Amazon Attempting To Dominate The Indie Beauty Industry
When it comes to Indie beauty brands growing in market share due to more small business owners wishing to compete in mineral makeup, skincare, organic soaps, essential oils, natural sunscreens and on and on, Amazon has taken notice as it has done in many other growing small business categories, and has now decided to launch it's own Indie Beauty Shop providing the "go to" source for customers while luring startups and small Indie company's in the promise of growing their handcrafted brand.
In this ever growing cottage industry Amazon doesn't currently have a strong foothold, but it is something they are wanting to take advantage of as natural, handcrafted brands are creating a nice niche market for themselves over commercial brands. It is consumer driven and the demand for organic, natural handmade products is on the rise.
We offer many mineral makeup products including an excellent 3 formula mineral foundation under our own Sterling Minerals brand, along with our natural, organic ONATI Skin Care line, and we were excited about the beauty shop concept as it is currently in it's infancy and only a few independent cosmetic brands are available. Others are considering their choices to join up using the new business platform Amazon is offering to some Indie Beauty Brands, but only time will tell if this will prove to be a winning partnership for beauty brands, instead of just Amazon.
Based on some research in the past and today on the Indie Beauty Shop, some entering the market with their new Indie brand are banking on it improving their chances of being seen by Amazon’s enormous customer base. In spite of the fact, their company may also be in it's infancy, not taking into account what it will take to get into Amazon's Indie business model. The setup costs can be prohibitive and the criteria isn't necessarily small business friendly.
Amazon Sets The Criteria For Being In The Indie Beauty Shop Category
We are also an Indie Beauty Company defined by creating our own formulations and manufacturing our mineral makeup products at our facility to our specifications. We do not implement 3rd party companies to formulate or package our minerals. This is essentially repackaging someone else's mineral makeup brand for private label and is something we won't do.
To become eligible for adding a small makeup brand into the Indie Beauty Shop, they needed to have exhibited at the trade show Indie Beauty Expo (IBE) within the last year, yet brands don’t have to be IBE exhibitors to be eligible. Which seems to be a contradiction in terms. What is confusing, Amazon offers another qualifier, which is the brand must be at least 50% owned by an independent operator and not be carried by major retailers, such as Target, Sephora or Ulta Beauty. *Check*
Even though Indie Beauty is still a small percentage of the cosmetic industry and many new companies have had great success offering their makeup or skincare through Ulta and Sephora, may now be faced with a new challenge since Amazon doesn't want to share in the marketing game. The new and upcoming Indie Beauty Industry is about to be elevated for those that want to pursue the new platform and it alone.
So with Sephora and others out, Amazon will take 15% on sales of products from Marketplace brands selling directly to consumers, and the brands have to pay a monthly fee of $39.99. Amazon is a behemoth of a search engine for looking for just about anything out there, and their risk of introducing the Indie Beauty Shop is very low. Amazon is known for determining what works in a business model by setting up algorithms measuring what sells and what doesn't based on category and type. After the experiment, depending on it's success or lack thereof, Amazon will pull the plug on any initiative such as a shopping show, exampled by “Style Code Live” and a flash sales site known as "My Habit" if it doesn't make the platform money.
When it comes to smaller Indie Beauty Brands, the risk of partaking in it will be quite high. Sterling Minerals, along with discussions with other Indie brands considering the new Amazon beauty shop, are particularly concerned customers will be dissatisfied with how Amazon will deliver our products to them. After our own research, it is revealed Amazon requires all Indie Beauty Shop brands must rely on fulfillment by Amazon, a service shipping all merchandise out of Amazon’s warehouses, and has to be accessible to over 100 million members of its Prime program. After speaking with Amazon reps once they contacted us about listing our brand with them, we considered the move, followed by sane reasoning, the logistics for this criteria were overwhelming and not right for our brand at this time.
Amazon Removes The Indie Experience From The Actual Creators Of Their Indie Brand
Amazon does a great job at providing super fast shipping and some discounts if you are a Prime Member on most products, and for many products it can work well. If you are not a prime member then your order can be delayed receipt up to 10 days. However, many small companies do the actual shipping directly to the customer and don't use Amazon's fulfillment centers.
In regard to allowing Amazon to fulfill from their warehouses when it comes to Indie Beauty brands of mineral makeup, organic skincare or similar, this would be removing the intimate experience we have with our customers. We use branded packaging, enclose inserts, sometimes bonus items at no charge, along with coupons at times and this seems to make our customers very happy with not only our products, but our customer service. Plus we always ship priority, and it doesn't take a membership to receive fast and qualified free shipping every day, or other free items since our customers want their minerals and skincare as soon as possible.
We have hesitated many times about selling our mineral makeup brand on Amazon for the very reasons explained, plus we would have no control over how items are packaged, stored and shipped. As simple as a small misstep from Amazon Fulfillment center could be the difference between keeping a customer and losing one. Needless to say, the customer will not be upset with Amazon but with Sterling Minerals, the provider of the product of which they ordered, and this is one of the reasons we are still not participating in the Amazon Indie Beauty Shop.
Being savvy to the tactics of Amazon, has protected our mineral makeup brand and our organic skincare line from trademark thieves that exist for the sole purpose of making money off the back of the entrepreneur, you know, the one who has actually poured sweat and tears into research and development along with many sleepless nights to strive for delivering perfection in result driven natural and / or organic products to you.
What we learned early on in the game, Amazon buyers are not our customers, they are Amazon’s customers. Plus Amazon also uses any and all sales data to see what products are the best sellers and then they recommend them as a great opportunity to other sellers. This is when Amazon shows it's true nature and it is not really in support of small businesses, especially a new up and comer Indie Beauty Brand wanting to enter into their beauty shop.
If our brand begins to outsell and out pace others, Amazon will encourage others to sell the same item, yet at a cheaper price. Or worse yet as we have seen with certain brands, Amazon will take a great selling idea and copy and brand it under the Amazon Trade Name, and consequentially at a lower price. They currently have over 70 private label brands now, and some of them are in the beauty category.
Indie Beauty Brands Need To Beware Of This Offer
Upon drilling down our homework for making the final decision for placing our mineral makeup and organic skincare on the Amazon platform boils down to this, the investment needed to set up shop in the Indie Beauty Shop is astronomical based on their prerequisites. They discussed contributing 30% of sales from our e-commerce to advertising, which can theoretically be reduced by half after our mineral makeup and organic skincare products prove to be winners.
We have no illusions with this type of marketing concept since many products fail to be seen and essentially become buried under thousands of other brands in the same category, making sales non existent unless you pay to sponsor your products through advertising. We've all seen those when shopping for a particular item. Sponsored ads become a necessity if the vendor wants to be seen, much less be found. Based on Amazon demands for this particular category, most upcoming brands or smaller independent mineral makeup, skincare and cosmetic companies will unfortunately be ill-equipped to succeed on the Amazon Indie Beauty Shop platform, us included.
We realize that the beauty shop business model sounds lucrative at first glance, yet what we have witnessed over the years every time we think we want to pull the trigger, our marketing research shows Amazon is flush with brands designed to excel on their platform and have generated millions by watching and observing others that cater to Amazon shoppers. Plus they have amassed fantastic customer reviews and have dominated Amazon keywords, and Alexa SEO tools acquired by Amazon in 1999 makes ranking easier for them. Indie beauty brands without the Amazon proficiency will soon learn their products are seeing a much less than desirable return on their investment. It may very well require by necessity, a serious investment for any indie business to hire an Amazon expert with their sales platform knowledge in order to navigate and be successful in their endeavor.
As an Indie mineral makeup and organic skin care company, we hold branding, trademark and registration for Sterling Minerals. We have seen countless times and read same in articles of people being taught the art of arbitraging a product that sells extremely well, then they give the illusion they are a company rep or an authorized re-seller of the brand. Or they simply use brands in keywords to get the traffic, followed by redirecting them to a competitor in the same category.
Contacting Amazon to get them to take action against the thief, you'll literally hear crickets. There is absolutely NO BRAND PROTECTION on Amazon. So essentially someone steals your copy and resells it, and if all goes bad with the end user, guess what, it isn't Amazon they are looking at, it is the brands namesake such as ours, Sterling Minerals, to lodge a complaint towards when we had absolutely no involvement or control of that particular sale.
Amazon was taken to task by "LUSH" Cosmetics brand. They were sued by LUSH and received a judgment in 2014 for trademark infringement and ultimately lost the battle with LUSH.
As An Ethical Mineral Makeup Brand Our Experience Says Approach With Caution
In meeting all the requirements necessary within Amazon's list, the other thing a customer should be wary of when purchasing any indie brand off of Amazon's Indie Beauty Shop, is the main requirement of Amazon fulfilling all orders on behalf of the merchant. The outlay of product and expense is not a guarantee the items will sell. For instance, mineral makeup, though resilient, will still have an expiration date. Organic skincare, essential oils, and sunscreens are also particularly vulnerable to expiration dates, usually a much shorter time frame, and temperature fluctuations due to the natural and organic ingredients needing to be as fresh as possible. Otherwise, symptoms of melt, rancidity, potency, mold, ingredient separation and / or bacteria can become a skincare merchant's worst nightmare. Once items are manufactured, packaged and shipped to an Amazon warehouse, then the question for the consumer should be:
- How long has it been stored there?
- How is it being handled?
- What conditions is it being stored under?
Then of course if it ends up being a dated product for lack of exposure your item may receive, it now can become a rejected product by the consumer for defect. The fallout on returns goes to the actual merchant whom has given up control of quality that was once a promise attached to each and every mineral makeup jar or bottle of skincare sold. They can't rely on Amazon whatsoever! The loss is the merchant's problem because freshness and product quality is vital to customers when spending their hard earned money for the truly exceptional mineral makeup or skincare product that works best for their skin, only now to perhaps have it compromised.
A Warning After Closer Review Of Amazon Indie Beauty Store Platform
Any mineral makeup, skincare, essential oils, perfume, sunscreen and body care indie makers, should go into this with your eyes wide open because of the limitations Amazon will place on your involvement with your brands. Though the Indie Beauty Shop sounds fabulous and new and shiny, one needs to pull back the curtain on this one. As in past models and currently today, Amazon uses manufacturers brands for research and development. By observing your sales within your niche market they obtain huge amounts of free data to determine if they wish to pursue something of their own in your specific beauty category. If it is determined we are rocking our sales on the Indie Beauty Shop platform, it won't be long before we see knockoffs or duplicates of our brand to expand Amazon's online sales revenue without them investing a single dime. When we bring our brand to market, we have done all the work for them free of charge, yet at great expense to our bottom line.
Basically, gaining the acquisition of a sale is going to be very costly as identified by the Amazon's parameters for using their platform. After monthly fees and their referral fees, along with any other expenses that fall under their A to Z guarantee, such as product replacement or shipping fees, one may quickly learn not much profit taking is left. The true benefactor is Amazon, and the merchant and customer are left being on the losing end if quality control falls short and the lost connection with your beloved Indie brand occurs. This matters a great deal to us when weighing our options, and we hope this matters to you as a customer demanding the very best from our mineral makeup or skincare products.
Don't misunderstand, Amazon absolutely has the premise for success which is, fast, convenient, and no questions asked policies, and many cosmetic company's have done well with their platform. We also think Amazon is offering customers and excellent way to shop all in one spot like a gigantic online mall. Even our staff shops on Amazon for many different products, but we also realize that organic natural type of brands that may offer skincare, also have sensitive timelines for freshness. Unfortunately, there is a level of indifference toward the very merchants Amazon is courting for the new indie beauty shop through visions of grandeur and large bank accounts.
For us, our niche as a small indie mineral makeup and skincare brand, we prefer to deal directly with our customers and continue to guarantee the extensive, individual customer care our ladies have come to love. Using a middle man such as Amazon may or may not be a company's downfall. For us we will practice a "wait and see" approach!
What we will guarantee, is always fresh is best and knowledge is power when relying on our help to get you what you need, since knowing what you need is vital to your skin health.
We also support other Indie Small Business Brands, from our own use of personal care beauty products we don't manufacture ourselves, to organic ingredient suppliers, soap makers, candle makers, and our beloved essential oils and herbal distillates we use in our skincare and lip products.
We hope you'll support the Indie Beauty Industry, and we would love to help you get started in shopping with Sterling Minerals by showing you how to enjoy an Indie mineral makeup brand the easy way.