The Beauty Moat is Service

Multi-brand retail and/ or eCommerce in most verticals is toast. Amazon won. Store traffic declined. 4-wall margin got ugly. Even the verticalized brand approach has lots of holes in it these days – mainly cost of customer acquisition.

I do, however, still like the Beauty category for a bunch of reasons and it’s no secret why the Ultas and Sephoras of the world are still growing. There is no shortage of beauty startups, either.

Here is some texture on why I think this category is still attractive, even though Amazon will most likely emerge the winner, if they are not the largest by volume already.

I have to believe that there are few purchases as personal as product choices that affect appearance. Because of that there can be a significant value add via the intermediary (retail layer). Authority and loyalty can be built around this necessary service layer and it’s what Amazon and the mass market will struggle with after they have gobbled up the lion’s share of less considered beauty categories.

Necessary service is the early moat for new entrants and stores before the addition of more exclusive beauty brands (owned or 3rd party) with distribution that avoids mass channels and Amazon.

As a dude who buys deodorant and soap, wears no cologne and abandoned razors in 2014, I can appreciate the category, but I’m not sure you’ll see me launch RougeZilla any time soon.


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