Health & Beauty retail: industry pulse, challenges & fraud risks

The health and beauty industry has remained one of the most successful sectors to come out from the pandemic. Online sales are expected to reach $358.4 billion by 2026.

This rapid growth has seen retailers attempt to make further inroads into the industry through enhanced online services and product lines. Some bigger brands are even making moves to acquire smaller digital-led skincare brands. This means lots of new players in the ecommerce space – prime targets for fraudsters.

Find out how the industry is shifting and how fraudsters are making the most of this new wave of activity…

Customers are moving online

Over a third of consumers buy their health and beauty products online or use digital media to assist their buying decisions. Around 40% of health and beauty product consumers primarily get advice online. Compared to 20% who get their advice in-store from sales associates.

Augmented Reality (AR) and other disruptive technologies are changing the way consumers discover, experience and connect with health and beauty brands. Many are now providing updated digital services from virtually trying on make-up looks to evidence-based skin analysis. But as businesses ramp up their online offerings, fraudsters are sure to follow!

The rise of the subscription box

By 2023 as many as 75% of consumer brands will have a subscription-based offering. This is huge! In the US 40% of consumers use subscription billing and this number is rising. The subscription box market is set to be worth around $2.6 billion (£1.8 billion) by 2025 in the UK alone. Key health and beauty players include Birchbox, Glossybox and BoxyCharm.

However, 60-80% of fraud claims in this space are from customers contesting charges for services that they forgot to cancel. This can lead to bigger problems down the line. How do you differentiate this from friendly fraud or refund and promo abuse? Does your business have a plan in place?

Social commerce is on the up

Around 30% of health and beauty consumers use social media to browse for new products. Nine out of ten Instagram users follow at least one brand and social selling will be a key trend this year. This convergence of social media and ecommerce convergence has brought brands a massive opportunity for growth. ​​US social commerce sales are set to surpass $36 billion this year.

Social media provides new avenues for purchasing products and delivering customer service. We know how adaptable fraudsters are, so what does this mean for fraud?

Source list

• Industry definition
• Health & Beauty predicted growth
• Ecommerce share of Health & Beauty sales
• Digital shoppers
• Health & Beauty subscriptions
• Subscription fraud claims
• Social media