For Los Angeles subscribers of Postmates Unlimited, a loyalty programme that offers mostly unlimited deliveries for a monthly fee, there’s a new service on the menu this month: beauty on demand.
Postmates Unlimited, which was acquired by Uber last November for $2.65 billion, is offering a bundle of 18 beauty products, delivered straight to consumers’ doors, for an all-in price of $375. The bundle, which represents a huge discount on the in-store price (likely to top $1,000), features products from cult indie brands such as Furtuna Skin, Summer Fridays and Corpus Naturals.
Uber is broadening out from its origins as a ride-sharing app. Part of its strategy is to build customer loyalty by acting as an ultra-flexible and fast delivery service. Beauty brands could be a big part of the mix, Uber believes. In the post-lockdown landscape, service has become an overriding priority, says global head of membership Julie Kim, who joined the company in February from Postmates. Brands are investing in mechanisms and technology solutions to ensure reliability and convenience for their customers, she says. “Uber Direct is a great tool for retailers who want an operationally efficient way to reach their customers. Anybody who has an e-commerce mechanism can basically utilise our backend technology to enable same-day service.”
In May, the Estée Lauder Companies became the first beauty business to directly link with Uber in the US. Customers can order ELC-owned brands, such as Origins, through the Uber app. Other new brand partners include Dr Barbara Sturm skincare. LA-based members of Uber’s Eats Pass (offering unlimited food delivery for a monthly subscription) can also order Sturm products, delivered to them within 35 minutes. Members who make purchases over $300 receive a free anti-aging body cream and cleanser.
These launches are the first in a series of member-only experiences being lined up by Uber, says Kim. Prolonged lockdowns during the Covid-19 pandemic fuelled a drive by brands to reach customers where they were. “Our membership programmes try to make everyday life effortless for our customers,” she says. “There is a heightened awareness and need for speed and convenience.”
Accent on speed and convenience
In 2020, Uber launched a white label solution called Uber Direct, teaming up with fashion and beauty brands such as Mac Cosmetics, Pixi, Le Labo, Honest Company, Fred Segal and Zadig and Voltaire, to fulfill deliveries that originated on the companies’ own websites or apps. Uber takes a merchant rate negotiated individually with brands.
For many beauty brands, a linkup with Uber represents a first step into on-demand services. “We’re testing it to see how people react to buying products on instant delivery,” says JP Mastey, founder of Corpus Naturals, a brand known for its $24 natural deodorants. Amazon has helped to change the game, he says. “When we launched in 2018, we decided to offer free domestic shipping, primarily to meet the expectations that have been set by retailers such as Amazon. With the pandemic, people have become really used to ordering and receiving goods within hours or minutes. If that’s the way people want to consume and purchase, then we’ll have to meet them there, and services like this are ideal for that.”
So how successful will it be? Uber isn’t the first company to explore the rocky path to making money from on-demand delivery services. Jo Malone London, one of Uber’s launch partners, is already no longer on the platform, although Uber’s Kim says the collaboration was always meant to be short-term and was used to promote a Mother’s Day collection. “A seamless and timely experience for our consumers is of the upmost importance… we look forward to exploring new opportunities in the future,” Jo Malone London provided in an emailed statement.
In September 2019, Google hit pause on its online shopping service Google Express, a high-profile attempt to compete with Amazon for online shopping clicks and ad dollars. Amazon itself, the dominant player in the space, faces challenges trying to draw more high-end brands.
Several beauty box services are also struggling, says Sucharita Kodali, vice president of retail at research firm Forrester. “It seems like Uber is trying to do the same thing as Amazon, but they’re not an operations company,” she says. “The bigger questions are what’s the value to the consumer and how much does it cost everyone? Uber wants stuff for free that it can add to a loyalty programme with as little cost to it as possible. The brands and retailers want Uber to give free marketing. Consumers just want free stuff. If everyone just wants as much as possible for as little as possible, how do you create a compelling offering that someone wants and is a win-win-win?”
Convenience doesn’t necessarily equate to luxury, warns Audrey Depraeter-Montacel, global beauty lead at consultancy Accenture. “If you don’t make your consumer dream about who you are, then you’ll face challenges. Amazon has been trying to penetrate the luxury and fashion industries for years, but I am not sure that they have succeeded because they are still perceived as a convenient platform.”
How it might work
For Uber to succeed with on-demand membership, plenty of benefits will need to be baked into a loyalty programme to encourage regular use, whether they are discounts on groceries, restaurant deliveries or access to streaming services, says Kodali of Forrester. “Anything that their users use frequently.” Uber says it already offers benefits, such as free delivery, as part of its Uber Pass, Eats Pass and Postmates Unlimted memberships.
Uber’s operation will also need to be seamless and in sync with the inventory carried by brands, Kodali adds. “One of the main reasons that local delivery services don’t make it is because inventory information is bad and you end up disappointing the shopper. Uber will need to make products available and make sure that they’re accurate. If retailers don’t have their inventories right, it’ll be a mess.”
Curation could help to set Uber apart. Its first on-demand service was curated by editors at The Board, a collective of industry experts, who also used their social media platforms to promote the launch. They convinced Corpus Naturals to take part in Uber’s new launch, says Mastey. “We’re in good company. They’re not all necessarily green and natural brands, but they’re elevated and cool brands that people love.”
Uber plans to partner with different tastemakers to curate each collection. “We’re not necessarily gaining revenue from this but we’re gaining awareness because the product is going into the hands of influencers who will give us exposure,” Corpus Naturals’ Mastey adds.
Uber might help to solve one of the beauty industry’s biggest challenges — retaining the customer who is making repeated purchases — according to Accenture’s Depraeter-Montacel. “That’s really the goal that all brands want to achieve. Of course they’re all trying to expand their database and target millennials, but the cost of acquisition is usually high and profitability only comes when you have repeat loyal clients.”
That is an alluring target, she says. “You can seduce a shopper with a promotion or discount sometimes, but that’s easy. It’s much more difficult to have them coming back again.”
Uber plans to announce more benefits and partnerships with brands in November, although Kim declined to share more details at this stage or to comment on growth targets. However, anything Uber takes on has significant potential on paper. Uber members currently contribute to an estimated 25 per cent of global delivery gross bookings and 30 per cent of US delivery gross bookings. That’s some business.
Source: Vogue Business