Why the Cosmetics Supply Chain Needs a Digital Makeover

Makeup moody frame background. Decorative cosmetic flat lay including eye shadows palette, foundation, brushes and tools. Beauty concept. Top view, copy space.

September 30, 2021

Manufacturers and retailers learned a poignant lesson during the global coronavirus crisis: that meeting constantly shifting consumer demands while providing excellent customer service is impossible without the right technology. In the highly competitive cosmetics industry, which has unique logistics challenges and above-average numbers of individual products to manage, leveraging technology to gain these efficiencies is even more critical.

The demands on cosmetics brands are numerous, from heightened product diversity expectations to the inherent fickleness of cosmetic trends—what’s hot today can be out of fashion tomorrow. Add to that consumers’ increased desire for high-quality, paraben- and cruelty-free ingredients and sustainable packaging, and the challenges of meeting both retailers’ and consumers’ needs can seem overwhelming.

A growing number of cosmetics companies are finding, however, that the right technology can solve all these problems while optimizing their operations, increasing revenue opportunities, and saving their team members’ sanity. Let’s dive into some of the biggest supply chain issues companies in the beauty industry are facing today and see how advanced technology can overcome them.

Too Many Suppliers, Not Enough Communication

Whether you’re a beauty brand sourcing dozens of ingredients or a wholesaler working with hundreds of product lines, you know how easily communications can break down, leading to delays and frustration. The cosmetics industry evolves and innovates quickly, making speed a must-have for any business that wants to thrive. There is little room for error.

To sidestep human error while scaling order capacity, many trading partners all along the beauty supply chain are embracing electronic data interchange (EDI). Integrated EDI can automatically exchange business documents like POs, ASNs, and Invoices to increase transaction speed, efficiencies, and accuracy. It also provides near-real-time insights into product movements, which are essential to keeping up in a rapidly changing market. By harnessing the power of data, EDI software helps cosmetics businesses navigate uncertain waters, while catching the wind of today and tomorrow’s trends. No company in the cosmetics space should be missing this boat.

Keeping Cosmetics in Stock Can Be Challenging

The forces of supply and demand are particularly mercurial in the cosmetics industry, and sometimes beauty companies have difficulty keeping up. Seasonality plays a role of course, but the problem is more complex than that. If a celebrity is seen wearing a color or product and it goes viral, it can clear shelves in a day. If an influencer trashes a product, sales can plummet. Product that sits on shelves too long can also expire, and the returns process is riddled with expenses and waste. Plus, time products spend collecting dust can negatively impact your relationship with retailers, who may look to other vendors with faster selling items. So timely replenishment for beauty products is a tough nut to crack.

With both trendiness and limited shelf life in play, having a supply chain that is data-driven and quick to respond can be a key differentiator for beauty brands. And once again, technology holds the solution, this time in the form of vendor managed inventory (VMI).

VMI enables suppliers and retailers to share data on inventory positions in near-real time, making it easy to optimize the replenishment. With integrated VMI, manufacturers and suppliers can monitor a retailer’s sales and stock positions; in response to inventory changes, advanced technology automatically recommends the perfect replenishment order, right down to the DC or store level. You can even optimize assortments based on local demand, ensuring that the right products are available at the perfect quantities for every store and DC.

With replenishment solutions for multiple routes to market, beauty brands can avoid overstocking and understocking, while meeting end customers’ expectations for shelf availability of their favorite products. Advanced VMI features like assortment management, order points, and intelligent forecasting give makeup companies even more of a glow up, by optimizing replenishment during stock shortages and rapid demand swings (think Q1 2020).

There Are So Many Beauty Options…and SKUs for Every One of Them

Consumers expect skincare products that are highly targeted to the type and condition of their skin, both unscented and in a variety of fragrances. More importantly, today’s makeup buyers demand a wide spectrum of shades to choose from, especially when it comes to foundations, concealers, and contouring products. This means that there are a lot of unique products that you likely produce or carry with a plethora of resulting SKUs.

It can be difficult for businesses to manage all that product information, especially in eCommerce and omnichannel scenarios. But if SKU proliferation is one of your challenges, product information management systems can save you time and headaches.

PIM solutions draw information about products from dispersed sources a human would otherwise have to cross-check—such as your ERP, spreadsheets, and files sent from your suppliers—and collect it all in one place. They give you a single source of truth that can autogenerate updates and even syndicate new and updated content to your eCommerce store or marketplace.

Not only does product information management save you from having to chase down and retype information manually; it also gives your customers a better, more consistent shopping experience with branded descriptions, accurate specifications, and rich media content across all your channels.

Consumers Are Buying More Cosmetics Online

Pre-COVID, many makeup consumers were already shifting toward eCommerce over brick-and-mortar purchasing, and the shutdown cemented and amplified those habits. While some consumers love to browse through cosmetics in a store, others may only do that occasionally and want to be able to reorder simply without leaving home. With the continued rise of digital makeup buying, it pays to give customers an easy-to-use B2C experience.

Having an eCommerce web store empowers your customers to shop wherever and whenever they want. But it’s not enough to just “have” an eCommerce presence. To keep customers happy, you need a seamless online shopping experience that matches your brand messaging and image. Having the right technology at your back can make managing your web store easier than you might think.

One key customer demand is rapid fulfillment. If your business needs to process every online order manually, meeting Amazon-driven customer expectations can be next to impossible. However, with and integrated B2C eCommerce platform, you can automate order processing by sending eCommerce orders directly to your ERP system. This makes ordering online fast and simple for customers and enables you to scale your operations as the online market grows.

Going Clean & Green Requires Improved Logistics

Another challenge that cosmetics companies grapple with is increased consumer demand for products that are clean, green, and sustainable. Not only do cosmetics consumers want fewer harmful chemicals and more pure and natural ingredients in their products, but they also prefer brands with a lower carbon footprint. That brings product packaging and shipping practices into the spotlight.

To keep up with consumer concerns, beauty brands need to focus on reducing waste in logistics. This can include:

  • Replacing paper-based processes with digital processes and automation
  • Choosing properly sized boxes for each order to reduce excess packaging
  • Offering discounts to customers willing to wait longer for orders sent in fewer packages, like Amazon’s “no-rush” option
  • Maximizing vehicle fill rates as often as possible to reduce the number of truckloads needed to ship orders

It Isn’t Just Your Customers That Deserve a Makeover

With the competitiveness and rapidly shifting demand in the cosmetics industry, it’s important to have the ability to adapt your supply chain to keep costs down while meeting your customers where they want to be met. The good news is that you don’t have to make your people work harder to keep growing your business; you just need the right technology behind you. The variety of solutions available today can help cosmetics businesses conquer on all fronts, enabling them to crush their customers’ expectations across multiple channels while streamlining their operations.

If your beauty business is ready for a digital makeover, reach out to one of our specialists today.

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About the Author: Steve Norris is the VP of Pre-Sales Engineering, Supply Chain Collaboration, at TrueCommerce. He is responsible for helping engineer solutions that allow small to enterprise businesses more efficiently and effectively collaborate with their supply chain partners and expand their sales channels. With over 15 years of supply chain experience ranging from consulting to sales, Steve helps organizations looking to achieve growth and profitability through providing solutions that allow seamless connectivity to customers, suppliers, channels, and systems.

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