Overview of the global beauty market E-commerce accounts for 26%, with China and the United States leading the way!

The global beauty market E-commerce is 26%, led by China and the United States

Business Dialogue learned that a report released in partnership between McKinsey & Company and The Business of Fashion shows that despite economic turbulence, the beauty market is still rapidly growing, with global beauty product sales expected to increase at an annual rate of 6% in the coming years.

According to the report, global beauty product sales are expected to grow from $427 billion in 2022 to approximately $583 billion in 2027. North America and China will remain the driving forces of the global beauty industry, with sales of $115 billion and $96 billion, respectively, over the next four years.

By 2027, e-commerce sales of global beauty products will account for 26% of total retail sales, with a stable increase in share and continued growth after the pandemic.

From 2015 to 2022, the annual compound growth rate of the global online beauty market was 20%, and the online share jumped from 8% to 21%. The online sales of beauty products have exceeded offline sales, with offline sales accounting for only 20% of the entire retail market last year.

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According to the report, online sales of beauty products in the United States are expected to reach $45 billion by 2027. The sales of beauty products in China are expected to be even higher and will increase to $55 billion over the next four years, with almost 60% of beauty products sold through online channels.

Although economic growth has been stagnant in the past two years, the beauty market has continued to thrive. Some DTC brands, such as Glossier, have expanded their influence by opening their own physical stores or signing wholesale partnerships with Sephora and others.

However, intensified market competition has also led some DTC beauty brands to struggle. Last year, Glossier went through multiple rounds of layoffs; Birchbox struggled to resolve unfulfilled orders and payments to suppliers before being sold to Retention Brands this year; Morphe CEO Forma Brands filed for bankruptcy in January; and recently, Wldkat announced it would close.

The report states that despite challenges facing DTC brands, the beauty market will continue to grow and attract new players in the coming years. On the other hand, emerging markets in India, the Middle East, and Africa are expected to see tremendous growth while maintaining leadership positions in the US and China.

According to the report, India has a population of 1.4 billion people, half of whom are under 30 years old. By 2027, the country’s beauty product sales are expected to increase to $21 billion. Sales in the Middle East and Africa are expected to reach approximately $47 billion in the same year.

The report also notes that the definition of beauty is expanding, moving towards the health sector and has developed into a $1.5 trillion industry. Beauty and health will become more closely linked, with a projected compound annual growth rate of 10% for health products.

Larissa Jensen, beauty industry advisor at Circana, said, “Health is a broader opportunity across all beauty categories. While physical health is still important, consumers are more concerned about their mental health than ever before. This trend has emerged since 2020 and has boosted the sales of beauty products.”

Editor ✎ Nicole/AMZ123

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