Amazon Beauty Transformation Case Study by Vogue

Case Study: Transforming Beauty Retail with Personalisation – The Amazon Beauty Approach

Introduction

The beauty industry is one of the most dynamic and fragmented sectors, with constant innovation and a steady influx of new brands. In this crowded space, customer experience (CX) is paramount for differentiation. Personalisation, once a luxury, has become a necessity. This case study examines how Amazon Beauty has redefined CX through advanced personalisation, leveraging technology, customer segmentation, and collaborative strategies.

Background

The beauty sector is fiercely competitive, with over 25% of all new fast-moving consumer goods (FMCG) brands rooted in beauty or personal care. Social media leads the way in consumer discovery (39% of consumers cite it as their preferred channel), but it has also eroded brand loyalty, with shoppers frequently exploring new options.

Amazon Beauty recognised these challenges and sought to enhance CX by integrating personalisation into every aspect of the customer journey. By doing so, it aimed to:

1. Cater to evolving consumer preferences.
2. Build long-term customer loyalty.
3. Drive seamless, engaging, and efficient shopping experiences.

Challenges in Amazon Beauty Journey

Challenges Faced

1. Fragmented Shopping Journeys:
   Many beauty shoppers use multi-brand platforms but often face siloed experiences. This fragmented journey prevents brands and retailers from understanding the customer’s entire purchasing behavior.
2. Erosion of Brand Loyalty:
   With abundant choices, customers are increasingly drawn to new brands, formulations, and experiences. Traditional loyalty programs are insufficient to retain them.
3. Demand for Digital Innovation:
   Seventy percent of beauty shoppers demand features like skin diagnostics and virtual try-ons, yet only 30% of brands provide these capabilities online.
4. Increasing Competition:
   As 40% of the top brands in beauty were founded in the past decade, established players and new entrants compete fiercely for visibility and market share.

Amazon Beauty’s CX Strategy

To overcome these challenges, Amazon Beauty implemented a three-pillar strategy: segmentation, personalisation, and technological innovation.

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Pillar 1: Advanced Customer Segmentation

Amazon Beauty profiled its customers into three distinct personas:

1. Replenishers:

Prioritise convenience, speed, and efficiency.

Tend to purchase essential items like skincare products regularly.

2. Brand Loyalists:

Conduct thorough research before purchasing their preferred brands and products.

Value brand authenticity and consistency.

3. Explorers:

Seek variety, excitement, and discovery.

Frequently explore new brands and categories, especially in color cosmetics.

Amazon identified that the same customer might switch between these personas depending on the product type, allowing for more dynamic targeting.

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Pillar 2: Personalisation Across the Customer Journey

Amazon integrated personalisation into every stage of the shopping experience:

1. Product Recommendations:
   Tailored suggestions based on browsing history, purchase behavior, and preferences ensured customers found the most relevant products.
2. Brand Storefronts:
   Amazon’s Premium Beauty Storefronts enabled brands like Clinique and Estée Lauder to showcase their offerings while maintaining brand identity. These storefronts created a cohesive, brand-driven experience within Amazon’s multi-brand ecosystem.
3. Subscription Services:
   Programs like Subscribe and Save ensured that replenishers could easily access their frequently used products at competitive prices, improving convenience and loyalty.
4. Exclusive Campaigns:
   Events such as the Amazon Holiday Beauty Haul catered to price-sensitive shoppers, allowing them to stock up on essentials while discovering new products.

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Pillar 3: Leveraging Technology for Innovation

Amazon Beauty used cutting-edge tools to bridge the gap between in-store and online shopping:

1. Skin Analysis Tool (Clinique):
   This interactive questionnaire, developed with Clinique’s dermatologists, recommended a personalised skincare routine, helping shoppers make informed decisions.
2. Virtual Foundation Matching (Estée Lauder):
   Launched alongside Estée Lauder’s entry into Amazon Premium Beauty, this tool allowed customers to find their perfect foundation shade, enhancing convenience and satisfaction.
3. One-to-One Consultations:
   Clinique ambassadors offered real-time consultations via Amazon, providing expert advice and fostering a deeper connection with customers.
4. Data-Driven Onboarding:
   Amazon developed a detailed brand launch program, optimising visibility and sales impact for new brands entering its ecosystem. This process was refined through trial and error, benefiting from learnings across categories.

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Results and Impact

Amazon Beauty’s CX initiatives delivered measurable success:

1. Customer Loyalty and Retention:
   The tailored experiences fostered loyalty among replenishers and brand loyalists, while explorers appreciated the variety and discovery opportunities.
2. Increased Sales for Partner Brands:

Clinique’s hero products quickly became top sellers on Amazon.

Other Estée Lauder brands, such as Too Faced and Smashbox, reported similar success.

3. Enhanced Brand Visibility:
   Amazon’s curated storefronts enabled brands to reach a broader audience while maintaining their identity.
4. Consumer Satisfaction:
   Tools like skin diagnostics and virtual consultations bridged gaps in the digital experience, addressing key consumer pain points.
5. Industry Recognition:
   Three of the top five brands in the Vogue Business Beauty Index—Kiehl’s, La Roche-Posay, and CeraVe—thrived in Amazon’s beauty ecosystem, cementing its reputation as a leader in CX innovation.

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Amazon Beauty Key Learnings

1. Personalisation is Paramount:
   Customised experiences, powered by data and technology, are critical for retaining customers and driving loyalty.
2. Collaboration is Key:
   By listening to brands and adapting its platform, Amazon ensured mutual success.
3. Technology Bridges the Gap:
   Tools like virtual try-ons and diagnostics are not just enhancements but necessities for replicating the in-store experience online.
4. Dynamic Targeting Works:
   Recognising the fluid nature of consumer personas allowed Amazon to meet diverse needs more effectively.

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Conclusion

Amazon Beauty’s approach demonstrates how personalisation can transform CX in a competitive industry. By integrating segmentation, technology, and collaboration, Amazon has created a blueprint for success that other industries can emulate. As personalisation continues to evolve, brands that embrace this strategy will be best positioned to win in the digital-first marketplace.