Amazon has been making moves to conquer the Beauty industry since 2013, when it opened a luxury beauty store. As of now, Amazon poses a more serious threat to retailers that specialize in non-prestige beauty and personal care products (e.g. Walgreens, Target) than it does to Ulta or Sephora.

Amazon’s beauty shoppers gravitate towards lower price points. Eighty percent of Amazon’s top-selling skin care and cosmetics products cost less than $20 vs. just 8% of Sephora’s top products and 20% of Ulta’s. Part of this breakdown is because higher-priced beauty brands are hesitant to post on Amazon: Just 30% of prestige beauty brands distribute on Amazon as the rest fear damaging their reputation.

However, much of Sephora and Ulta’s success is due to their ability to curate unique product assortment. Anastasia is the only best-selling brand overlap among the three e-tailers. And while Benefit Cosmetics, bareMinerals, Tarte, Too Faced and Urban Decay are top products on Sephora and Ulta, both brands have best-sellers unique to them. Sephora, especially, is known for its discovery and distribution of indie products like Sunday Riley and Drunk Elephant. (On average, Ulta’s top skincare brands were googled three time more in the past year than Sephora’s.)  Furthermore, its effective distribution network – which jumpstarted the success of many small brands – incentivizes more brands to seek partnership with the retailer.

It would be a mistake to think Sephora and Ulta’s upper hand on Amazon is permanent. Amazon’s shoppers have proven to be price-insensitive, affluent, and young: the ideal cocktail for aspiring beauty brands. Furthermore, ease of distribution on Amazon (all are welcome versus Sephora’s deliberate selection) can drive smaller brands to seek distribution on the e-tailer while creating their own marketing relationship with the consumer. And, since beauty is replenished, once fans discover and convert to a product they can seek it on alternate retailers. Ulta and Sephora must continuously provide incentives for users to repeatedly purchase from them, and think of new ways to Amazon-proof their shops.

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