According to Statista, online beauty sales generated around $86 billion in the United States in 2023, while personal care sales reached nearly $54 billion1. More broadly, The Global Wellness Institute (GWI) reports the wellness economy, which includes personal care and beauty as well as nutrition, wellness tourism, fitness, and personalized medicine, has reached a record value of $5.6 trillion3.
Customer expectations are shifting towards hyper-personalization, omnichannel engagement, and buy now, pay later. Here’s how flexible payment options are helping to drive this growth, and how large beauty and wellness e-commerce enterprises can develop a more user friendly shopping experience.
The cosmetics and beauty sector was the fastest-growing retail category in the US last year, with consumers spending $94.36 billion in total – and eMarketer reports that many of these shoppers also plan to increase their beauty budgets in 2024 4. It is essential for brands to differentiate themselves in a shifting and increasingly competitive landscape.
These are the beauty e-commerce trends predicted to make an impact over the next 12 months and beyond.
Skin analysis and individually formulated products are already demonstrating the power of artificial intelligence in the beauty industry. These AI offerings are likely to continue to evolve toward hyper-personalization. Both in-store and online, consumers may begin to have access to sophisticated algorithms to individualize their skincare routine, diagnose and prevent sun damage, and discover the right cosmetics for their specific needs.
9 in 10 beauty shoppers think about sustainability when choosing products – 15% care more about the ethics of a product than the price, Forbes reports 8. McKinsey & Company has labeled these shoppers “belief-driven buyers” 9 and predicts this figure will increase as Gen Z and Millennial shoppers continue to dominate the market and scrutinize brands more than other generations 10.
Forbes’ research further found the majority of beauty shoppers care about nature and animal welfare, followed by waste reduction, treatment of workers, and climate change impact – however, 71% of shoppers are skeptical of what brands really mean when they use generic labels like “environmentally friendly” 8. Wary consumers are keen for beauty and wellness brands to demonstrate greater transparency and may reward this with trust and loyalty.
E-commerce is the fastest-growing sales channel for beauty and wellness – but there’s still high demand for in-store product testing at drugstores, department stores, and even grocery retailers, as well as social selling through Instagram and TikTok 10. 1 in 3 TikTok users use the app to discover and consider new beauty and personal care brands 11.
The demand for omnichannel engagement extends to how customers pay too. Digital wallets and buy now, pay later (BNPL) have surged in popularity 12. The proportion of mobile e-commerce users meanwhile is growing every year and predicted to be 66% by 2026 13.
Flexible payment options are driven, in part, by consumers’ desire for financial freedom and a need to manage budgets more effectively during a cost of living crisis. Consumers want to indulge in beauty and wellness products even if they’re on a budget, and e-commerce sites can enable them to do this.
Dynamic Yield reports that cart abandonment is around 74% in the beauty and personal care industry – common causes include slow site loading times, finding cheaper prices elsewhere, and awkward multi-stage checkouts 14. Offering alternative payment methods, including mobile payments and BNPL, allows customers to use pre-populated payment details in an instant.
A PYMNTS study from 2023 shows 32.3% chose BNPL to buy health and beauty products compared to 36.8% who paid with their credit card 15. Many customers are choosing BNPL installments to make beauty products more affordable 20.
After integrating PayPal's Pay in 4, Younique saw 218% growth in Pay Later sales volume with dynamic messaging and a 209% increase in Pay Later transactions in 2022 16. Also, PayPal Pay Monthly AOVs are 400% higher than standard PayPal AOVs for retailers in the cosmetics vertical 17.
Optimizing the checkout process means accurately displaying products, prices, shipping costs, and available payment methods to shoppers. This transparency can help enterprises drive awareness scalably and facilitate informed purchases.
Beauty e-commerce businesses can also drive sales with PayPal's Pay Later’s intuitive payment options. This can reduce friction and encourage completion of purchases in an industry where cart abandonment is common.
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