The beauty industry is now a horse race— it is significantly evolving, and it is time that companies and shoppers finally realize that. With rampant trends, new technology, everyday advertisements of products and—most importantly— the burgeoning generation of Generation Z and Alpha, their prevalent desire to use beauty products could make it uneasy to understand what products work best for each shopper and their beauty. This is because beauty is ominously now not so much about what products radiate a shopper's inner and outer beauty, but more so being vigilant about what trends are prevalent each day and jumping on the opportunity to generate a product to be “trendy” in order to maintain business. This surface-level method decreases trust and the symbiotic relationship between beauty companies and shoppers, posing an issue.
As a result, creating a routine and bundling the products together can be one of the easiest ways to mitigate this problem. Creating a routine means recommending a bundled set of products to shoppers so that they use it regularly to ensure there is improvement in their skin health with time. These bundles are specifically catered towards a specific shopper based on their skin type, skin concerns, allergy to certain ingredients, and other preferences. Thus, add the magic to it— bundle products together and educate the shoppers on why they were recommended that very specific routine. This strategy for beauty companies will help in sales and build a loyal relationship with the brand. As a result, the impact is even bigger on a macroscopic level.
Let's stop the surface-level talks and dig deep into how routine and bundles quantitatively impact D2C brands in terms of e-commerce metrics! So, here poses an in-depth question to this connection: how do routines and bundles impact e-commerce businesses?
Routines and bundles increase product performance amongst e-commerce businesses because these customized combinations develop a trusting relationship between shoppers and e-commerce companies. This study will break down this notion with key qualities that determine the product performance for an e-commerce brand: total sales revenue, AOV, conversion rate, customer lifetime value, and return rate.
Primarily, the total sales revenue determines the total amount of profit generated from the sales of a company’s products or services over a specific period. Revenue is highly vital for a company because not only does it scale the company’s financial health but this can also be a determining factor of the trusting relationship between shoppers and a company. For example, if a total sales revenue is high, then it can be inferred that trust is robust. Bundles tend to be cheaper and more efficient (since it is a packaged deal of customized products for a shopper) compared to buying individual products at their baseline price. As this would be more appealing for shoppers with the main idea of personalized products, they would most likely buy the bundles, increasing total sales revenue.
Average order value, or AOV, is another important factor to scale trust. It is the average amount of money spent by customers per order. So, a well-crafted routine for shoppers can incentivize them to purchase the package from the allure of a routine that is catered towards them and their needs, within seconds! Furthermore, routines save shoppers from doing time-consuming research about what products would be fit for them at the cost of believing misinterpreted or fabricated information. In addition, AOV increases as more shoppers want to buy customized products. AOV can go hand in hand with the conversion rate, which is the percentage of visitors on a website that complete a desired action, such as purchasing a product or service or clicking a page. In addition, the conversion rate measures how efficient a company is to convert visitors into shoppers.
While all of these factors constitute the trust of shoppers and beauty companies, the steadfast factor is the customer lifetime value since it measures long-term revenue for each customer, which ultimately scales the strength of trust between shoppers and companies. Customer lifetime value is the long-term measurement of revenue from a particular shopper. In addition, it is the total revenue a business can anticipate from a retaining customer based on their relationship with the company. This factor doesn’t necessarily measure first-time shoppers but instead has a longitudinal measurement and value of a customer that keeps going back to their company to buy more and more. Routine and bundles boost the customer’s lifetime value because if the routine ends up working for them, it creates a notion that this specific selection of products is foolproof and works for them and their skin type. As a result, this develops consistency, which causes them to go back to purchase the same products after usage. This builds trust, establishing a positive relationship and correlation between the customer retention rate (which is the percentage of customers the company retains over a specific period) and a decrease in churn rate (the rate at which customers stop buying from a company).
Lastly, the return rate is the percentage of shoppers returning items to the company. This can pose an issue for companies since it can infer that the product does not work for them, decreasing the trust between shoppers and e-commerce companies. Buying bundles and routines lowers the return rate risk because since each step and product matter to the cosmetic sequence, the risk of returning a singular product out of the bundle is unlikely.
In conclusion, routines and bundles are essential for e-commerce brands because they provide fundamental trust amongst shoppers and companies which grows the mentioned factors, boosting the health of a company. As a result, beauty companies should foster routines and bundles within their products as it will aid the growth and brand development.
Sources:
https://www.emarketer.com/content/5-charts-on-gen-z-s-shopping-habits-across-beauty-apparel-more
https://www.glossier.com/products/the-summer-beauty-set
https://olaplex.com/products/olaplex-bond-maintenance-system-kit-2022?
