At the end of June, Sephora and Zalando announced a deal that will see Sephora’s portfolio of high-end beauty products sold via Zalando’s online retail platform. The two companies said they want to create a “new, innovative online prestige beauty experience for millions of Zalando customers”.
Zalando has over 42 million active customers across 20 European markets. And so, as Zalando’s strategic partner for prestige beauty, Sephora will benefit from this route to market for its assortment of beauty products from more than 300 prestige brands. From Zalando’s perspective, the partnership will elevate its beauty proposition and grow its presence in the category, as Joanna Rogers, the company’s VP Beauty, explained.
“The beauty market is a sizeable opportunity for us, with attractive market trends that enable us to leverage our technology and e-commerce expertise. But it also reflects the demand of our customers. We know that customers appreciate the convenience of shopping fashion and beauty on a single platform and we are therefore committed to continuing to invest in growing our beauty category. Partnering with Sephora is an important step in that direction,” Rogers told CosmeticsDesign-Europe.
Whilst declining to go into more detail on the terms of the deal, she explained that Sephora will work with Zalando through its Partner Program model.
“As a Partner Program partner Sephora will pay a remuneration to Zalando on items that are sold and not returned,” she said.
German launch-pad ‘makes sense’
The first market to be targeted under the collaboration will be Germany, where Zalando will start retailing Sephora’s assortment from Q4 2021, with a view to rolling it out across Europe during 2022.
Commenting on this strategy, Mintel global beauty analyst Sam Dover said: “As the second biggest online retailing market in Europe, an initial launch in Germany makes sense. In Germany, 30% of beauty and personal care buyers shopped online in 2020, up from 21% in 2019.”
However, Dover said the partnership’s impact on the online beauty landscape would depend on how far and wide it is rolled out.
“It will strengthen the existing competition in certain markets, notably those where Zalando or Sephora already have an online beauty proposition, which will likely be first in line for the rollout, but the real disruption will come if the partnership is rolled out beyond those markets,” she said.
Motivations behind the deal?
Dover said for Zalando, backing from a beauty powerhouse will give its online beauty proposition greater credibility and a stronger point of difference.
“Zalando has seen success from its beauty rollout in Europe, but it is facing increased competition, with Douglas’ investment into online exemplifying a wider trend as more beauty retailers take online seriously,” she said.
For Sephora, Dover said the partnership would assist expansion of its online business, which accelerated sharply in 2020.
“Zalando is a dominant online player across Europe. Sephora can therefore benefit from its well-established logistics and customer base, meaning the partnership will also help Sephora keep pace with its online beauty competitors,” she said.
A predictable and ‘consistent’ move
The deal probably won’t have come as a great surprise to anyone following developments in the industry, as according to data analyst major GlobalData, a number of clothing stores and brands have recently expanded their offerings to include beauty products.
“It was only a matter of time before Sephora’s stock would be made available through more than one website; the competitive market forces brands to switch their focus from the product to pushing a lifestyle instead,” said Nina Nowak, senior innovation researcher at GlobalData.
Nowak described the partnership with Zalando as a “consistent next move for Sephora” as the beauty brand makes the most of its online momentum.
“Sephora’s retail store-based strategy was challenged in 2020. Compulsory shop closures due to the pandemic provided the impetus to focus more on the online channel. An increased online presence and facilitated shopping experience with same-day deliveries and click-and-collect services were introduced. The success of those ideas may have solidified the decision to cooperate with Zalando,” she said.
Premium image at stake?
However, Nowak said there could be a potential flip side for Sephora in growing sales via this route.
“It seems that Sephora may be risking more with this partnership than Zalando. Sephora’s appeal has always focused on a luxurious shopping experience. The partnership may force Sephora to compromise on the ‘luxurious aura’ created mainly via its retail stores with their distinctive design and atmosphere,” said Nowak.
She continued: “Unlike Zalando, which offers a range of products from budget to premium, luxury has always been a focal point of Sephora’s image. Sephora must maintain a strong brand identity, with self-branding at its centre in order to retain its loyal consumer base (…) Depending on the outcome, this collaboration may inspire other clothing and beauty brands to join forces.”
