Global challenges since early 2020 have caused the sales of various beauty and personal care products to rise and fall like never before. In recent years consumers have assigned increasing levels of disposable income to purchase haircare, skincare, and cosmetics products, but many consumers cut back on spending and consumption as COVID restrictions were established.
In this article we examine how consumer behaviors and trends have shifted, their relationships with counterfeit beauty and personal care products, and how the growth of e-commerce has facilitated the expansion of this illicit market.
The beauty and personal care market
A 2019 study by Statista analyzed the beauty and personal care sales by category within Europe, with skin care leading the way (EUR 20.39 billion), followed by toiletries (EUR 19.92 billion), hair care (EUR 14.92 billion), fragrances and perfumes (EUR 12.28 billion), and decorative cosmetics (EUR11.07 billion)
A recent report published by L’Oréal revealed that the worldwide cosmetics market had seen year-on-year growth since 2000 (when the report begins). However, in 2020 sales fell by 8%, a drop which went against the trend, and was largely attributed to the global pandemic.
The beauty and personal care industries are not alone, this has been one of the most challenging periods in recent history for various industries, who have frantically adapted their business models to grow sales, or limit churn during these difficult times.
The migration from offline to online shopping had been gathering pace, however the global pandemic really accelerated this change in consumer behavior, which has put a real emphasis on a mobile first, consumer friendly digital shopping experience, where technology to bring instore online is being developed and implemented to delight today’s consumers.
In our most recent research study, conducted with Ipsos*, we found that 65% of beauty and personal care shoppers have increased their online shopping over the past 12 months with one in three admitting that they are no buying more through digital channels than ever before.
Counterfeit beauty products are rife
In 2019 the European Union Intellectual Property Office (EUIPO) estimated that the financial losses within 11 sectors due to counterfeiting and piracy amounted to at EUR 60 billion each year, which translates into an average of 7.4% of all sales. Cosmetics and personal care were named as one of the most vulnerable industries with estimated losses of around EUR 7 billion per year, or the equivalent of 10.6% of all sales within the sector.
In our exclusive research we found that 19% of respondents have unintentionally purchased a counterfeit beauty or personal care item, whilst an additional 16% are unsure. In the US we found the number to be significantly higher with one in three consumers having unintentionally bought a counterfeit.
Our internal data shows that 70% of beauty and personal care brands suffer from counterfeits within digital marketplaces, whilst 60% suffer from brand abuse throughout online channels. 40% of the infringements we find are within marketplaces, 30% are detected on social networks, and the remaining 30% are fake or rogue sites which imitate the look and feel of the official brand with the intention of deceiving unsuspecting shoppers.
Despite the possible dangers associated with fake products sold for use on the hair and body, one in five consumers have intentionally purchased a counterfeit beauty or personal care item whilst shopping online. Alarmingly, 52% of this group do so on a regular basis. It´s perhaps a little contradictive when we consider that 94% of consumers declared that yes, it absolutely concerns them that counterfeit beauty or personal care products could cause harm to their body (68%), or that it concerns them a little (26%). It seems that a reasonable percentage are still willing to take that risk.
These consumers are not only purchasing counterfeits for personal use (67%), but also as gifts for friends and family (39%), and perhaps most worryingly for their child or children (37%).
Counterfeit beauty products, what´s the big attraction?
One in five respondents to our survey (21%) who have purchased a counterfeit intentionally did so because they believe that it provides the same quality as the official item. A similar number (18%) were inspired to do so after reading positive reviews and ratings, whilst a lesser percentage bought a fake because it was the first one that they found when searching online.
It´s important that consumers understand the ways in which cybercriminals adopt sophisticated methods to drive sales. These fake products are readily available on popular marketplaces, promoted on well-known social networks, and even build websites which imitate the look and feel to that of the official brand to deceive shoppers.
Fake beauty and personal care items also appear in Google search listings, often thanks to paid media campaigns, and positive reviews and ratings are often submitted by the same person. Despite what may be considered the most obvious attraction, just one in 10 (9%) claims that lower pricing is the key influence.
Official brands pay the price
Brand name and brand reputation play a huge part in the success of key players within the beauty industry, and significant resources are made available for marketing and advertising campaigns to build awareness, recognition, and ultimately sales. However, the illicit sale of counterfeit goods is undermining those efforts.
16% of consumers believe that the official brand is primarily responsible for the number of counterfeit beauty and personal care products which are marketed online using their brand name, with a further 9% unsure who to blame. When asked how they would / have reacted to unintentionally purchasing a counterfeit, two in five would only shop and the official brand website in future, 28% would warn friends and family and about the brand, 21% would lose trust in offers and discounts, whilst one in five would stop shopping with the official brand entirely.
Official brands can benefit in multiple ways through tackling the issue of counterfeits and brand abuse online. Constant monitoring provides brands with a full picture of the threats which exist online, and this is essential, not only within the distribution channels and markets where they operate, but also in those where they don´t. By issuing takedown notices, delisting counterfeit listings in global marketplaces, and removing fake accounts and pages throughout social networks brands can limit the damage to consumer confidence and brand reputation, increasing sales and revenue streams, and safeguarding opportunities for future growth.
Want to learn more about consumer behavior online within the beauty and personal care industry?
Download our free beauty and personal care research study today, with access to all our facts and findings.
*Ipsos Group S.A. is a multi-national market research and consulting firm with headquarters in Paris, France. The company was founded in 1975 and today are the global leader in market research, Ipsos delivers reliable information and true understanding of Society, Markets and People.