Amazon Makes a Bet on Beauty With Lady Gaga Deal
July 12 2019 - 6:28PM
Dow Jones News
By Alexandra Bruell
Amazon.com Inc. is betting it has the marketing muscle to help
an upstart beauty collection from Lady Gaga compete with the range
of established celebrity-backed brands and industry stalwarts.
If successful, the tie-up announced this week with the
33-year-old musician and movie star could help Amazon woo prestige
marketers, which have often limited or avoided selling their
products on the platform for fear of losing control of the brand
experience and undermining their image, marketing experts say. That
could benefit not only Amazon's business selling merchandise but
its increasingly important ad-sales operation.
Haus Laboratories, the startup founded by Lady Gaga, initially
planned to sell its beauty line directly to consumers online
without any partners or retail distribution, according to a company
spokeswoman. But it began talking with Amazon in the fourth quarter
of last year.
Haus thought long about whether Amazon was the best place to
introduce its brand, said Ben Jones, chief executive at Haus, which
is backed by Lightspeed Venture Partners.
Ultimately, Haus decided that the company's global scale and
promotional muscle would work well with Lady Gaga's storytelling
prowess, he said.
"Gaga's feeling was she wanted to bring a really high-quality
product at a price affordable for her consumers and fans and wanted
to make sure she was able to get the product to her people
throughout the world," Mr. Jones said. "We feel comfortable with
how we're going to be positioned, not only for launch but the
foreseeable future in our relationship with them."
Amazon has built its retail reputation on disruption and
efficiency, aggressively pushing its own line of generics and
developing in-house lines that compete with outside brands it sells
on its platform.
It hasn't previously done an exclusive global deal with a big
celebrity-backed beauty brand, the company said.
Health, personal-care and beauty items accounted for about 7% of
Amazon sales through its platform last year, according to research
firm eMarketer, but the category showed the second-fastest growth,
behind only food and beverage. Last month, the company also
launched a professional beauty store, offering products and brands
typically sold to stylists and barbers.
Much of the growth that Amazon has seen from the beauty and
health category is likely from beauty sales, said Will Margaritis,
senior vice president of e-commerce and digital marketing at Dentsu
Aegis Network. He previously worked at companies including L'Oréal
and Amazon.
"They're sending a message to luxury brands, and luxury beauty
in particular, that Amazon's a viable place and it's not going to
damage their brands but accelerate them," he said, referring to the
Lady Gaga deal.
Amazon and Haus will begin to take preorders during Amazon's
annual Prime Day promotion, a two-day event that starts Monday,
ahead of the collection's full rollout in September. Amazon and
Haus's own website will be the only places for customers to buy the
line at launch, according to the companies.
Amazon will promote Haus on its home page, as well as through
its social channels, including paid and unpaid posts, according to
an Amazon spokeswoman.
"Amazon stands for much of what Haus is founded on -- global
reach and accessibility," the spokeswoman said in an email.
Mr. Jones and Amazon declined to elaborate on the companies'
arrangement.
"It's showing they can compete with the likes of Sephora, Target
and Ulta, and showing that they're investing in this type of
thing," said Cassie Stevens, global commerce director at Publicis
Groupe's Zenith.
Write to Alexandra Bruell at alexandra.bruell@wsj.com
(END) Dow Jones Newswires
July 12, 2019 18:13 ET (22:13 GMT)
Copyright (c) 2019 Dow Jones & Company, Inc.
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