Beauty goes digital – Platform commerce as the business model of the future

With its “digital first” strategy, the perfumery chain Douglas shows how companies can position themselves well and even grow in a dynamic environment and also under crisis conditions. In 2019, Holding AG set up a beauty platform with, and in 2020 it increased online sales by over 40 percent and made up for the local sales losses due to lockdowns. The platform business is the future – also for beauty brands. Especially closed marketplaces score as strong sales channels and ideal online shop windows. In order to be allowed to sell, brands need the right products, a certain brand awareness and mature technical processes. 

Last updated on November 13, 2022


1. Digital-First

Douglas presented its figures for the 2019/20 financial year in January: online sales grew from 585 to 822 million euros, a whopping 41 percent. Of these 822 million, 195 million were generated via the mobile app, which means an increase of 68 percent. Douglas was thus able to more than compensate for the losses of the branches closed during the lockdown. In the 2020 calendar year, Holding AG generated sales of more than one billion euros in e-commerce for the first time.

“Digital First”: Douglas adopted this strategy in 2019 when the perfumery chain converted its online shop into a closed marketplace and thus into a beauty platform through which products from partners and other brands are also sold. In 2020, the approach will be consistently implemented with a massive restructuring program: more than a quarter of the 2,400 branches with total sales of 270 million euros are to be closed. Douglas expects savings in the hundreds of millions by focusing on e-commerce and omni-channel. 

Former Chief Executive Officer (CEO) of the Douglas Group, Tina Müller, saw the business model of the future in the platform economy – the marketplace meant another big step in the digital transformation of the beauty giant. Douglas also expanded its portfolio to include the Niche-Beauty shop with a focus on special brands and also took over the operator of the shop. 

2. Closed marketplaces as revenue generators for beauty and co.

Closed marketplaces such as are extremely interesting for the beauty industry because they bring a massive gain in reach. The traffic of the big ones cannot be reached by a small to medium-sized brand with its own social media channels or online shop. Closed marketplaces also score points compared to open platforms like Amazon because they are more relevant for the respective target group, even if they do not reach the absolute reach of the generalists. In addition, competition and price pressure are less pronounced because fewer suppliers sell the same items than on open platforms.

Closed marketplaces provide an attractive environment to enable an advantageous presentation of the products and a consistent brand image. This is particularly important in the beauty sector, since it is not just products that are sold here, but an attitude towards life. Closed marketplaces place correspondingly high demands on photos and content, and their guidelines correspond to the state of the art of online trading. This guarantees a consistently high quality of the presentation and an optimal approach to customers. Of course, good product information has a positive effect on conversion. Douglas announced in 2019 that the beauty platform’s partners would be carefully curated. In March 2020, the chain opened its online marketplace to other retailers to support them in the Corona crisis. A task force should enable retailers and brands from the beauty, accessories and lifestyle sectors to be quickly checked for connection to the beauty platform.

Closed marketplaces require this brand approval: It is specifically selected who is allowed to sell. Approval is the first step towards connection. It is usually made based on criteria such as brand awareness, product portfolio, social media activities or website. Approval is either requested using standard forms or initiated via existing contacts. 

3. Marketplace-ready: these are the prerequisites

The digital maturity of the beauty manufacturers differs, and so do their strategies: while some concentrate on the B2B business, others orchestrate well-running online shops and have experience in selling via platforms. 

Marketplace readiness requires the fulfillment of various criteria apart from image and products: The brand must be able to map the operational processes of the platform in day-to-day business. Marketplaces place specific requirements on the presentation and description of the products, the technology and the logistics. Data packages and master data must meet the standards of the marketplace and the product information must be displayed accordingly. All of this requires know-how: brands need to know what is important and know the tricks, such as which tools can be used to optimize data quality. 

In addition, it is important for brands to be or become B2C-ready. Namely in the areas of logistics (shipping and returns processing), customer service or invoicing to the end consumer. 

It is clear that not every brand can completely handle the B2C business itself. Service providers can take over this either partially or completely, depending on requirements, and provide support with manpower or IT systems. Your own logistics can, for example, be supported with software modules (SaaS) or, if necessary, completely outsourced. All with the aim of complying with the corresponding service levels of the marketplaces.

Anyone who thinks that there are no marketing expenses when selling via platforms is wrong: it is not enough to be listed. Deals and campaigns are also necessary on closed marketplaces in order to address your own target group and to gain more visibility in the respective category. The possibilities of marketing on closed marketplaces are manifold. Brands must use these in line with their strategy. 

Selling on closed beauty marketplaces is therefore complex and requires both know-how and manpower. If brands have their core business – good products, marketing and clean data – under control, this is an important first step. In addition, however, they must also keep an eye on technology, IT and interfaces as well as the contractual side. The challenge: There are significant differences between the various platforms. An external partner like the e-commerce specialist onQuality can offer support from the technical connection to marketplace marketing.

4. First onboard, then monitor performance

Once the contracts have been made and the requirements are met, it’s time for onboarding: First, the technical conditions are checked and it is ensured that the exchange of master data and media works. Manual processes are set up and automatic interfaces are implemented. 

A good database is essential so that the products can be sold quickly. After the connection, brands should definitely keep an eye on their KPIs: The status of the product data before the sale or later in the day-to-day business Product-related and time-related KPIs: Are the bestsellers in stock? Where are returns piling up, which products should be taken offline? How are order values ​​and sales distributed across the platforms? Brands need an overall view and have to track the range from go-live on the platform to the service level of the logistics, because here too it is important to perform: orders should, for example, be sent within 48 hours at the latest and the quota of orders that are not can be delivered should be well below one percent. All of this information and functioning processes ultimately determine whether the brand ranks well on the beauty marketplace or not, whether it stays or is dumped again.

5. Conclusion

Closed marketplaces such as represent highly interesting sales channels for beauty brands. They offer range, quality and less competitive pressure. However, the requirements of a connection should not be underestimated with technical specifications, clean data quality and the necessary processes for logistics and shipping. After onboarding, brands have to keep an eye on their performance to ensure smooth processes and thus staying on the platform. A marketplace specialist can provide valuable assistance here. 

Recent Posts

What Does a Marketplace Manager Do?

The rise of online marketplaces has transformed the way businesses operate in the e-commerce landscape. In this context, the role of a marketplace manager has emerged as a critical position responsible for overseeing and optimizing a company’s performance on various online marketplaces.

E-commerce: Crisis-proof sales on marketplaces

Retail has been under massive pressure for more than a year: complete closures or significant restrictions are causing sales to collapse in the corona pandemic. Fashion brands that want to get through the crisis must enter e-commerce now at the latest.