“Buy perfume” - they don’t buy it, do they?
We started working with perfumes and cosmetics in 2012. Back then, the era of online retail was just dawning, "Nova Poshta" was just launching, searches were conservative, there was no product promotion, and it all seemed a bit unusual, as it was unclear how anyone could buy perfume online without trying it. But in reality, demand was beginning to emerge from customers who either valued their time and knew exactly what they needed, or simply wanted to buy at a lower price or on sale. Thus, the niche of online perfume and cosmetics sales was born.
This article is a look back at how the online perfume market was formed.
Initially, many tested trivial SEO and PPC promotion methods to find customers, for example, using the most obvious keywords such as "buy perfume", "niche perfume", "buy perfume", and so on. But in most cases, this didn't produce profitable results.
As the field of online store promotion developed, it became obvious that it was necessary to divide the semantic core into the following types of queries:
- category-specific;
- brand-specific;
- product-specific.
Additionally, back then, there was still the classic and universal Google Analytics, which showed search queries and their conversions. It was then that the key to successful online perfume store promotion became clear:
Brand, fragrance, product - the key to sales!
Product and brand queries are the most converting, and not just in the perfume and cosmetics niche, as these queries already reflect the buyer's pre-existing choice, who is simply looking for a place to complete the transaction.
Those who got their bearings in time immediately worked to expand their product range in order to concentrate maximum conversion traffic.
That is why:
A successful online perfume store is a multi-brand store.
Brands are magnets for customers, and the online platform is just a place to make a purchase.
If you want to attract as many customers as possible, not just visitors, then maximize your product range.
Online store owners have sharply increased their activity in the following areas:
- Product range management;
- brand page optimization;
- online store filters;
- product card optimization;
- automation of multiple processes.
Over time, in 2018, Google Shopping appeared - sales simply skyrocketed.
Perfumes in Google Shopping are focused on promoting product listings, the most converting keyword in this market.
During the COVID-19 pandemic, sales soared even further as people began shopping more remotely.
Everything was great until everyone started competing on price. One of the players chose a “scorched earth” strategy and began selling goods significantly below market value, resulting in a 40-50% market share and being sold for a tidy sum. We won't reveal his name, but everyone knows he's a player starting with "M."
The smarter ones moved into the niche
Why?
Margin, exclusivity, no competition.
👉 Margin. These are completely closed, individualized retailing and pricing conditions. This isn't a mass market, where everyone has the same gross margin of 25-30%.
👉 Exclusivity. Some players have received exclusive distribution terms, thereby concentrating a monopoly position.
👉 Lack of competition. A "niche" is a product that isn't sold in all stores, meaning promotion costs are lower and the ability to control sales is greater.
Niche players have received a number of bonuses, but they all face the same challenges, which we will discuss below.
What hinders market development?
👉 Unfair taxation for all market participants. Some are sole proprietors and have a single tax rate, while others are legal entities subject to VAT and can no longer afford to lower their prices.
👉 The presence of goods that have not been properly cleared through customs. Entrepreneurs call this the "gray market." The presence of such goods allows them to sell below the recommended retail price of the official supplier, thereby gaining the opportunity to engage in market dumping.
According to one of our friends, who is a transparent official representative of niche brands in Ukraine:
Working transparently is a long-term strategy, but strategically correct, as the market will eventually come to transparent conditions.
As the market develops and projects are supported, we see that those who have been working long-term—specifically, on the website, service, and consistent quality—have earned good branded traffic and, as a result, increased profits, since with branded traffic, transaction costs are minimal.
Today, in the perfume industry, according to Google Ads, the following branded traffic figures can be obtained:
It's clear who worked and how. This is a result of many factors, from the name to the reach of the customer base.
In conclusion, the following can be said: the market is becoming polarized; small players are unable to withstand the pressure of systemic players and are gradually selling their projects. All promotional steps must be considered strategically, not just for the short term.
Order a service