The majority of global sales in the health and beauty sector are forecast to move online, to be controlled by four giants, three Chinese and one American, according to new figures.

Why it matters: e-commerce is largely consolidating, with the West likely to fall under even greater dominance of Amazon’s seemingly inexorable rise, while Alibaba demonstrates its even larger growth potential in a trend accelerated as a result of COVID-19.

This is according to new figures from Edge by Ascential’s data insight arm, Retail Insights. WARC is owned by the same parent company. 

Alibaba is expected to achieve the greatest share of health and beauty online sales this year, with sales of $43.2bn. This is closely followed by Amazon, with sales growing to $28.8bn, and Pinduoduo, which will increase its sales to $16.8bn by the end of 2020.

“With COVID-19 driving increased demand for health and beauty products, many retailers are planning further inroads into the category via enhanced online services and product lines,” explained Florence Wright, Senior Retail Analyst at Edge by Ascential.

“However, as department stores experience a -10.9% fall in growth in 2020, more beauty brands will be forced to diversify and focus on investing in online to expand reach and boost growth.”

The online share of sales made in the health and beauty sector is expected to rise to 16.5% globally by the end of 2020, increasing to 23.3% by 2025.

The health and beauty sector will see the second-fastest ecommerce growth rate after the Household and Petcare category, largely driven by emerging participation from pure play retailers, with Amazon investing heavily in healthcare provision, while Alibaba and continue to add more third-party health and beauty brands to their marketplaces.

It also points to a deeply changed market at a cultural level. While health products are expected to benefit from a renewed relevance for a global population reeling from a health crisis, cosmetics are likely to show weaker growth following the realities of home working, social distancing, and mask wearing, particularly in H1.

However, there are also opportunities: pampering and self-care are growing trends through 2020 and offer a route for beauty-focused brands to reframe.

Sourced from Edge by Ascential