Data analytics firm GlobalData forecasts the online channel will account for 15.3% of UK health and beauty spending by 2024
Beauty brands should invest in smart packaging to counter the rise of counterfeit product targeting the industry, according to data analytics firm GlobalData.
Counterfeit items in the beauty sector are primarily growing within e-commerce and s-commerce — which involves using social media to promote and sell products and services.
And with GlobalData forecasting online channels to account for 15.3% of UK health and beauty spend by 2024, it believes there should be renewed emphasis on protecting consumers buying such products.
Furthermore, it says this gives beauty brands the perfect opportunity to invest in smart packaging solutions that implement technologies such as blockchain or data-tracking technology.
GlobalData associate analyst Yasmina Tsalamlal said: “Counterfeit products hold a high risk for personal care brands, and it is imperative from both consumer safety and a branding perspective to fight against these fake products on all fronts.
“It is imperative from both consumer safety and a branding perspective to fight against these fake products on all fronts.
“It is in a brand’s best interest to invest in smart packaging solutions, especially at a time when more customers than ever are shopping via e-commerce platforms — where the shopper can’t see the salesperson or test the products in person.
“Smart packaging can give consumers that peace of mind.”
Increase in concerns around counterfeit items due to a rise in online beauty purchasing during Covid-19, says analytics firm
Over the past six months, much of the global population has experienced some form of lockdown due to the Covid-19 pandemic — pushing many consumers to shift their purchasing online.
According to research published by online researcher Adobe Analytics in August, e-commerce sales were up 55% year-over-year for the first seven months of 20202 — resulting in $434.5bn in online spending.
The organisation expects that 2020 online sales will surpass the total online sales in 2019 by 5 October.
More specifically, Covid-19 has had a big online impact on health and beauty sales.
Research firm Retail Insight reported in August that the online share of post-pandemic global sales in the industry is forecast to rise to 16.5% – surging to 23.3% by 2025.
The organisation added that health and beauty would see the second-fastest e-commerce growth after household and pet care in the coming years.
According to the report, this will largely be driven by emerging participants from pure-play retailers such as Alibaba, which has continued to add third-party health and beauty brands to its offering — while Amazon has recently invested heavily in healthcare provisions.
As such, it’s estimated that by the end of 2020, Alibaba will have generated €36.5bn ($43.4bn) in online health and beauty sales, while Amazon will have recorded €24.3bn ($28.8bn) — growth of 6.1% and 6.2% respectively.
According to GlobalData, this growth is because consumers — especially those in the younger age brackets — place great importance on getting products at the best price.
Additionally, younger consumers are more comfortable interacting with the industry online — with beauty influencers often taking to social media to promote products.
Tsalamlal said: “Unsurprisingly, Gen Z and Millennials led in the number of consumers who said they are buying more personal care products online due to Covid-19 in a recent survey by GlobalData.”
The company’s survey asked consumers (from the groups, below) whether they are buying or stockpiling more personal care products online due to Covid-19.
- Gen Z (people born between 1997 and 2015)
- Millennials (born between 1981 and 1996)
- Boomers (born from 1946 until 1964)
- Silent Generation (who were born from between 1928 and 1945)
Of all those asked, 37% of Millennials and 30% of Gen Z said they had — compared with 25% of Gen X, 13% of Boomers and 6% of the Silent Generation.
Tsalamlal explained: “They [younger generations] are tuned into social media and trends, and are — as a result — likely to be vulnerable to counterfeit products.”
The counterfeit industry has been estimated to be in the trillions — with brands in all categories looking to technology with reasons ranging from showing consumers their supply is sustainable and ethical, to tracking luxury beauty items to ensure their authenticity.
Tsalamlal added: “This is where innovation is key. With so many e-commerce touchpoints, it can be difficult for a consumer to resist a great deal on their favourite brand.
“However, if they have access to blockchain technology — whether that be via an app or directly on product packaging — everybody wins.
“Consumers get access to a safe and tested product they can trust, and brands can ensure their trademark and reputation are protected.”