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Online cosmetic sales to slow

make up, costmetics, lipstickOperators in the online perfume and cosmetic sales industry in Australia have undergone blemish free growth over the past five years, primarily due to the increasing uptake of online shopping throughout Australia’s population.

According to IbisWorld, industry revenue is forecast to rise by a compound annual 17.1 per cent over the five years through 2014-15, to reach $259.0 million.

As online shopping continues to tap more market demographics, its uptake is beginning to plateau, which is forecast to result in more subdued growth, at 9.2 per cent, over 2014-15. Market share concentration in the industry is low.

IbisWorld industry analyst, David Whytcross, says consumers are becoming more adept and comfortable with online shopping, as the internet increasingly becomes a customary means of purchasing products.

“Perfume and cosmetics are well suited to the explosion of online shopping as they are pre-packaged goods, and consumers know what they will be getting when they purchase them,” Whytcross said.

Strong growth in online shopping has driven many bricks and mortar operators to establish an online presence over the past five years, with the entrance of Priceline, Myer, and David Jones boosting industry revenue.

Industry operators have benefited from strong economic conditions over the past five years, as positive consumer sentiment and rising discretionary incomes have pushed consumers to “upgrade to higher end products when shopping online for perfume and cosmetics,” says Whytcross.

While many female demographics were already industry consumers, an increasing number of young, image-conscious males purchasing cosmetic products has provided further growth for the industry.

The online perfume and cosmetic sales industry is expected to continue growing over the next five years, albeit at a less rapid pace than the previous five years due to the slowing uptake of online shopping.

Over the next five years, industry operators will be able to market to older female demographics, as they are high users of perfume and cosmetics and are less likely to already be shopping online, in addition to the burgeoning image-conscious male demographics.

More bricks and mortar outlets are projected to establish an online retail presence, providing further stimulus to industry revenue growth.

For more information, visit IbisWorld’s Online Perfume and Cosmetic Sales industry in Australia report page.

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