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Health & Beauty

Not your mom’s Mary Kay – some of the hottest online beauty brands are also multi-level marketing companies

by Rakuten Intelligence - May 16, 2019

Image credit: Diana Kadreva on Unsplash

Glossier’s latest round of funding brought digital native makeup and skincare businesses back to the forefront in e-commerce. While there was relatively modest growth in online health and beauty, at 19 percent over the past year, Glossier revenue was up 56 percent over the same period. A big news event always inspires a bit of analysis, and when we looked into the category, we discovered an unexpected trend: many of the largest digital native brands in Health & Beauty are also Multi-level Marketing (MLM) companies. 


The top 10 merchants for Health & Beauty are what most people would expect, with Amazon generating 47 percent of category revenue, followed by a distant Sephora (8 percent) and Walgreens (7 percent). 


But the next part of the list gets more interesting, as Rodan + Fields, a digitally native and MLM, was the fourth-largest merchant, with 4 percent of category revenue. Another star performer is Beautycounter, which saw 31 percent growth in revenue, 29 percent growth in units sold, and 35percent growth in buyers. Not only is Beautycounter another digital native MLM company, but it’s tied with Walmart in category sales volume and is growing much faster than Amazon, whose sales were up only 20.4 percent.


The MLM marketing strategy, also called referral marketing, is built upon products or services being sold by their buyers to new buyers, who are not necessarily employees of the company. In the case of skin care and beauty, the most well-known MLM merchants are Arbonne, Avon, Beautycounter, Mary Kay, and Rodan + Fields. Other examples of MLM’s in other industries include Herbalife, Youngliving and Amway.

Top Health & Beauty Merchants

The top Health & Beauty merchants have a mix of traditional retailers, but also MLMs

Digital MLM strategy drives loyalty and purchase frequency

MLM buyers are very loyal – when looking at Arbonne, Avon, Beautycounter, Mary Kay, and Rodan + Fields buyers, 95 percent of the buyers only bought from one merchant. They place approximately four orders a year, which is quite low compared to Health & Beauty buyers, who average over nine. However, MLM buyers spend almost twice as much in a year as other Health and Beauty buyers, with the average MLM buyer spending $523.67 a year at MLM companies, compared to the $302.31 an average Health & Beauty buyer spends on the category.


While the average Health and Beauty buyer places more orders than MLM buyers, there is a large contingent that orders at high frequency.  About 10 percent of Health and Beauty buyers make 25 or more orders over the course of a year, compared to almost 1 percent of MLM buyers. On the flip side, 70 percent of MLM buyers make between one and three orders, compared to 40 percent of Health and Beauty buyers. 

Comparison of MLM and Health & Beauty buyers' habits

MLM buyers make fewer orders with MLM merchants than Health & Beauty buyers make with Health & Beauty merchants

Those who buy from multiple MLM merchants shop most often

While buyers who bought from more than one MLM merchant is a small percentage of MLM buyers, they are a very interesting segment. We looked at how many orders a buyer would place with their primary vendor, secondary vendor, and, if applicable, tertiary vendor and discovered that the more vendors a buyer purchased from, the more orders they would place at all of the vendors. For example, buyers who would only buy from one merchant would order three times a year from that (primary) merchant, but buyers that would buy from two merchants would order four times a year from their primary merchant, and buyers that would buy from three merchants, would order five times per year. 


“The online beauty sector is among the more interesting ones that we track because a wide variety of models have thrived within it,” says Ken Cassar, vice president and principal analyst, Rakuten Intelligence. ”While traditional retail models are doing well, exemplified by Sephora, Ulta, and Amazon, we have seen successful, non-traditional retail models.  Companies like Ipsy have done well with subscription models while companies like Rodan & Fields and Monat have shown explosive growth with representative-based models.  At the core, this is driven by the fact that beauty is an innovation driven business, with new materials, formulations, and looks constantly emerging.  It is natural that we’d see similar innovation in beauty business models as well.”

Orders per buyer for MLM buyers

The more merchants an MLM buyer orders from, the more orders they place with each merchant

About this data

With a panel of millions of online shoppers, Rakuten Intelligence gives the most detailed, and accurate digital commerce data available, and is reported daily.

Rakuten Intelligence is the only service to measure digital commerce directly from the consumer, across all retailers, at the item level, and over time. Our retailer-independent methodology precisely measures commerce as it happens. By extracting detailed information from hundreds of millions of aggregated and anonymized e-receipts, Rakuten Intelligence can map the entire Purchase Graph, connecting each and every consumer to all their purchases.

Rakuten Intelligence gets its data from e-receipts – not a browser, app or software installed by the end-user – so its measurement reflects comprehensive shopping behavior across multiple devices, over time, which are key in an increasingly omnichannel retail world. Rakuten Intelligence is the exclusive e-commerce data provider for NPD’s Checkout Tracking e-commerce service.