At the L2 Academy held at this week’s DLD event in New York, L2 co-founder Maureen Mullen spoke about Amazon’s reliance on discounts to promote sales. Even though few prestige beauty brands officially distribute on Amazon, many of their products are found on the platform – sold at a perceived discount. Take, for example, this mascara from Dior, which a third party seller is selling for $26 on sale from $53 while the original price is $25 of Sephora.
While the egregiousness is unique to Amazon (who takes no responsibility for third-party listings), the reliance on discounting to sell is not. L2’s Insight Report on Pure Play Beauty E-tailers finds the excessive use of discounts has led prestige brands to tighten up their distribution on these channels.
Personalized marketing emails that update consumers on discounts, new products and loyalty program offers are used by Beauty brands and e-tailers alike. However, e-tailers send emails featuring promotions at 1.74x the rate of brands.
Prestige Beauty brands have adopted a cautious approach to e-tailer distribution. Just two brands (Dermablend and Origins) are making more than 20% of their SKUs available on an e-tailer.
A few brands use e-tailers for excess inventory. Forty-one percent of Burberry SKUs on Amazon and 54% of its SKUs on Net-a-Porter are not available on the Burberry brand site. However, for Birchbox and Net-a-Porter (exceptions to the discounting prevalence among e-tailers) unique SKUS are most likely limited edition stock than past-season inventory.
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