Last updated: 14 May 2015
The online sale of cosmetics presents a sizable opportunity in Brazil. In this article we will outline the size of the market for cosmetics in Brazil and how companies in this segment should approach the e-commerce sales channel.
Beauty products market and e-commerce in Brazil
Brazilians are known worldwide for their high consumption of cosmetics, as the size of the national market, valued at BRL 38 billion in 2013, is only surpassed by China and the United States in sheer volume.
This industry is solid to the point that it maintained double digit growth during periods of recession, as researchers predicted that the market value for cosmetics in Brazil should increase by 11% in 2014, while analysts forecast the country’s GDP growth for the same year at 0,2%.
During recent years, the consumption of cosmetics by Brazilians reached online outlets and turned this sector into one of the most important for the country’s e-commerce. Reports by market intelligence provider e-bit indicate that this is the second largest category for Brazilian e-commerce in terms of ordered products, with a share of 15%. Their research also places these products as the sixth category with most purchases by Brazilians who shop in foreign online stores, with a participation of 11% in sales.
Direct sales model
Though an unquestionably relevant sector for Brazilian e-commerce, some of the largest, multi-billion manufacturers of cosmetics in the country have had trouble with implementing online sales channels to their business strategy. This has to do with the traditional model of direct sales of cosmetics handled by official representatives or “consultants”, as they are known in Brazil, which for many years has been one of the main methods for purchase of cosmetics in the country.
For the largest cosmetics brands in Brazil, offering products online would generate unfair competition to the over 2 million representatives operating in the country, and in turn cause a major rupture in their strategies. This conflict of interest led one of the market leaders of this sector in Brazil, Natura, to implement a peculiar strategy to align the sales representative model with a proprietary online outlet. In 2014 the company launched Rede Natura, a social network where consumers are able to find sales representatives and have their assistance when purchasing the brand’s products online.
As major cosmetics companies in Brazil get onboard with e-commerce and implement proprietary online stores that complement their physical outlets, many other players still maintain the historic yet still profitable door-to-door sales model.
Multi-brand cosmetics e-commerce
Regardless of their business model, the major producers of cosmetics in Brazil currently face the competition of multi-brand stores which have been established on online and physical outlets in recent years. These stores commonly offer a range of premium products from international manufacturers, which compete with local brands to grab the attention of the ever-growing audience for cosmetics in Brazil.
Some of the largest e-commerce websites of cosmetics in Brazil offer ways for consumers to buy online yet still maintain the personal approach reminiscent from the sales representative model. The measures adopted by these websites include:
- Set up blogs or Youtube channels where make up artists and in some cases celebrity hairdressers, offer beauty tips and show how to use the products available from the online store, as a way to encourage consumers to use and purchase more expensive products
- Contact and partner with cosmetics bloggers by sending them products in return for the product reviews
- Establish social network accounts where consumers are able to submit questions about the products, receive tips on how to apply them and participate in contests
These online stores also follow a number of trends in terms of product offerings and discounts. For example, it is very common for product bundles to be available, containing free samples. Another popular trend is the setup of “outlet” sections, or selections of discounted products, designed to gather the attention of consumers that have already purchased the cosmetics they were looking for and would be interested in trying new products.