the behemoth of the Amazon. How will Amazon's beauty ambitions impact on Sally's Beauty?
On Monday Amazon.com Inc unveiled its online professional beauty store to sell supplies to licensed professional stylists, barbers and estheticians, weighing on shares of other beauty retailers. Reuters reports It would sell a wide range of brands from Wella Color Charm and RUSK to OPI Professional, and other supplies typically found in salons and spas, Amazon said in a blog post here.
Following Amazon’s announcement, shares of beauty retailers Ulta Beauty Inc fell about 3% and those of Sally Beauty Holdings plummeted 9%. Amazon said the buyers would need a state-issued cosmetology, barber, or esthetician license to purchase products. The company started in the 1990s as a bookseller and now has its footprints in sectors from cloud computing to groceries.
Sally Beauty is a B2B business model, they are selling beauty supplies to hair salons, barbers, nail salons etc. Amazon are prioritizing higher margin businesses and this is one of their moves into this industry. This is one of the highest margin eCommerce business out there. Amazon look like they are heading to the B2B market to establish their name within this industry. If they are able to penetrate it, it could help their profit grow.
Amazon check out experience is pretty
, how are they going to manage this CRM experience for the shopper, speaking from the perspective of a shopper who likes to have a consultant sometimes help me with this experience. I am hearing that for product replenishment this might be okay for Amazon.
However on the discovery of new products side, new brands, which speaks to the beauty enthusiast. I have been hearing that this could be a tougher nut to crack. When it comes to the high end prestige brands where some companies have spent decades building their branding and their brand awareness. I am not sure whether they would be willing to sell to Amazon?
Amazon is not going to offer the 1 on 1 personal experience that you get with your beauty brand consultant, on in store advice. There are many other beauty brands who are pushing back against Amazon. Much like Glossier, who are focused on branding and marketing and catering to their audience.
Beauty is a very fragmented market - with every body having their own niche. Some have very strong digital properties, some a mix of digital and real properties. I am hearing the Amazon is going to learn from using this B2B foray to experiment in this industry with the replenishment sales. Which could me Sally is doing the leg work for Amazon by introducing the new products and brands, with Amazon capitalizing on their prices and quick shipments for replenishment.
Amazon doing what it does best will then scale up the experience from this. With Beauty businesses facing tighter margins, obviously price for products is going to matter as it will effect their profit margins.
Stay posted to see how Sally Beauty reacts with this new push by Amazon into their playground.