The Beauty Confidential Report - Give your checkout a payment makeover that shoppers will love - Klarna
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The Beauty Confidential Report Give your checkout a payment makeover that shoppers will love.
klarna.com/us July 2019
The Beauty Business is
Booming
Americans spent over
Unlike some retail segments, the beauty industry is
looking good for growth. Worldwide, cosmetics are
$12 billion online on
now worth $532.43 billion and are expected to reach beauty and personal care.6
$805.61 billion by 2023.1 A big chunk of this growth
will come from North America, which represents 24%
of the global market. 2
Online is On-Trend
In the US, sales of makeup alone are increasing 16%
While the majority of shoppers currently buy beauty
each year3. Today, 86% of all women buy make-up and
products in-person at places like Sephora and Target,
78% buy skincare4. No matter if they’re Millennials,
it’s expected that many of these sales will increasingly
Gen Z, or Baby Boomers the amount that each
shift online. Dominant brands will find themselves
consumer is prepared to spend is staggering. Women,
facing strong competition from highly targeted,
aged 18-78, who regularly buy cosmetics, invest
heavily socialized digital-born brands like Glossier, as
around $3,756 a year – that’s a total of $225,360 in
well from powerful online retailers like Amazon.
the average lifetime.5 And men are getting in on it
too, spending $2,928 annually on grooming, just 22%
And there’s lots to play for. In 2017, Americans spent
behind their female counterparts.
over $12 billion online on beauty and personal care.6
What’s truly exciting is how quickly the market is
High demand, combined with healthy profit margins
moving from in-store, product-based models to
and growth rates that outperform almost all other
experience-driven sales made on laptops, tablets
retail sectors make beauty one of America’s most
and mobile devices. Thirty percent of today’s beauty
lucrative and attractive markets.
dollars now flow through online channels, up from just
24% a year ago. By 2021, cosmetics and personal care
revenue generated through online sales is expected
to reach 44%.7 In this increasingly competitive space,
merchants need to do everything they can to stay
In the US, sales of makeup ahead, capture more sales, and grow their brand.
alone are increasing 16%
year-on-year.3
1 Beauty Confidential Reportklarna.com/us July 2019
Seeing is Believing
All of these stats are great news for online beauty retailers. But how can you stay ahead of the curve, accelerate growth,
and encourage more consumers to buy on your websites and apps?
The first step is understanding what shoppers like, and what they don’t.
Klarna’s latest survey on the beauty-buyer attitude reveals that consumers are increasingly happy to shop for a wide range
of beauty-related items online, especially products that they’re already familiar with or those that can be selected without
testing in person.
Items like concealer, foundation, blush or hair color are a bit riskier. It seems that fear of getting it wrong and wasting their
money can hold them back. That’s why 78% of beauty shoppers say they’re more likely to make a purchase online if they
can see them in real life before parting with their cash8.
Moving your sales from the shop to the laptop requires modern options and streamlined return processes that decrease
the inherent risks associated with buying beauty products online.
78%
of shoppers say they’re more likely to make a
purchase if they can see the item in real-life
before parting with their cash.8
Consumers are increasingly
happy to shop for beauty
products online if they are
already familiar with them.
2 Beauty Confidential Reportklarna.com/us July 2019
Beautify Your Checkout
So, what do beauty buyers want? Learn how adding new payment options at checkout can increase your sales and grow
your brand by meeting your customer’s demand for flexibility.
Here are Klarna’s top 5 beauty checkout makeover tips:
Don’t Ignore the Basics
1
Clear and easy return policies, keeping out-of-stock items out of sight, and offering the payment
options that shoppers want can decrease your cart abandonment rate and increase your sales.
Convenience is key for beauty shoppers. They like being able to skip the store and shop for all of their
favorite brands on the same site. When shopping online, however, purchase friction and pain points
can stop them in their tracks. Shoppers want the basics done right. Hassle-free returns, reliable product
availability, and pain-free payments are absolutely essential. When customers are uneasy about your
return policy or don’t see the products or payment options they want, they might look elsewhere and not
come back.
You Don’t Have to Lower Your Prices in Order to Make Your
Products More Affordable
Cheaper isn’t better, especially when it comes to beauty products. Even though shoppers are willing to
spend more money on higher quality products, nearly half of them say that they worry about whether
2
or not they can afford them. Even more shoppers say that they would like the option to split the cost of
more expensive items11 instead.
Klarna gives shoppers the option to pay a quarter of the price upfront, and split the rest into equal
interest-free installments.
3 Beauty Confidential Reportklarna.com/us July 2019
Capture More Customers by Making Trendy Products Easier to
Buy Right Away
3 Making your trendiest products more accessible can boost spontaneous shopping and help lift sales all
year round.
Being the ‘first to have it’ is a big deal for beauty customers. Many prefer to shop online in order to get
the latest products earlier than everyone else.
By allowing customers to spread payments over time, Klarna relieves FOMO and helps them be more
spontaneous. By paying less upfront, but getting the product right away, beauty shoppers can stay on
trend and keep up with the latest celebrity styles without having to wait until payday.
Capitalize on the “Treat-Yo-Self” Mindset
4
Guilt often holds people back from buying the products they really want. Flexible payment options
instill confidence and make it easier for customers to treat themselves and others.
Makeup and skincare products aren’t necessities-- beauty shoppers are actively looking to indulge.
In fact, subscription boxes, which offer a gift-like experience, are especially popular among shoppers
aged 25-349. Over half of online shoppers claim to spend more on products if they are a gift for
someone else10.
Despite this desire to splurge on high end products, last-minute price shock can cause cart
abandonment rates to soar. It’s up to the retailer to give hesitant customers the confidence they
need to treat themselves without worrying about cash flow. By offering the ability to purchase beauty
products in interest-free installments, Klarna gives consumers the assurance they need to fill their
basket without remorse.
Capture More Repeat Customers by Letting Shoppers Try
Multiple Products at Home Without Paying Upfront
5 For “multi-buyers,” Klarna relieves the stress and hassle associated with waiting for a large refund by
splitting payments into smaller amounts.
Anxious consumers often multi-buy beauty products in many shades and then return the options they
don’t love. With Klarna, these shoppers no longer have to stress over a large refund. Allowing them to
split their total purchase into 4 interest-free installments gives your store a competitive advantage over
the others.
Having access to good reviews and customer feedback on products can also make your customers feel
more confident in their online beauty shopping experience helping you bridge the gap between in-store
and online sales.
4 Beauty Confidential Reportklarna.com/us July 2019
Beauty Merchants Want Klarna’s Beauty Buzz
a Fresh Approach In addition to making it easier to buy and sell online,
Klarna can help beauty businesses build a powerful
With 60 million consumers worldwide in over 130,000
buzz by attracting customers and encouraging casual
online stores, Klarna is quickly becoming the go-to
browsers to spend. Offering a new angle, Klarna can
online checkout option for international retailers like
boost ROI across upstream marketing.
H&M, ASOS and AQ/AQ. In fact, shoppers love paying
later in 4 installments so much, adding Klarna has For example, adding something as simple as free next
helped these brands and more boost customer loyalty, day delivery to shoppers who pay with Klarna can
reduce cart abandonment, and deliver double digit deliver a demand spike that smashes the competition.
improvements in sales conversion.
At the end of the day, whether beauty buyers are
Beauty retailers who target a comparable shopping for a seasonal color palette, an invigorating
demographic with similar aspirational and treatment, or a total skincare update, offering flexible
transformational goals, are eager to replicate these payments helps them buy with confidence. Adding
results. Alternative payment methods are boosting Klarna to your checkout delivers lasting value that’s
ecommerce success and paving the way to greater more than skin deep.
conversions and higher online sales. Adding Klarna
to your checkout decreases cart abandonment rates
which makes your online sales more profitable. And
Some of our merchant partners:
since customers love buying what they want without
stressing over cost, they’re more likely to become
repeat buyers.
About Klarna:
• Founded in 2005, HQ in Stockholm
• Working with 130,000 online merchants 1 Euromonitor 7 Statistica
2 IBISWorld 8 Klarna Beauty Buyers Survey
• Active in 14 markets 3 A.T. Kearney 9 Klarna Beauty Buyers Survey
• 2,500 employees 4 Euromonitor 10 Klarna Beauty Buyers Survey
5 Groupon 11 Klarna Beauty Buyers Survey
• 60 million consumers worldwide 6 Nielson 2018 The Future of Beauty Report
5 Beauty Confidential Report www.klarna.com/us/businessYou can also read
