Pricing Is Not Sephora’s Achilles' Heel in Beauty E-Commerce

In 2024, US beauty and personal care e-commerce sales increased by of 16%. The share of beauty and personal care sales taking place online also increased, from 35% to 39%. Within this expanding digital landscape, Amazon further solidified its dominance, 47% market share in 2024, an increase from 44% in 2023. Meanwhile, Sephora, the second-argest online retailer for beauty and personal care in the US, experienced a slight market share dip from 10% in 2023 to 9% in 2024 despite growing value sales.

Some industry observers have identified Amazon’s aggressive pricing as the primary contributor to Sephora’s slowing online momentum. However, a closer look at shopper behavior and category performance suggests that the real reasons lie elsewhere.

What constitutes Sephora’s online sales?

To accurately identify the factors impacting Sephora’s online performance, a detailed, category-specific examination is necessary, particularly focusing on its key online categories.

Colour cosmetics and skin care are the retailer’s dominant categories, accounting for nearly 70% of its online sales in the US in 2024, but both categories experienced modest declines in sales. Most of Sephora’s sales growth in 2024 came from fragrances – which is the third key online category for Sephora in the US.

Price vulnerability is not the reason for Sephora’s subdued performance

Given Amazon's extensive marketplace encompasses both premium and mass-market brands, comparing Sephora to Amazon requires careful consideration. Therefore, Brand-level analysis within Sephora’s most important categories offers a clearer understanding of the competitive dynamics at play.

Notably, Sephora’s top ten color cosmetics brands account for 40% of its total online sales in this category, while the top ten skin care brands represent 46% of the category’s online sales in 2024. The comparative assessment of these brands provides actionable insights into Sephora’s strategic positioning and performance relative to Amazon. Most top-performing brands in colour cosmetics, including Charlotte Tilbury, Rare Beauty, and Sephora, had higher average prices at Amazon compared to Sephora in 2024. Despite lower prices, these brands experienced sales declines on Sephora.

It’s also noteworthy that the share of Amazon for these prestige brands is also lower given their concentrated strategy on Sephora. Brands that posed growth on Amazon during 2024, continued to do so despite higher average prices on the platform.

It is striking, that online sales of the top colour cosmetic brand, Charlotte Tilbury, continues to decline across both retailers – indicating that the issue is likely more about the brand’s own performance rather than retailer pricing.

A review of the performance of the skin care category shows it is a more competitive category across both retailers. While Most brands posted growth on Amazon in 2024, they did so despite higher average prices. While Laneíge, Sol de Janereiro, Claudalie and Tower 28 saw lower prices on Amazon, these brands performed well across both retailers, with higher share of sales made via Sephora online.

In Q1 2025, the top 10 skin care brands at Sephora experienced a decline of 8% compared to Q1 2024, while these brands experienced a 19% growth at Amazon. Where 3 of the top 10 brands posed a decline across both platforms and 3 brands posed growth across both platforms.

The real competitive dynamics: Convenience and experience

In colour cosmetics and skincare, the sales of the top brands declined on Sephora despite lower prices than Amazon.

This indicates that customers at Sephora are not predominantly price-sensitive; instead, they demonstrate a willingness to pay a premium, provided they see clear value.

Thus, Sephora’s challenges may stem more from factors beyond pricing:

Convenience and fulfillment: Amazon’s rapid logistics, subscription models, and bundled offers significantly enhance consumer convenience, often overshadowing price as a deciding factor.

Expansive assortment advantage: Amazon’s vast third-party marketplace provides access to niche and emerging brands not always available at Sephora, attracting consumers seeking exclusive or unique items. This extensive assortment influences brand loyalty and purchasing decisions.

Impact of third-party sellers: Third-party sellers on Amazon occasionally offer unauthorized pricing, which can inflate prices for certain brands. Nonetheless, these sellers benefit significantly from Amazon’s robust delivery services and expansive reach, maintaining attractive profit margins.

Curated brand partnerships: The performance of top brands at Sephora is influenced by consumer shifts toward niche and emerging brands rather than retailer-specific competition. As a result, effectively curating and managing a diverse and engaging brand portfolio remains crucial for Sephora’s continued relevance.

Enhanced digital experience: Amazon’s user-friendly digital interfaces streamlined checkout processes, and robust customer review systems significantly strengthen customer satisfaction and repeat purchases.

Customer engagement and personalization: Successful brands on Sephora typically excel in community engagement, influencer-driven campaigns, and tailored digital experiences. Conversely, brands with undifferentiated narratives or limited customer engagement strategies tend to underperform.

Leveraging inherent strengths to outmatch on experience and assortment

While price competition initially appears influential, it is not the definitive barrier to Sephora’s e-commerce growth aspirations. The real battleground is not about matching Amazon’s price but about outmatching its shopper experience, convenience, assortment and digital engagement capabilities.

Sephora and retailers sharing similar qualities must recognize that customers are paying premiums willingly when the perceived value aligns with their expectations. To sustain a competitive advantage, these retailers should strategically leverage their inherent strengths in personalized consumer engagement, targeted brand curation, and unique shopping experiences.

Read our briefing, The State of Marketplaces in FMCG E-Commerce e for more analysis of beauty and personal care e-commerce on marketplaces.