Beauty e-tailing- High growth opportunity with verticals poised to accelerate
Published on: Mar 2019
Beauty category has been one of the big success stories in MENA e-tailing. Penetration of beauty products has been higher compared to other categories. A prime reason for a deeper penetration is the standardisation of products and well established European brands entering into the space. Yet as the chart below shows, MENA online beauty still has a low online penetration and high growth potential.
Further deep diving into the beauty space, we see the below category trends emerging-
- Majority of business is from the fragrances and cosmetics category, which are also growing rapidly
- Women’s products constitutes large chunk of the market but men’s beauty is growing much faster (40% vs 25%)
- Overall market is being driven by multiple beauty-influencing portals that are further catalyzing the whole ecosystem. Huda Beauty is one of the most well known names in this area but newcomers like Alia Beauty are also jumping into the fold
Horizontals in beauty have a disproportionately high share of SKUs across compared to the verticals, which drives category as well as overall beauty leadership for them.
Verticals vs horizontals in E-tailing
Published on: Mar 2019
Online retail in MENA is still small compared to other regions around the world but is expected to grow on the back of improving supply and demand landscape. The e-tailing market is currently pegged at USD ~8 Bn and is expected to grow at a CAGR of 35%.
Horizontals have traditionally been strong especially in categories like electronics, but our research shows that GMV split has been dispropotionately higher towards vertical players in other categories. In this sense the market has evolved similar to other more evolved online markets like India where verticals similarly lead in these categories.
In beauty and personal care segment in MENA E-tailing, despite having comparitively less SKU’s, verticals are able to perform better due to availability of established brands and on-demand content in the form of blogs and guided videos enabling them to get higher user traction on their platforms, . Influencers play a critical role in building habits among the consumer base for beauty and personal care products, who could be founders of beauty brand, makeup artists, stylists, media personalities
In online grocery space, ominchannel verticals (Danube, and other players) have been able to capture major market share owing to wide variety of brands and SKU’s offered in the fresh category clubbed with higher penetration in Tier-1 and Tier-II cities.
In the nascent furniture segment, higher SKU’s coupled with competitive pricing offered by verticals is positioning them better among the consumer segment. Many of these verticals are omnichannel players like Ikea and homecentre, with strong brand recall amongst their target demographic which also includes expats in MENA.
It is interesting to compare this with a more mature market like India, where the chart looks as below-
In RedSeer’s work in India we have also seen significant success from verticals, with players like Bigbasket, Myntra and Nykaa being prime example of success stories of this content/experience based differentiation.
Online Retail : UAE & KSA are already behaving like a mature market in Online Services; Online Retail has still has a long way to go
Published on: Oct 2018
UAE + KSA with 70%+ representation of MENA etail market observe online retail market penetration of ~3%, with highest level of penetration observed in electronics segment. Service industry is mature with higher level of acceptance for online media to consume the service.