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Watch Out, Sephora and Ulta: Amazon Is Coming for Higher-End Beauty Shoppers

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Amazon still has big issues (hello, counterfeits), but it’s slowly closing the gap.

Erno Laszlo soap and bottles of skin care
Erno Laszlo, which is a featured brand on Amazon’s “luxury” beauty page.
Erno Laszlo

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The Amazon story is one we all know well: It’s killing retail, basically. (At least that’s the claim.) But beauty is one industry that Amazon has not been able to decimate, presumably because people still like to go to brick-and-mortar stores for a hands-on experience. Sephora’s and Ulta’s tremendous growth are proof of this.

However, Amazon seems to finally be making inroads here. Historically, super-high-end designer beauty brands have avoided the platform because of complaints that its web interface isn’t attractive, that it “commodifies” products, and that it doesn’t allow for adequate brand storytelling. But Barron’s estimates that Amazon has 9 percent of the total beauty category in the US and growing. And according to a new report by One Click Retail, a marketing and analysis firm, high-end beauty sales at Amazon are on the rise.

In the first quarter of 2018, the total beauty group grew by 30 percent. In the luxury category, however, it almost doubled to 57 percent growth. Luxury skin care, specifically, grew by 25 percent, selling more than $40 million in the quarter. (Not surprising, considering that skin care was the big story in 2017, both in the cultural conversation and in sales — according to the NPD Group, the skin care category grew 9 percent.)

There’s also evidence that Amazon is positioned to take some customers away from Ulta, which sells both mass-market and more upscale brands. For example, MAC has been a best-seller there since it was added last year, and Ulta just announced that it would begin carrying Chanel.

A post shared by Clinique (@clinique) on

According to a Deutsche Bank analyst, Amazon now has a 94 percent product overlap with Ulta’s best-sellers. The analyst said in his report that it showed “concerning trends for Ulta.” Prices seem to be competitive. Consider Clinique’s Take the Day Off Makeup Remover, one of Ulta’s best-sellers in 2017: It costs $19 at Ulta and $18.05 at Amazon. (Though it should be noted that Estée Lauder, which owns Clinique, doesn’t sell its products officially on Amazon’s marketplace, so these are likely coming via other distribution channels that might not be trustworthy.)

Amazon also just revealed that it will open an Indie Beauty Shop in June, according to Beauty Independent. Brands will need to be at least 50 percent independently owned and not be sold at Ulta, Target, or Walmart. This will be a boon for beauty junkies looking for new, interesting brands all in one place, and for Amazon, which will have semi-exclusive products that won’t be sold by its competitors.

While Amazon’s site and customer interface are still not up to par design-wise compared to other beauty sites, there have been recent improvements, including virtual “storefronts” to make navigating the vast beauty selection easier. Within the beauty category on Amazon, customers can shop in a separate luxury tab, which includes brands like Stila, Elemis, Burberry fragrances, and L’Occitane. There is also a new professional skin care tab, which features lines often found at dermatologists’ offices like SkinMedica and iS Clinical. Finally, there’s a salon and spa tab, which includes Oribe, OPI, and hair tools.

Amazon still has big hurdles for beauty shoppers, of course. Counterfeits and limited transparency into sellers is still a big issue, as are fake reviews. And obviously you can’t try on makeup or get a great sense of shades via a computer screen, which probably explains why skin care is doing better than makeup at Amazon. Either way, Sephora and Ulta should probably be looking over their shoulders.

Updated Thursday May 17 at 9:52 pm:

An Amazon spokesperson provided a long statement to Racked about counterfeits and its policy to combat them, excerpted in part here: “Our customers trust that when they make a purchase through Amazon’s store—either directly from Amazon or from one of its millions of third-party sellers—they will receive authentic products, and we take any claims that endanger that trust seriously. We strictly prohibit the sale of counterfeit products and invest heavily—both funds and company energy—to ensure our policy against the sale of such products is followed...We encourage rights owners who have product authenticity concerns to notify us; we investigate all claims thoroughly. We remove suspected counterfeit items as we become aware of them, and we permanently remove bad actors from selling on Amazon...Counterfeit is an age-old problem, but one that we will continue to fight and innovate on to protect customers, brands, and sellers.”