Thursday, February 29, 2024

Amazon sees jump in demand for premium clothing and beauty products

New Delhi: Online marketplace Amazon is seeing a clear trend of consumers buying more expensive clothing, watches, beauty products, and pricey footwear on its platform. This is a sign that e-commerce platforms are now seeing a shift from value-focused purchases to more expensive ones.

“There is a very clear trend on premium products across customer segments—beauty, fashion, even on mobile phones, people are trading up and that comes from more disposable income as well as a larger middle class,” said Saurabh Srivastava, vice president, Amazon Fashion India. Srivastava looks at both fashion and beauty in the online beauty marketplace.

Fashion and beauty is one of the largest and one of the fastest-growing categories on Amazon India.

“The online fashion and beauty market, by some estimates, is already over $11 billion dollars; it is estimated to grow at a 35% CAGR till 2028. So this is a huge opportunity. We are seeing that in certain categories—there’s huge acceleration. In some categories we are selling 2x, in some categories, it is like 14x, mostly focused on premium products. If you look at luxury beauty, we are growing almost two times than we were,” Srivastava said as the company announced its latest fashion and beauty trends report.

Amazon opened its global beauty store in May with brands such as Forest Essentials, Kama Ayurveda, O3+’s Professional, etc. However, the portfolio for now only consists of a few up-market brands when compared to what rivals Myntra and Nykaa offer vis-à-vis their international beauty portfolio. Nykaa, for instance, has a large selection of foreign beauty brands, some exclusive to the platform. Customers are asking for international beauty brands, he said.

Meanwhile, Srivastava said fashion and beauty have become a big hook to draw first-time shoppers at Amazon. Fashion and beauty is now the biggest customer acquisition category for Amazon. “So if you look at new customers that this category acquires, it is the largest category on Amazon India. After customers shop for fashion and beauty, they go on to shop for other categories like mobile phones and television sets,” he said.

Amazon has seen greater demand for international footwear and athleisure clothing.

To be sure, fashion has overtaken mobile phones to become the single largest category for online commerce companies. Although mobile phones dominated the category divide in FY19, fashion is now the single largest category whereas beauty and personal care, grocery, and home categories are the fastest growing, according to a May 2023 note by consulting firm Redseer.

“Over the last three years, new users who are willing to try e-commerce throughout the country have increased and non-metro users account for a large share of the total user base in FY23. As a result of the category mix evolving towards non-mobile segments, the overall take rate of the e-tailing industry has improved to 1.2x from pre-covid era,” it said.

Srivastava said tier 2 and tier 3 markets are now a source of growth for the company’s fashion and beauty business.

“More than 50% of our customers are now coming from tier-2 and tier-3 cities. In these markets, access to products is also very important,” Srivastava added.

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