Health and beauty in e-commerce and fulfillment services

Products in the health and beauty category are among the most frequently purchased online. In the case of these products, the reverse ROPO effect is particularly pronounced, meaning that many customers look online for products they have previously encountered in a stationary shop. This year's Gemius report "E-commerce in Poland 2022" indicates cosmetics as the third most popular category of online shopping [1] . It poses a major logistical challenge - orders should not only be transported quickly, but also under appropriate conditions.

Health and beauty sector in e-commerce

According to a report by PMR, the value of the entire cosmetics market in Poland in 2022 could reach PLN 27.7 billion, an increase of almost seven per cent on the previous year. The same report indicates that the main place of purchase of cosmetics are drugstores and the online channel (a total of 57% of the market) . PMR also foresees continuous market growth of 3-5% year-on-year [ 2] . This makes the health & beauty category one of the most important to dominate online shopping in the coming years.

In turn The value of the dietary supplement market in 2021 will reach PLN 6 billion and 2021 is considered to be the year with the highest growth rate. The number of manufacturers and distributors on the market is increasing, while the number of stationary outlets offering such products (shops and pharmacies) is decreasing slightly. Particularly in a post-pandemic world, thinking about speed and convenience of purchase, Poles are taking care of their health, increasingly buying supplements and OTC drugs online [3] .

Specific logistics requirements in the cosmetics industry

Both cosmetics and health-related products (supplements, nutritional supplements, OTC medicines) require special storage and distribution conditions. The vast majority of these products can withstand temperatures of 20-22°C quite well. However, most are not resistant to low temperatures and even a short freeze can render a product unusable or even harmful to health.

These requirements indicate that an e-commerce warehouse dedicated to such products should have a closely monitored temperature - In some cases, this will be a requirement of the sanitary authorities or pharmaceutical inspectorates. This means that the warehouse should be well heated in winter and air-conditioned in summer. As far as the latter requirement is concerned, most large professional logistics operators' warehouses are so well insulated that even during hot weather the temperatures there do not exceed 23-24°C.

The safe transport of products to the recipient is also a major challenge. The right packaging ensures that cosmetics or dietary foods reach the customer intact. Such a package is not just cardboard and adhesive tape, but also suitable, preferably ecological fillers and security features. In the case of glass packaging, additional wrapping or trussing is required, and in the case of screw-on or opening bottles and containers, additional protection of the lid or cap with non-marking adhesive tape is required.

Both cosmetics and health-related products (supplements, nutritional supplements, OTC drugs) require special storage and distribution conditions. .

The aforementioned temperature is also of great importance in transport. It is important that packages leave the temperature-monitored warehouse as late as possible and reach the customer as quickly as possible. This is why The cosmetics and supplement industry very often uses the services of fulfilment operators as they offer a late cut-off-time (the cut-off time after which orders are issued to couriers) and have a high priority with courier networks.

For example under the InPost Fulfillment service, cosmetics ordered on a given day can leave the warehouse even at 8 p.m. And thanks to an efficient distribution network, they can be at the recipient's premises or in a parcel machine® after just a few hours, which minimises the risk of thermal damage in transit.

Product monitoring requirements

The broadly defined category of 'health and beauty' very often involves products under the strict control and supervision of state authorities. Reliable and responsible handling of such products requires the support of appropriate IT systems (WMS - warehouse management system), allowing tracking not only of stock levels, but also the history of turnover broken down by individual batches and expiry dates.

In the case of a so-called 'recall' (withdrawal of a batch of a product from the market), the retailer is sometimes obliged to indicate to whom and when products from the indicated production batch were sent. The implementation and maintenance of such a system can be a major cost barrier for smaller operators and this is another reason why these industries entrust the logistics handling of e-commerce to professionals providing fulfilment services. Such a logistics operator not only has a warehouse prepared for the service, but also the necessary IT systems to meet product tracking requirements.

The right warehouse system not only supports batch tracking, but also manages the release of products according to the FEFO strategy (first expire - first out: products with a shorter shelf life are released first). At the same time, such a system ensures that goods are collected efficiently and quickly from the shelves, choosing the shortest possible routes to take, but still in line with the chosen strategy.

An advanced WMS also provides the vendor with a range of useful reports. These include:

• ageing (how long a product has been in stock), stock rotation report (stock in days based on average sales),
• raport slow-movers (stock report + number of days since last stock movement per item).

This allows the e-tailer to manage stock, purchases and sales efficiently and in accordance with regulations.

Health and beauty and added value

The health & beauty industry, and cosmetics in particular, are ideal occasion products. Many retailers base quite attractive sales strategies built on this by creating special offers in the form of gift sets. On the logistical side, these can be 'produced' beforehand, e.g. by assembling 3 products into one set and stocking it as a new stock and sales index.

Another way is to create kits 'on the fly': the seller presents a kit on the website, but at the integration stage it is already broken down into its component parts and an order for the collection of individual sales indices falls into the warehouse system. The second way is much more advantageous from the point of view of inventory management and parallel sales of both the components of the kit and the kits themselves, but the 'gift' nature of such a shipment is not directly apparent from the order.

A suitable warehouse system not only supports batch tracking, but also manages the release of products according to the FEFO (first expire - first out: products with a shorter shelf life are released first) strategy.

For both kit production and the creation and additional packaging of kits on the fly, adequate system support is definitely helpful. As part of the InPost Fulfillment services, the operator's customers can benefit from both the creation and packaging of kits in decorative packaging in the form of "on stock" (for later sale) as well as forming sets already on the basis of individual orders.

An additional added value is the support for the attribute "gift wrapping". Such a tag on an order can mean not only special gift packaging, but also additional package inserts or small freebies, the completion of which is based on strict guidelines imposed by the manufacturer.

Flexible logistics for the cosmetics and peri-health sector

The cosmetics and allied health products industry is subject to fairly pronounced amplitudes in order volumes throughout the year. In the case of the health category, there is a 'peak' at the beginning of the summer season (sun care, insect repellents) and then also in the early autumn, during the cold season, where demand for vitamins, supplements and popular OTC medicines rises sharply.

What's more, The beauty industry is even more susceptible to periodic surges. These tend to be recurring occasions like Valentine's Day, Women's Day, Mother's Day or, of course, the standard 'Christmas' shopping frenzy .

The dynamics of the increases have been so high during this period that virtually it is impossible within a small in-house warehouse to handle daily surges of 100-200% without serious delays. Even with an increase in the capacity and working hours of a team of several people, it will still be far from being able to fulfil all orders on time.

The situation is completely different for large logistics operators. They usually have a very late cut-off-time (at InPost Fulfillment this can be as late as 8pm) , which means that there is much more time within the working day to pack and post order parcels.

As part of the InPost Fulfillment service, cosmetics ordered on a given day can leave the warehouse even at 8 p.m. and, thanks to an efficient distribution network, can be found at the recipient's premises or in a Paczkomat® device after just over ten hours, which minimises the risk of thermal damage in transit.

Furthermore, an efficient and well-organised logistics operator skilfully 'mixes' customers within a single logistics centre, so that seasonal and occasional order spikes do not overlap significantly. With a team of dozens of people working dynamically on various projects, the logistics operator is able to handle spikes well above the daily average without any problems. This provides a guarantee of efficient shipping, while maintaining the strict requirements for products in the health and beauty category.