Introduction
Is the Beauty Industry a substantial market in Australia?
When we think of beauty, we usually don’t associate it with recession. From Instagram, Facebook, and television to conversations with friends at the pub, people always discuss new products, procedures, and wellness-related topics. Despite the pandemic’s harsh impact on most businesses, the beauty sector is flourishing. Google trends data for the past five years in Australia shows a continuous upward trend, indicating how users search on Google.
We can quickly understand the graphs, but we also like numbers. Approximately $22 billion is spent annually on beauty products in Australia. As per statistics provided by Mozo and Beauty Packaging, Australians spend a staggering $22 billion yearly on beauty products, encompassing domestic purchases and imports, with $888,405,000 reported in 2018 alone. Furthermore, this figure does not solely account for cosmetic procedures, as Australians invest an estimated $1 billion annually in cosmetic treatments. The Beauty Industry is experiencing a global surge, not just within Australia.
The boundaries between beauty and wellness are projected to bloom further, presenting an exceptional opportunity for brands, retailers, and investors worldwide. The combined potential of this market is valued at approximately $2 trillion, showcasing its continuous growth and promising prospects.
Upon analysing the opportunities, a notable trend is the surge of beauty e-commerce. Consumers are increasingly eager to purchase beauty products online, making it the fastest-growing channel in the global beauty industry.
Data from the Beauty Industry in Australia
In 2021, the beauty market in Australia generated a revenue of $7.7 billion, as reported by Statista. Although the industry experienced a slight decline in revenue in 2020, it bounced back in 2022, reaching total revenue of $8.6 billion. Online sales have increased, with approximately 36.1% of all cosmetics sales made online in 2021, amounting to around $2.1 billion in revenue. Online shoppers continued to grow in 2022, constituting 39.8% of the market, and this figure is projected to reach 52.4%. Women are the primary consumers in the Australian beauty industry, with an average annual expenditure of $3,600 on beauty-related products. This trend is significantly influenced by 2.1 million millennial women who regularly purchase new skincare items every six months. Australian women collectively spend an impressive $15 billion annually on grooming products, while men’s contributions amount to $7 billion. Regardless of spending differences, looking and feeling their best is a shared priority among both women and men in Australia. Regardless of spending differences, looking, and feeling their best is a shared priority among both women and men in Australia.
The Personal Care segment is the most prominent beauty industry sector in Australia. 46% of Australian women would avoid cosmetic products if involved in animal testing. To sum up, the beauty industry is not only thriving in Australia but also on a global scale. The rapid growth of e-commerce presents abundant opportunities, but it also brings forth significant challenges that must be addressed. Among these challenges, Logistics in the beauty industry stands out as a crucial area requiring attention.
Beauty Industry and Logistics
Understanding that e-commerce is “the future” of beauty, we must recognise that Logistics is already playing an essential role in this industry. Even though the beauty industry highly depends on Logistics solutions, Visibility and Trackability are two of the major problems businesses face. $4.8bn of beauty products is wasted in the brands’ supply chain. Overproduction and excess inventory were found in a study done by Avery Dennison to be the biggest culprits in supply chain waste, accounting for 6.2% of discarded goods. Meanwhile, 4% of the stock goes to waste due to perishing, spoiling or damage to the products – a growing concern for brands, which could be losing up to 2.8% of their annual profits.
Brands are increasingly aware of these issues, with more than three quarters (77%) of respondents – which included more than 60 beauty and personal care businesses worldwide – currently tracking their supply chain waste. In the study, 18% of these brands cited visibility and transparency across trading partners as their biggest challenge to achieving resilience in their supply chains. That is why companies are increasingly adopting new technologies to boost their supply chain efficiency, with 52% tracking unique items in their supply chain and 38% saying they plan to in the future. As Logistics is an essential part of the Supply Chain, we want to address a better understanding of how TGL benefits this industry as a 3PL and Freight Forwarder provider.
Especially because Australian companies are highly dependent on overseas suppliers for raw materials and packaging when it comes to beauty products, and the global pandemic has created the perfect storm for supply chain issues – shipping container shortages, price hikes on shipping containers, staff shortages, transport delays, factory shutdowns and backlogs of orders are all the components which impact the whole logistics and supply chain.
Issues related to Beauty Industry Logistics and Supply Chain:
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Transporting beauty products over long distances: Aside from temperature, cosmetics can spoil/damage if exposed to the incorrect amount of moisture, humidity or even a bump on the road when transported. The sensitivity of cosmetic products means you must be very careful during logistics.
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Lack of Visibility: Poor visibility across the supply chain can lead to inefficiencies, delays, and increased operational costs. Real-time tracking and visibility of shipments are vital for logistics providers and beauty companies.
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Last Mile Delivery: Efficient last-mile delivery is essential for meeting customer expectations in the fast-paced beauty industry. Logistics providers need to ensure timely and accurate deliveries to customers’ doorsteps.
These are just three of many reasons it’s crucial to have reliable providers that understand the specific need of the beauty industry to deliver the best service.
How do Logistics companies play their part in delivering better services to their beauty industry clients?
Efficient Inventory Management: Communication between suppliers and distribution warehouses is crucial in supply chain management. Logistics companies help facilitate this process, ensuring supplier stock-ready times match space and demand at the destination, increasing visibility to a client’s supply chain. This ensures that the right products are in stock when needed, reducing the risk of stockouts or overflow, and missed sales opportunities.
Reduced Lead Times: Logistics companies can help beauty businesses reduce lead times by optimising transportation routes and delivery schedules. Faster and more reliable deliveries are essential for meeting customer expectations and staying ahead in a competitive market.
Sustainable Practices: Eco-consciousness is a growing trend in the beauty industry. Logistics companies can assist beauty brands in adopting greener practices, such as picking specific carrier companies to optimise shipping routes and reduce carbon emissions.
Temperature-Controlled Shipping: Many beauty products, like skincare and cosmetics, require temperature-sensitive handling. Logistics providers with temperature-controlled shipping capabilities ensure these requirements are met so beauty companies deal less with spoilage and damage.
Compliance with Regulations: The beauty industry is subject to various regulations depending on the products. Logistics companies can help ensure that products are transported and stored in compliance with relevant laws and regulations.
How TGL helps the Beauty Industry?
TGL, a leading international Freight Forwarder headquartered in Australia, specialises in providing businesses with seamless export and import solutions. Our primary focus is delivering exceptional customer service, offering a single point of contact for handling goods from Door-to-Door, be it Air Freight, Sea Freight, Domestic Freight, Customer Clearance, or 3PL warehouse services in Sydney.
Recognising the unique challenges faced by the beauty industry, we have strategically established a well-located warehouse in Sydney, ensuring efficient transportation. This setup enables our clients to concentrate on planning, products, and sales while we offer tailored logistics solutions, including transparent and efficient calculations of freight forward fees per unit.
To enhance our client’s experience, we provide:
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Our cutting-edge technology.
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Ensuring they have efficient and up-to-date information about their shipments.
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Guaranteeing the visibility, they require.
Book a Consultation with our specialised team to discover how TGL can elevate your business’s efficiency and thrive in the beauty industry’s growth wave.
Our unwavering commitment to reliability, transparency, and personalised services ensures that your logistics needs are met with precision and professionalism.
Sources:
- https://cosmeticsbusiness.com/news/article_page/48bn_of_beauty_products_is_wasted_in_brands_supply_chains/204793
- https://retailbeauty.com.au/how-global-supply-chain-woes-are-impacting-beauty-brands/
- https://accumulate.com.au/australian-beauty-industry-statistics-2023/#:~:text=Approximately%20%2422%20billion%20is%20spent,cosmetics%20sales%20were%20made%20online
- https://www.mckinsey.com/industries/retail/our-insights/the-beauty-market-in-2023-a-special-state-of-fashion-report
- https://airpharm.com/en/blog/trends-2023-cosmetics-logistics/
