Will Cosmetics Get an Amazon Makeover?

For beauty companies, image is everything. For Amazon.com Inc.—which made a name for itself based on assortment, price, and speedy delivery—not so much. In fact, some beauty brands see the internet giant’s way of doing business as an affront to glamour itself. With its utilitarian website—a scroll of endless products on white backgrounds—Amazon doesn’t carry the prestige that companies such as Estée Lauder Cos. and Coty Inc. want for their premium brands. The cosmetics makers have instead focused on their own sites and retailers where they can tightly control presentation and pricing.

Yet with Amazon expanding into every corner of retailing, these brands may have to reverse that strategy quickly—or risk losing a high-growth opportunity that could offset declining foot traffic at physical stores. They also could boost profits by selling through Amazon, because the online retailer takes less of a cut on many sales than some department stores and specialty retailers, according to Becca Edelman, a senior beauty research associate at digital marketing company L2 Inc. “Amazon has established itself as a major player in the beauty market,” she says. “It has a growth channel offering much bigger margins than brands would otherwise have.”