Amazon's premium beauty push may be a buffer against Trump's tariffs
NEW YORK: Amazon's defense against tariffs for its coming Prime Day? Luxury goods.
President Donald Trump's tariffs have spurred some Amazon sellers who source products from China and other heavily tariffed countries to bow out of the company's Prime Day, one of its biggest sales events of the year, to protect their margins.
The Seattle-based e-commerce company is hoping that recent sales growth in high-margin cosmetics in its Amazon Premium Beauty category will cushion the impact of tariffs on Prime Day sales revenue and consumer sentiment.
'Beauty has become, in the past few years, more of an essential item in consumers' minds,' even in hard financial times, said Anna Mayo, vice president of NielsenIQ's Beauty Vertical unit.
Amazon Premium Beauty was initially shunned by luxury cosmetic players who feared the platform would harm their image when it was launched in 2013. But those days are gone. Now, the online retailer is promoting products from top beauty and haircare brands including Estee Lauder's Clinique, Olaplex and L'Oreal's Urban Decay.
During last year's Prime Day event, U.S. shoppers spent $14.2 billion, up 11% year-over-year, according to Adobe Analytics.
Top cosmetics brands can charge high prices and often do not offer steep discounts on Prime Day compared with electronics, apparel and home goods. This year, Adobe Analytics expects beauty product discounts to have 'milder' discounts of 10% to 17%, whereas electronics deals are expected to range from 14% to 22% off, said Vivek Pandya, lead analyst at Adobe Digital Insights.
That, coupled with the ease of shipping small packages of most products, means that Amazon Premium Beauty merchandise has higher margins than other products sold on Prime Day.
Amazon 'doesn't make a huge margin in most of the categories of stuff that it sells online,' said Renee Parker, co-founder of consultancy firm Invinci and a former Amazon executive. 'They are making a lot of money on premium beauty products because … (they're) small and expensive, and you can ship a ton of them.' Vitamins and supplements are successful for similar reasons.
Amazon Premium Beauty sales gathered steam after the e-commerce giant began clamping down on counterfeits and top beauty companies needed new ways to reach customers, said Alfonso Emanuele de Leon, a beauty industry veteran and partner at FA Hong Kong Consultancy.
Amazon was previously viewed as a pariah by luxury beauty brands because of the cheap merchandise on the website, but is no longer perceived that way, said Emanuele de Leon.
'Huge acceleration'
Sales at Amazon Premium Beauty rose by nearly 20% to $15 billion between April 2024 and April 2025, outpacing the 14% growth for beauty products outside the specialized e-commerce store, according to NielsenIQ. It also outpaced the year-over-year growth of 5% for online store sales in the first quarter, NielsenIQ said.
L'Oreal Chief Executive Nicolas Hieronimus said during the company's annual meeting in April that having products on Amazon led to a 'huge acceleration' in expanding its U.S. market share.
Estee Lauder has launched 11 brands on Amazon's U.S. site since March 2024. More than 75% of Estee's finished goods sold in the U.S. originate from the U.S. or Canada and are therefore protected by existing trade agreements, Roberto Canevari, Estee Lauder's global supply chain executive vice president, said at a conference in June.
Lauren Gordon, vice president of Amazon at Estee Lauder, said that Prime Day and Amazon's other 'high-traffic shopping moments' give the company a chance to 'attract both new and existing customers.'
Melis del Rey, general manager for health and beauty for Amazon U.S. stores, said her team has been 'very proactive' in working with premium brands to determine tariff impacts.
'At a high level, most of the premium brands' sourcing strategies are local, and therefore, the (tariff) impact is less imminent,' del Rey said.
Amazon Premium Beauty is an invite-only program for brands shipped and sold by Amazon and third-party sellers. The department has grown to more than 10,000 products, and brands' eligibility is determined on a case-by-case basis. Brands like Dyson and Estee Lauder's Aveda pay an extra 15% commission to Amazon for every website sale, and the third-party seller approach allows major brands to control pricing and inventory.
Adding prestige brands including Unilever's Dermalogica has helped the company compete with beauty retailers Ulta Beauty and Sephora, which is owned by LVMH and also attract older, higher-income shoppers at a time when TikTok Shop is scooping up younger customers.
Hashtags
Try Our AI Features
Explore what Daily8 AI can do for you:
Comments
No comments yet...
Related Articles
Business Recorder
34 minutes ago
- Business Recorder
Aluminium hits three-month highs after US airstrikes on Iran
LONDON: Aluminium prices jumped to three-month highs on Monday as U.S. airstrikes on Iran's nuclear facilities raised the prospect of higher energy prices and disruptions to shipments of the metal from the Middle East. Energy can amount to 40-45% of aluminium smelting costs in some regions. Investor fears of an escalation in Middle East conflict and disruption to oil and gas supplies escalated as President Donald Trump warned that the U.S. could attack other targets unless a peace deal can be agreed with Israel. Benchmark aluminium was up 1.3% at $2,584 a metric ton in official rings after touching its highest since March 21 at $2,654.50. 'Middle East countries produce almost 9% of the world's aluminum,' said Alastair Munro, senior base metals strategist at broker Marex. 'If the Strait of Hormuz is blocked, that could affect shipments.' Global supplies will be further disrupted if Iran shuts the Strait of Hormuz, analysts say, because Middle East production relies on imports of aluminium raw materials bauxite and alumina. Elsewhere, the LME market was focused on large holdings of cash copper contracts and warrants - title documents conferring ownership - and premiums for near-term copper contracts. Aluminium outperforms copper on energy cost concerns amid US-Iran tensions LME data shows that one company holds a dominant position of more than 90% in copper warrants and cash contracts. The premium or backwardation for the cash copper contract over the three-month forward soared to $340 a ton on Monday, the highest since October 2022. The premium stood at only $3 a month ago. Part of the problem is the slide in copper inventories in LME-approved warehouses. Much of the copper stored on the LME has been shipped to the U.S., where prices soared after President Trump ordered an investigation into possible tariffs on copper imports. The London exchange responded on Friday by imposing restrictions on holders of large positions in near-term contracts. Three-month copper was up 0.1% at $9,641 a ton, lead rose 0.8% to $2,009, tin slipped 0.2% to $32,615 and nickel retreated 1.5% to $14,785. Zinc, production of which requires large amounts of energy, was up 1.8% at $2,677 a ton.
Business Recorder
2 hours ago
- Business Recorder
Sterling at five-week low against dollar as markets mull Middle East risk
LONDON: The pound fell against the dollar on Monday with the greenback benefiting from safe-haven demand as investors assessed the risk of an Iranian response to U.S. attacks on its nuclear sites. By 1054 GMT the pound was down 0.5% versus the dollar at $1.33795, its lowest level since May 20. British Prime Minister Keir Starmer spoke to U.S. President Donald Trump on Sunday, his office said. Starmer also urged Iran to return to the negotiating table. Market focus is firmly on the price of oil, which earlier spiked as much as 5.7% and was last up 0.5%. 'Ultimately the pound is exposed…Pro-cyclical currencies have a negative sensitivity to oil prices,' said Francesco Pesole, FX strategist at ING. Elsewhere, UK flash PMIs hit screens showing business activity expanded modestly in June, but the data barely moved the needle on the pound. The S&P Global UK Composite Purchasing Managers' Index rose to 50.7 from 50.3 in May - edging further above the 50.0 growth threshold. Sterling gain slightly against dollar 'Overall, the PMIs suggest that the biggest hit to the economy was in April and things are now starting to recover. That said, the subdued level of the PMIs is still pointing to near stagnation,' Thomas Pugh, chief economist at RSM UK, wrote in a note. The Bank of England held interest rates at 4.25% last Thursday as expected but flagged a weaker labour market and the risk of higher energy prices as conflict in the Middle East escalated. Despite the hold, market watchers took a doveish hint from the 6-3 vote split in favour of keeping rates on hold, with three MPC members in favour of a cut, a factor that is still playing a role according to ING's Pesole. 'Markets are still tending towards the doveish side for the pound curve,' he said. As of Monday, 58% of traders were betting on a 25-bps rate cut at the BoE's next session in August, with 42% betting on no change.
Business Recorder
3 hours ago
- Business Recorder
Tankers U-turn, zig-zag, pause around Strait of Hormuz
SINGAPORE: At least two supertankers made U-turns at the Strait of Hormuz following U.S. military strikes on Iran, shiptracking data shows, as more than a week of violence in the region prompts vessels to speed, pause, or alter their journeys. Washington's decision to join Israel's attacks on Iran has stoked fears that Iran could retaliate by closing the strait between Iran and Oman through which around 20% of global oil and gas demand flows. That has spurred forecasts of oil surging to $100 a barrel. Disruption is already evident, with tankers avoiding spending more time than needed in the strait, industry sources said. Singapore-based Sentosa Shipbrokers said that over the past week, empty tankers entering the Gulf are down 32% while loaded tanker departures are down 27% from early May levels. The Coswisdom Lake, a very large crude carrier (VLCC), reached the strait on Sunday before making a U-turn and heading south, Kpler and LSEG data showed. On Monday it turned back again, resuming its journey towards the port of Zirku in the United Arab Emirates. The South Loyalty, also a VLCC, made a similar U-turn and remained outside the strait on Monday, LSEG data showed. It was scheduled to load crude from Iraq's Basra terminal, according to Kpler data and two shipping sources. US urges China to dissuade Iran from closing Strait of Hormuz The Coswisdom Lake was scheduled to load crude at Zirku for delivery to China. It was chartered by Unipec, a trading arm of China's state-run Sinopec, LSEG and Kpler data showed. Sinopec did not immediately respond to a request for comment. No lingering Shipowners will try to minimise time that vessels spend inside the Strait of Hormuz due to the conflict, KY Lin, spokesperson at Taiwan's Formosa Petrochemical Corp. 'Vessels will only enter the region when it is nearer to their loading time,' he said on Monday. Japanese shipping firms Nippon Yusen and Mitsui O.S.K. Lines said on Monday they continue to transit the strait but have instructed their vessels to minimise time spent in the Gulf. Iran's top security body to decide on Hormuz closure, Press TV reports Several oil traders and analysts told Reuters that they had been warned to expect possible shipping delays as vessels wait for their turn outside the area. Iran's parliament on Sunday approved a measure to close the strait, Iran's Press TV reported, but any such move would require approval from the Supreme National Security Council. Iran has threatened to close the strait in the past but has never done so.
