India stands fourth in the global beauty market and is expected to grow by 40% by 2026. The rise of the cosmetic industry in India has gone through various transitions, and today, this growth is shaped by evolving consumer preferences, including a shift towards personalized skincare and a focus on inclusivity.
It is important to note that the cosmetic industry extends beyond makeup, encompassing a wide range of beauty and personal care products. This diverse landscape is reflected in the success of brands like Mamaearth, The Man Company, Sugar Cosmetics, and WOW Skin Science, which are leading the charge in innovation.
Currently, the trends are shifting towards organic and natural products, along with an increased demand for Men beauty essentials, which underscores the new customer’s need for more personalized products. However, opportunities come with a set of challenges. Many brands have trouble coordinating the inventory across offline stores and online channels, including batching the inventory and expiry circulation of products, which leads to ineffective customer return management.
In this blog, we’ll delve into the exciting world of the cosmetics industry in India, exploring its trends, challenges, and realistic solutions in detail that would shape the future of your brand.
Growing Trends and Opportunities in the Cosmetic Industry in 2025
1. Virtual Try-On for Enhanced Personalization
Today, consumers increasingly demand highly personalized products tailored to their unique skin types, tones, and specific needs. According to McKinsey’s report, approximately 71% of consumers expect a personalized shopping experience. With the availability of virtual try-ons and AI-driven solutions, consumers can more easily find products that meet their requirements. These advanced technologies significantly impact the consumer journey, as they are more likely to purchase from brands that offer seamless, tech-enabled experiences, making the product discovery process effortless and efficient.
2. Growth of Natural and Organic Products
One of the most prominent trends in the Indian cosmetics industry is the shift towards natural and organic products. Consumers are increasingly seeking products with fewer chemicals and more natural ingredients. Take Mamaearth, for instance, a brand of the parent company Honasa Consumer, which progressed after the COVID-19 pandemic with a mission to provide 100% natural and toxin-free products with a blend of natural ingredients. Mamaearth’s dedication to providing customers with what they want resulted in a 400% growth amid COVID-19.
This inclination towards natural beauty has paved the way for homegrown brands that emphasize the use of herbal and organic components, which also makes the trend ever-relevant in the cosmetic industry.
3. Digital Influence on Beauty Choices
The digital age has brought about a revolution in the way consumers discover and purchase cosmetics. Social media influencers and beauty bloggers play a pivotal role in shaping consumer preferences and many brands promote their products in this way. Can you guess some of these brands?
In the vibrant realm of cosmetics, titans like Nykaa and Lakmé have carved their mark, particularly in the dynamic world of social media. Here, beauty enthusiasts seek recommendations tailored to diverse skin types and tones. These brands have recognized the immense potential of social media and influencers and used this power to create beauty products that cater to customers’ individual needs.
4. Male Grooming on the Rise
The Indian male grooming market is projected to reach $1,844.65 million by 2029, driven by a growing willingness among male consumers to invest in skincare. This shift is largely influenced by the impact of social media and the enhanced accessibility of grooming products. Leading brands such as The Man Company, Bombay Shaving Company, and Beardo are at the forefront of this expanding segment. The future of the Indian male grooming market is promising, with continued growth fueled by rising consumer awareness, evolving social norms, and the increasing availability of specialized products.
5. Rise of D2C Brands with Omnichannel Strategy
The rise of Direct-to-Consumer (D2C) brands has brought a dynamic shift to the cosmetics industry in India. With consumers increasingly relying on reviews & ratings and, at times, preferring to visit stores in person, these D2C brands have embraced an omnichannel strategy. By seamlessly integrating their offline and online channels, they offer a consistent and frictionless shopping experience, allowing customers to engage with the brand in whichever space they choose—whether online or in-store.
Top Cosmetics Brands in India
1. Sugar Cosmetics – Sugar Cosmetics is a popular Indian brand co-founded by Vineeta Singh, with a focus on inclusivity, offering cosmetic products that cater to a diverse range of Indian skin tones.
2. Lakme – Lakmé, founded in 1952, is a renowned and trusted Indian cosmetic brand known for its wide range of high-quality beauty and skincare products.
3. Colorbar – Colorbar is a premium makeup brand recognized for its innovative products offered at affordable prices.
4. Nykaa Cosmetics – Nykaa Cosmetics is one of the largest cosmetic brands, renowned for offering high-quality products at affordable prices.
5. Biotique – Biotique is an Ayurvedic-based skincare brand known for its chemical- and paraben-free products, making it an excellent choice for a budget-friendly skincare routine.
6. VLCC – VLCC is a well-established brand in India, primarily focused on skincare and healthcare, offering a wide range of skin care treatments to cater to diverse audiences across the country.
7. RENEE Cosmetics – Renee Cosmetics is an Indian makeup brand known for offering high-quality, cruelty-free, and vegan cosmetics. The brand features a diverse range of products, including kajal, makeup essentials, and perfumes.
8. Kama Ayurveda – Kama Ayurveda is a holistic skincare brand dedicated to using high-quality ingredients and ensuring the efficacy of its formulations.
9. Wow Skincare – WOW Skin Science offers high-quality, natural skincare, haircare, and wellness products enriched with hand-picked ingredients from nature and carefully formulated for optimal results.
10. Mamaearth – Mamaearth is one of the most trusted brands in India, offering toxin-free, natural, and safe personal care products for babies, children, and adults.
Major Challenges & Roadblocks Faced by the Indian Cosmetics Industry
The cosmetic industry follows a high-depth, low-width model, focusing on producing a limited range of products in large quantities, particularly those with strong sales.
1. Seasonal Demand Fluctuations
Seasons change drastically in India, ushering in a massive shopping spree with the holiday season arriving simultaneously. The cosmetics industry witnesses a substantial surge in product orders and delivers them to customers in the shortest possible time, and the challenge arises to keep the inventory streamlined. Lack of knowing your customer preferences may lead to overstocking and stockouts, which most brands experience during these times. This not only leads to unwanted inventory in the warehouse but also cuts down revenue and results in a bad customer shopping experience.
2. Counterfeit Products
The cosmetic industry is vulnerable to the presence of counterfeit products, which pose a significant challenge for sellers and manufacturers. These counterfeit items not only undermine product quality but also feature misleading packaging, putting the reputation of legitimate brands at risk. Such issues can lead to consumer mistrust and potential legal implications for businesses.
3. SKU Management for Complex Product Variations
The cosmetic industry frequently handles multiple SKUs with subtle variations, such as different shades of red lipstick. Managing and tracking each SKU can lead to confusion for warehouse pickers, resulting in incorrect dispatches. Such errors can harm customer satisfaction and damage the brand’s reputation.
4. Inventory Expiry Management
Cosmetics are subject to strict regulatory standards. Mishandling products with an expiry date can lead to dire consequences for your brand, from losing products before they even leave the warehouse to compromising revenue and valuable storage space. Moreover, shipping expired products not only erodes customer trust but also complicates return issues.
5. Inefficient Returns Management
Returns are part and parcel of the e-commerce business. However, inefficient return management in the cosmetic industry can directly impact your cosmetic business. The cosmetic industry is competitive, and that’s why a seamless return policy plays a crucial role in the brand’s reputation. Inadequate processing and quality checks of returned products not only result in wastage but leave a hole in your brand’s finances and leave customers dissatisfied.
6. SKU Proliferation
The Indian cosmetics industry grapples with a diverse range of SKUs due to variations in shades, packaging, and formulations. Striking the right balance between offering a wide range of such products and maintaining a lean inventory can be quite a juggling act. This is especially challenging, considering the ever-changing trends and evolving customer preferences over time. Brands, unable to keep up with these changing trends in the industry, tend to get dissolved with the competition.
7. Limited Shelf Space
As the cosmetic market in India continues to grow, warehouses may face constraints in terms of available space. Inefficiencies in storage space utilization can impede your brand’s ability to maximize its potential storage space. This limitation might be the very factor holding your brand back from reaching its full sales potential and accelerating business growth due to limited inventory in the warehouse.
Industry-Based Solutions to Challenges in the Cosmetics Industry
1. Detailed Report Snapshots to Track Demands
To achieve high efficiency during seasonal fluctuations, employing a warehouse inventory management system is crucial to map fluctuations and adjust inventory levels accordingly to maintain slim inventory. Utilize flexible storage solutions for your brand like consumer buying patterns and filter it from SKUs to geographical locations to track product success throughout the country and accommodate changes in product demand.
2. Implementing Batching
The strategic practice of ‘batching’ the inventory enables utilizing the first-expiry, first-out (FEFO) and first-in, first-out (FIFO) options to ensure that older products are used or sold before newer ones, minimizing waste and maximizing profits.
The Man Company faced a similar challenge, batching 1,000+ SKUs across 11 warehouses. But with batch-level traceability, The Man Company is able to track inventory using important attributes, such as cost, expiry, manufacturing, vendor, etc. Additionally, the batching feature also allowed the brand to identify soon-to-expire inventory and liquidate them accordingly while achieving minimal expiry and spoilage.
3. Item-Level Traceability
Item-level traceability significantly enhances SKU management by allowing businesses to track each individual product throughout the supply chain. With this system in place, each item, whether it’s a lipstick in a specific shade or a unique skincare product, is assigned a unique identifier, such as a barcode. This enables real-time tracking of each product from the warehouse to the final dispatch.
When warehouse pickers scan the product using barcode scanners or mobile devices, any discrepancies, such as a mismatch between the selected SKU and the order, are immediately flagged by the system. This immediate feedback reduces the chances of errors in dispatching the wrong item, ensuring that customers receive exactly what they ordered.
4. Advanced Return Management
Returns management, being one of the most cumbersome tasks, requires rigorous visibility of stock and returns processes that include a thorough product inspection. Additionally, quality-checking the product after returns in order to appropriate disposal of damaged or expired items and restocking of acceptable returns. See how Mamaearth rose above this challenge and achieved a faster inventory turnaround while attaining a drop in returns by 300%.
5. Managing Inventory Across Multiple Channels
Implementing an omnichannel strategy would empower your brand by creating a unified inventory pool for all your sales channels, not only minimizing logistics costs but also saving precious time. Additionally, you gain access to detailed real-time reports, all from a single dashboard. So, the need to manually update inventory to online channels and physical stores would become obsolete, subsequently giving your clients a unified shopping experience.
6. SKU Management and Barcode Scanning
Implementing robust SKU categorization and management techniques can significantly enhance inventory control which includes barcode scanning and labeling technology, ensuring accurate and efficient tracking of products, making the process smoother and more streamlined. Many leading cosmetic brands, among Wow Skin Science, Sugar Cosmetics, etc., use SKU categorization and barcode scanning to manage their complex warehouse operations in an effortless manner.
7. Implementing WMS
To overcome limited shelf space challenges, implementing a comprehensive warehouse management system (WMS) would enable your warehouse’s optimal shelf capacity for specific inventory and let you efficiently store products in the warehouse. Additionally, make use of high shelves to maximize vertical space. Investing in efficient storage solutions like pallet racks and mezzanines can significantly increase your storage capacity.
By strategically organizing your warehouse, you can unlock untapped potential for storing cosmetics and ensure seamless operations. Many leading brands among Plum Goodness have implemented a strategic warehouse management system that enables them to seamlessly track inventory and fulfill customer orders. With full visibility on the inventory, Plum Goodness was able to get detailed reports of their overall business operations and experience a 69% growth in sales.
By addressing these challenges, the cosmetics industry in India can ensure efficient warehouse and inventory management, ultimately contributing to business growth and customer satisfaction.
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