Amazon.com, Inc. (NASDAQ:AMZN) is already the world’s biggest online shopping channel and now it is also targeting the niche sectors like beauty, health, and wellness. The Jeff Bezos-owned company is now aiming to become one of the most important channels in the field of beauty and personal care with each of the US store of Amazon growing by minimum 24% year over year. So is there any reason for the beauty conglomerates Ulta Beauty Inc (NASDAQ:ULTA) to worry about?
Amazon Benefits From The Biggest Trends In Beauty Segment
According to a data, there has been a rise of 30% in the total beauty segment for Amazon in the first quarter of this year. The e-commerce giant has managed to reap benefits from the biggest trends in the beauty customers where consumers are showing more interest in buying high-end and prestige products. The company has managed to get a better response by categorizing the trending items under the unique badge called “professional beauty”. Amazon says it has, “curated a selection of high-quality products that can be found in professional settings such as salons, spas, and dermatology offices.”
It indicates that Amazon is trying everything possible to attract all the consumers who are looking for specialized beauty products or treatments and is slowly coming into a position where it can take away some of the customers from Ulta, a company known for selling both mass-market as well as more upscale brands. Ulta added MAC on its platform last year and is now a best-seller and the company is now going to add Chanel on its platform soon.
Ultra Continues To Grow; Not Really Affected By Amazon
According to reports, Ulta Beauty continues to grow and change. Recent statistics indicate that the online sales of the company accounted for about 4% of its total sales at the end of fiscal 2014. However, the recent conference call in March revealed that it has now grown to 12.8% and this tripling has come when it was thought that the overall sales of the company have slowed down. Even the revenue has grown by 20 to 25% in the last seven years. In 2017 UBS set the market for beauty products and services for Ulta Beauty at $139 billion and it is still growing. So, despite the fact that Amazon is expanding aggressively, it has not affected the growth of Ulta whose stock price grew by 10% at the start of 2018.
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Importantly, Ulta also managed to make into the Fortune 500 list becoming one of the most successful companies in the US.