Beauty Pie, the membership-based beauty retailer, sees success with its unconventional pricing strategy

Why it’s interesting

  • Beauty Pie was started as a cross between Netflix and Everlane. Customers pay $10 a month for the right to pay for beauty products at cost ($5.38 for a cleanser), while non-members pay full price ($32 for this same product). Members can buy up to $100 of product per month on the $10 plan, or max out at $300 of product per month on the $30 plan. (Amazon uses a similar concept in its bookstores and will do so imminently at Whole Foods, featuring lower prices for Prime members.)

Why it matters

  • While many companies have launched programs that aim to replicate the transformative effects of Amazon Prime, most just focus on fast shipping, which is only one reason why Prime is so powerful. On the other hand, Beauty Pie is the best manifestation of Prime’s learnings we have seen because the approach aims to change consumption behavior.
  • This pricing mechanism has an interesting effect: The monthly subscription guarantees a steady revenue stream for the brand, while the rock-bottom prices ensure people will buy lots of products, thus driving scale and reducing costs of goods.
  • But the big questions is whether this pricing structure will give the brand enough cash flow to scale its marketing to the large market it needs to hit.

Amazon debuts new and improved aesthetic for its private labels

Why it’s interesting

  • Amazon’s homepage now prominently features Buttoned Down, its premier men’s private label. Clicking the page reveals a range of new, compelling photography, reminiscent of something from SuitSupply or another mid-tier menswear brand.

Why it matters

  • Because Amazon Fashion and, by extension, its private labels, lacked an elevated aesthetic, brands have refused to sell on the platform. Up until recently, Amazon’s private labels had the sleepy nature of normal private labels, even though this doesn’t mean they were unprofitable.
  • Amazon, realizing the importance of aesthetics in selling mid- and high-end clothes, is now stepping up its game. This is proof that getting the visual presentation right is learnable and does not cost a massive amount of money to achieve. Now that this is a priority, more aesthetic improvements are on the horizon, unless Amazon can somehow prove that it actually makes them sell fewer shirts, which would be fascinating.

Target posts holiday sales gains as its private labels and redesigned stores pay off

Why it’s interesting

  • In Target stores open for at least a year, sales rose 3.4% during November and December, versus a 1.3% decline last year in the same period. Healthy consumer spending contributed to part of the rise—other retailers also saw good gains—but Target’s individual efforts also paid off.
  • Target saw increased use of in-store pickup for online orders and is now tripling the size of its store remodeling program to 325 stores—evidence that the company believes it can replicate these positive results elsewhere. Target is also simplifying its discounting strategy, lowering prices across the board.

Why it matters

  • Target is clearly working hard to compete with Amazon in many categories. These early steps are signs that the battle is not over. Focusing on new stores and more private labels—which shoppers can only get a Target—still has upside. The concern, of course, is that lower prices and costly expansion will create a drag on profitability, but for now the company expects profit to rise for Q4 2017.

Amazon is one of the largest online beauty retailers in the U.S. without really trying

Why it’s interesting

  • Amazon has yet to focus ample time on beauty, though it is the largest online beauty retailer in the U.S., according to some reports. Even so, Amazon’s lack of attention to the market has led most brands to ignore the channel and focus on their own sites and third-party retail. But this will change as Amazon gets its act together, as it is doing with private labels.

Why it matters

  • Amazon’s fee structure, which can range from 15-25% of sales, is more attractive on a margin basis than traditional wholesale, which would allow brands to capture more margin.
  • Estée Lauder says it has no plans to sell on Amazon, while Coty is only interested in selling some of its lower-end offerings on the platform—not its higher-end lines. Sephora, however, has stopped selling some brands that are now available on Amazon—a bold position that might not last long as brands have to keep growing.
  • Like with most things Amazon, taking the beauty industry seriously seems not like a matter of if, but when.

Aural advertising is making a comeback as Amazon Echo, Google Home and podcasts grow more popular.

Why it’s interesting

  • Social media platforms, Google search and other online marketing tools have traditionally led brands to focus on the visual over the sonic—some have stood out with  thumb-stopping visuals and soundless, captioned videos. But with the rise of home-assistant devices and the popularity of podcasts, some brands have started to put renewed focus on sound, songs and melodies.
  • Visa, for example, is testing out branded chimes that will play after a transaction is completed online and in-person, finding that it leads to higher consumer trust.

Why it matters

  • Sonic branding has become an afterthought and creativity in the sonic-only space is limited, tasking brands to not only think about how they look and feel, but increasingly, how they sound.
  • Alexa, launched only one year ago, was the best selling item on Amazon during the holiday season and voice search is used by millions of shoppers, according to Amazon. Big brands, especially those who sell commodities, are thinking through their own voice-shopping strategies knowing that a failure to do so will cut into its sales.