Direct Sales Companies are Taking Market Share from Legacy Names

Cosmetics

Direct sales companies are taking market share from Revlon—Learn how COVID-19 has impacted the makeup industry.

The COVID-19 pandemic has had a significant impact on several different industries. The makeup industry is one of many impacted, and it is causing some of the biggest brands to change their strategies. While Revlon has struggled and is even holding back an accidental payment of $900,000,000 from Citigroup others in the makeup industry are continuing to thrive—thanks to the direct sales model.

Revlon in the second quarter of 2020, had revenue decline 39 percent compared to the prior-year period. For the first six months, sales fell nearly 30 percent to $800 million and net losses more than doubled to $340 million. As they try to figure out how to make things work, others in the industry are finding ways to make it work and empowering women during these difficult financial times.

To survive, companies need to have a quality short-term plan while also keeping an eye on the future. How will the makeup industry change for the short and long term? This is a look at what to expect going forward.

Do-It-Yourself Makeup Options

More people than ever before are tackling all of their makeup issues on their own, instead of relying on professional assistance. While that might go back to normal to a certain degree, others will become comfortable enough to stick with do-it-yourself options for the long-term. This is due to a few different reasons connected to the pandemic.

For starters, professionals are just now starting to get back to normal and welcome customers back. There are still some adjustments that are necessary to use professional services, including being forced to wear a facemask and potentially having extended wait times.

This is enough of a change to keep people at home, and they are giving do-it-yourself options a try and, in a world, where Zoom meetings and Facetime have taken over it’s now more important than ever to make sure your face shines on camera. Companies such as Younique a Lehi, Utah based direct sales beauty company with more than 1 million members operating in 13 international markets noticed that they are selling more do-it-yourself makeup kits and all-in-one solutions that allow people to do work at home. Digiday attributed the company’s quick growth to its reliance on digital selling, compared to other direct selling brands’ reliance on in-person sales.

Another factor is that people are looking to cut their monthly bills down however possible. It is a luxury for some to get certain beauty-related work done professionally. By trying out products and watching online tutorials, some will become proficient enough never to return. People in general will take a harder look at their finances to make sure they are spending wisely.

Makeup Businesses, Influencers, and More Must Embrace Online

It is an evolution that has been going on for a while, but COVID-19 accelerates the online change. It is impossible in 2020 to survive without a solid foundation online. Companies have no choice but to have events entirely online now, and those who are trying to sell products and show off different looks must have that same energy on camera as they do in person. Where Younique is thriving is that they on board new sellers who purchase a starter kit for $99 or £69 to begin which includes 17 of Younique’s best selling products. They are not considered a multi-level marketing company even though it was incorrectly referenced as one once in The Guardian.

Even with relaxed restrictions, there will still be a lot of people hesitant to go back to makeup in the traditional manner. They might be more comfortable shopping and applying at home to the point they never return as the same shoppers in-person again. It is a change that will alter the long term, as some people are being introduced to a whole new world online.

Although online sales are on the rise, they are not offsetting companies that rely on in-store purchases. That is bad news for traditional companies that have been around for a while and have a presence inside major stores. However, for online companies like Younique, it is not hurting them as much since they are primarily based online already.

Companies must think beyond just a website to move products. An online presence in multiple locations will lead to more success. Shopping on the website is always going to be the top producer, but making social media and video easy to connect with makes sense as well. Younique makes it possible for customers to follow a direct link to order, whether their products are highlighted in a video, on Instagram, or anywhere else online. It simplifies the shopping process and makes it easier for impulse buys traditionally restricted to in-person stores.

Will people eventually return to in-store shopping options? It is hard to predict at this point, but early signs in China show that it could be a long, slow process back. Traffic has been slow to bounce back at this point, and most of the stores in China have been open to some extent for several months. This could very well have a lasting impact on the industry as people turn to online sales over shopping at stores.

Stocking Up

There are already plenty of reports out there that certain makeup, personal care, and other cosmetics are having

supply chain disruptions. This is a global pandemic, so just about every company is going to go through some difficulties in keeping normal production up. For those who rely on a few basics for makeup, that is forcing people to stock up.

Stocking up is only recommended to those who are well aware of what they like and what they use regularly. It is a way to ensure that a person can have up to a year of supplies without any disruptions. Some makeup products do not last as long when purchased in bulk, so make sure that they are adequately stored and capable of holding up during that time.

Unfortunately, some people have used limited supplies as an opportunity to make some money of their own. Some of the more popular products and makeup choices are hard to find, and people are selling on the secondary market at a higher price. It is the unfortunate reality of supply and demand being a bit off during this time. The makeup industry has not suffered from this as much as some of the others out there. To avoid this from happening, stock up as much as possible on what works.

A Focus Around the Mask

Generally speaking, people are spending less money and less time on makeup right now during the pandemic. There are fewer places to go out in public, and a covered-up face makes it less of a necessity to apply makeup.

For a more simplified approach, people are focusing more on what can be seen even with a mask. In particular, eye makeup tutorials and different products are becoming increasingly popular, especially if they are relatively straightforward to use. By highlighting eyes above the mask, it is giving people a sense of normalcy without having to go through a regular routine.

Lighter makeup options should also thrive in the setting, as people are looking for more simplicity and a natural look compared to caking products on, only to have it messed up with a mask coming on and off throughout the day. People are still investing in products that help keep their faces clean and

free of breakouts, so makeup that is healthy for the skin is more important than ever.

Finally, people who usually go to a physical location to get their hair and nails done are focusing on doing things themselves at home. While a lot of people will return once everything is fully open up and ready to go, some people are becoming good enough that they do not feel the need to return at a later date.

Final Thoughts

The makeup industry was already evolving to a certain degree, and COVID-19 should only accelerate some of those trends. The majority of consumers are looking for simplicity more than ever before. They are also forced to be more self-sufficient than ever, and that could be a change that is here to stay. The makeup industry is in a better situation than many other consumer categories, but the industry will evolve and look at COVID-19 as a significant turning point.