In October 2013, Amazon opened a new Luxury Beauty Store predicted to be competition for Sephora. A year later, L2’s Insight Report on Amazon Beauty finds the experiment is not going so well. NARS Cosmetics, one of the first brands to participate, is no longer an official distributor. And even though the number of brands available in the store has increased to 57 from 24 at launch, most are niche brands with insignificant market share such as Butter London and Hampton Sun. In fact, just 5% of brands sold at Bloomingdale’s are available on Amazon’s Luxury Beauty Store.
Amazon has a history of muscling brands by enabling unregulated listings of their products unless they cut a deal with the retailer in exchange for restrictions on third-party sales. This strategy has been phenomenal so far, but do the setbacks in entering the luxury space mean Amazon will take a softer approach?