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E-commerce giant Amazon recently announced the launch of Amazon Professional Beauty Store, intended to sell beauty products used by licensed stylists, beauticians & barbers. Followed by the announcement, shares of many specialized beauty retailers fell, report sources.
Shares of Sally Beauty holdings (an American international specialty retailer and distributor of professional beauty supplier), sank by 17%, while those of Ulta Beauty Inc. (a chain of beauty stores in the United States) fell about 3%.
This move by the world’s largest retailer into the niche beauty market is alleged to pose serious threat to beauty retailers. For instance, in 2018, Amazon forayed into online pharmacy by acquiring PillPack. As a result, the U.S. pharmacy chains & drug wholesalers such as McKesson Corp, CVS, and Walgreen, lost billions in market value.
Amazon typically uses its online profile and scale to offer a broad spectrum of products at lower prices and hence, pushes the existing players to the margins.
Steve Kann, Customer Driven Experience, Director, Amazon Business, reportedly said that the company is pleased to bring convenient shopping experience for professionals in the beauty industry. The stylists can now get everything they require at the Amazon online beauty store at good price, with convenient delivery options, freeing up their time for customers, Kann added.
Presently, stylists often travel to get necessary supplies from multiple cosmetology supply locations. Amazon would soon become a substantial channel for many brands to carry their top offerings on the Amazon platform, claim sources.
Amazon’s entry into the beauty segment is expected to lower Sally Beauty’s operating profits by 19%. In contrast, Ulta Beauty will face lesser troubles as it mostly sells cosmetic & styling tools, which account for 19% of the total sales, industry analysts claim.
Amazon reportedly stated that the stylists would need to create a business account and upload their state-issued licenses to buy products from the Amazon professional beauty store. The company added that it will stock brands including OPI Professional & Wella Professionals.
Source credits: https://www.reuters.com/article/us-amazon-beauty-products/beauty-retailers-fall-after-amazon-opens-store-for-professionals-idUSKCN1TP21H
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