Amazon.com has long been the predominant marketplace platform for beauty brands. However, in recent years, as the US Amazon marketplace has become more competitive and advertising and logistics costs have escalated, brands have begun to venture beyond Amazon’s US platform.

There’s a compelling reason to look globally. Statista Global Insights estimates that global marketplace revenue will hit $5.6 trillion by 2027. Nearly $570 billion of that massive global consumer spend will be focused on beauty, health, and personal care brands. This growth in global marketplaces is being driven by the increasing global popularity of online shopping across all demographics, the expansion of e-commerce into hard-to-navigate new markets in East Asia and LATAM, and the increasing availability of online payment in those markets.

The outlook for global e-commerce marketplaces is favorable. 

Marketplaces are well-positioned to capitalize on emerging trends that beauty brands are paying attention to at home, offering opportunities for more learnings and more leverage of business and operating strategy:

The rise of mobile and social commerce. Mobile devices are becoming the primary way that people shop online. This is driving the growth of mobile-friendly e-commerce platforms and apps. The same is true for social commerce platforms that are primarily accessed through mobile devices.

The increasing importance of data analytics. Data analytics is becoming increasingly important for e-commerce marketplaces. By analyzing data, marketplaces can better understand their customers and their needs. This information can then be used to improve the customer experience and increase sales, particularly when data is leveraged across marketplaces. 

The increasing regulation of e-commerce. Governments are increasingly regulating e-commerce in response to concerns about consumer protection, fair competition, and tax evasion. As a result, e-commerce marketplaces are focused on compliance with the growing number of regulations. This regulatory environment levels the playing field for global businesses that can meet standards and creates advantages for those able to address the regulatory complexity.

While there are hundreds of global marketplaces, just a few dominate the majority of global spend.

While the United States drives approximately two-thirds of Amazon’s $500B Gross Merchandise Value (GMV), the company operates in 200 countries and provides access to global expansion with a footprint heavy in Europe and parts of East Asia. Top international markets include Germany and Japan.

The Alibaba Group includes China-focused TMall, a Chinese C2C marketplace called Taobao, and Lazada in Southeast Asia. The B2B portion of its business generates $100B in GMV.

Although smaller than any of the TMall properties, China-focused Douyin is an important social media marketplace that generates $30B in GMV. It is growing rapidly.

Mercado Libre is dominating e-commerce in LATAM by developing payment, supply chain, and merchandising tools to attract top sellers across 19 countries. While global GMV is just under $20B, its 25% current and projected growth rate makes it very attractive to brands gaining traction in its key markets of Mexico, Brazil, and Argentina.

Brands entering these marketplaces find meaningful benefits.

• Market Expansion: Entering a global marketplace allows the brand to access new and diverse markets, expanding the potential customer base and revenue streams.
• Diversification: A global presence provides beauty brands with resilience and adaptability. Diversifying across various markets can help mitigate risks associated with any one market.
• Brand Exposure and Awareness: New markets expose the beauty brand to a broader audience, increasing brand awareness and recognition globally. Positive brand experiences in international markets can also influence the perception in local markets.
• Learning and Innovation: Operating in diverse markets enables beauty brands to learn from different consumer behaviors and preferences. This knowledge can drive innovation and improve products globally.
• Partnership and Collaboration Opportunities: Global expansion opens doors for potential partnerships with international retailers, distributors, and influencers.

There are also a number of risks associated with selling on global e-commerce marketplaces.

• Competition: Global e-commerce marketplaces are very competitive and often feature dominant players that are not yet well known to the brand entering the market.
• Customer Service and Language: Customer service can be difficult to provide on global e-commerce marketplaces, especially if there is lack of familiarity with local customers or language barriers. 
• Currency Fluctuations: When brands sell to customers in other countries, currency fluctuations impact demand and selling economics. 
• Shipping Costs: Shipping costs can vary depending on the weight and size of products, as well as the distance they need to travel. This can be a significant cost that impacts consumer perception and brand economics.
• Intellectual Property Infringement: Presence on global marketplaces brings competitive attention to a brand, increasing the potential for intellectual property infringement.

There is a path forward.

When evaluating selling on global e-commerce marketplaces, there are several important considerations beauty brands can take to develop a successful strategy.

• Create ONE Global Marketplace Business: Having one business across all marketplaces will ensure consistency and leverage. This involves having one central group or advisor responsible for all marketplace activity supported by local input as needed. Doing this allows brands to leverage creative, marketing strategy, and insights while creating a single point of responsibility for operational support of the global marketplace business in the areas of logistics and compliance.
• Choose Carefully: Not all global e-commerce marketplaces are created equal. Some marketplaces are better suited for certain products or price points than others. Look hard at the overall market, the economics and customer demographics of the marketplace, and the competitive dynamics among incumbent brands.
• Leverage or Acquire Consumer Research: Brands that have successfully moved through various markets via marketplaces have a keen understanding of their consumer at home. They leverage this understanding and apply it to what they can learn about consumer differences in new markets in order to not only determine whether or not to engage, but also the optimal merchandising and assortment strategy.
• Align Marketplace Strategy with Overall Corporate Strategy: While the core intent of global marketplace expansion may be revenue growth, how the marketplace is used to achieve that, with what products, and for whom and how they are positioned, must align with overall corporate strategy. Consumers do move across borders and marketplaces.
• Establish Pricing Policies: Often brands will set a cost-plus pricing strategy for global marketplaces that factors in the cost of currency fluctuations and shipping costs. This might not be the best approach for a global brand. Companies with mature global marketplace businesses set global pricing, assess whether local economics will be acceptable under that pricing model, and then either make small modifications or move forward with a global price. 
• Protect Intellectual Property: Registering intellectual property with the appropriate authorities in the countries covered by each marketplace will help to protect brand rights if your products are counterfeited.

Global marketplaces represent an exciting opportunity for brands to extend revenue and global awareness while bringing together new insights that could enhance many areas of their business. Executing a true global marketplace strategy is not simple nor quickly done. However, when done deliberately, with the right supporting structure and strategy, it can drive meaningful value for a brand.

Written By: Brandon Pemberton