Ecommerce vs Retail: What’s Best For Your Beauty Brand
Are you making plans to start a new beauty brand? Then you need to pick the right go-to-market strategy. Two main options available to consider here would be ecommerce and retail models. You need to compare retail vs ecommerce to pick the best business model out of two.
Ecommerce focuses on online sales through a brand website, marketplaces, or social platforms. If you plan to go ahead with dropshipping or bulk selling, this would be a good option. On the other hand, retail relies on in-store purchases at physical locations such as salons, boutiques, and department stores. Read on and we will help you pick the best business model out of two.
What is ecommerce in the beauty industry?
When you start an ecommerce business, you will be selling skincare products directly to consumers online. Creating a successful ecommerce site is crucial as it ensures a safe, convenient, and thoughtful shopping experience that rivals that of a physical store.
There is no need to have a physical presence. It can be through your own branded ecommerce website. Just make a selection among WooCommerce or Shopify and build your ecommerce website. Or else, you can sell on online marketplaces such as Amazon. It is also possible to sell on social commerce platforms such as TikTok and Instagram.
This method of selling private label skincare products reduces your initial investment. That’s because you don’t need to have a brick and mortar store. Your success would rely heavily on your skincare marketing efforts.
What is physical retail in the beauty industry?
Retail trade relies on in-person sales at physical storefronts. For skincare, popular retail channels are boutiques, salons, spas, beauty supply retailers, drug stores, big box stores, malls, and department store beauty counters. Established brands leverage relationships with major retailers to get products on shelves in front of buyers. If you have some capital starting a skincare business, this would be a good option to try.
A retail store provides immediate product availability and enhances the shopping experience through physical interaction with products. It allows customers to engage directly with items, fostering confidence in purchases and creating opportunities for community connection, immediate revenue generation, and positive customer relationships.
The retail model limits geographic reach to local shoppers but enables personalized consultations and ability to see/touch products. For luxury or clinical skincare lines, the credibility and experience of selling in a physical retail store may help influence higher price points per product as well.
Ecommerce vs. retail: key differences
Now let’s explore ecommerce vs retail differences to pick the best model. While both are valid go-to-market strategies, ecommerce and retail have inherent structural differences across key dimensions:
Costs: Ecommerce has lower operating costs with no rent or staffing physical stores, and online shopping further reduces expenses related to physical infrastructure. Retail requires substantial fixed costs to set up and manage locations.
Audience reach: Ecommerce can directly access global niche audiences online. Retail is limited geography to local shoppers and physical store locations.
Scalability: Ecommerce can ramp up rapidly to handle spikes in demand. Scaling retail requires opening more store locations. Retail ecommerce strategies can help businesses leverage both models to enhance their reach.
Logistics: Ecommerce manages shipment logistics directly. Retail offloads to distributors.
Customer experience: Retail offers personalized service and ability to test. Ecommerce relies on digital content and recommendations, with ecommerce sales emphasizing the efficiency and convenience of the online purchasing process.
Benefits of ecommerce
Ecommerce offers numerous benefits for businesses and customers alike. One of the primary advantages of ecommerce is its ability to provide a wider reach and potential customer base for retailers. With an ecommerce platform, businesses can sell their products or services to customers all over the world, increasing their sales potential and market presence.
Additionally, ecommerce stores can operate 24/7, providing customers with convenience and flexibility. Ecommerce businesses can also use technology to streamline order processing and shipping, reducing the need for physical storage space and inventory management. Furthermore, ecommerce provides a cost-effective and scalable business model for retailers, allowing them to start small and grow their business as needed.
Benefits of retail
Retail stores, on the other hand, offer a unique set of benefits for customers and businesses. One of the primary advantages of retail is the ability to provide in-person customer service and support. Sales associates can assist customers with their purchases, answer questions, and provide personalized recommendations.
Retail stores also offer immediate product availability, allowing customers to take their purchases home with them right away. Additionally, retail stores can provide a more personalized and engaging shopping experience for customers, with events and promotions that create a sense of community and belonging. Retail stores can also offer services such as gift wrapping and returns, making the shopping experience more convenient and enjoyable for customers.
Which model is best for your business?
The best retail or ecommerce strategy depends significantly on your brand goals, budget, and resources. Key questions to ask are:
What is your geographic target and expected reach for Year 1?
Will you rely more on influencer/performance marketing or retail partnerships to attract customers?
How large is your product catalog and production capacity starting out?
Can you support operation of a website along with managing order fulfillment/shipping?
Who is your target market and how will you reach them?
The answers can determine if starting online first is prudent or if you should anchor first in proven retail partners. Understanding your startup costs and having alignment upfront can optimize success.
Hybrid Approach: Combining Ecommerce & Retail
While many brands pick one strategic direction early on, there is merit in a hybrid model spanning retail and ecommerce channels. Omnichannel retailing, which connects physical and online presence, can leverage the strengths of each channel to support growth.
Offering products online as part of an omnichannel strategy enhances customers' ability to browse and purchase while also accessing physical retail options, boosting overall customer satisfaction and loyalty.
Ecommerce can enable scaling new markets faster while a retail footprint tackles customer acquisition locally offering a branded experience. Introducing this hybrid approach from the start does require additional investment and coordination but may offer the best mix to drive growth.
Building customer loyalty
Building customer loyalty is crucial for both ecommerce and retail businesses. One way to build customer loyalty is to provide excellent customer service and support. This can include offering personalized recommendations, responding to customer inquiries, and resolving issues promptly.
Ecommerce businesses can use data analytics to understand customer behavior and preferences, allowing them to tailor their marketing strategies and product offerings to meet customer needs. Retail stores can use in-person interactions to build relationships with customers and create a sense of community.
Additionally, both ecommerce and retail businesses can use loyalty programs and rewards to incentivize customers to make repeat purchases. By providing a positive shopping experience and building strong relationships with customers, businesses can increase customer satisfaction and loyalty, driving long-term growth and success.
Conclusion
When assessing the ideal go-to-market strategy for a budding skincare brand, retail and ecommerce businesses reflect very different paths but can also complement one another.
Setting distribution priorities informed by your specific brand identity, audience profile, budget and capabilities allows focusing initial efforts on the highest value channels first, such as utilizing an e-commerce marketing calendar.
This strategic clarity on whether to lead with online direct sales or establish offline retail presence can ultimately set up your beauty business for sustainable success over the long term.
