At Affiliate Window we've been focusing on several niche sectors with the advertisers we work with. The aim of these reports has been to shed greater light on the nuances seen within these specific advertisers, who quite often differ from the typical retail, travel and finance affiliate trends, and to provide sector-specific actions for programme managers.
This series looks at variety of sub sectors, taking into consideration online market reports in tandem with typical affiliate reporting metrics such as conversion, AOV, growth/decline curves and device sale splits. This report analyses the fragrance sector.
Characterised by strong seasonal peaks in November and December, the online fragrance sector has seen growth in the past year with annual revenues increasing 4% in 2014. The last two months of the year account for 38% of total sales when including the wider beauty sector, owing to a “Christmas effect”.
Fragrances and cosmetics are worth around £3 billion to the UK economy in 2015, but the nature of the industry is changing rapidly. Niche perfume stores in the UK grew to a population of 441 in 2014 versus 139 in 2004. Consumer mindsets are changing, with artisan fragrance products gaining increased popularity over the traditional top brands in the sector.
Stephen Weller, from the International Fragrance Association, claims that customers are keen to find innovative brands and become more involved in the art of perfumery via content blogs and online magazines.
The wider retail sector including fragrance has also been impacted by greater adoption of mobile online shopping, with smartphones driving the growth. M-commerce accounted for 33% of online sales in 2015, and this is expected to rise to 42.5% by 2019.
As with the sector’s seasonality, the affiliate channel sees strong peaks in November and December each year. Yearly growth has been considerable, with year-to-date sales up 24.5% since 2014, and revenues up 31.82% for the same period, placing perfume advertisers in a good position ahead of 2015’s peak months.
Trends over time: The graph below indicates the monthly sales trend for Affiliate Window’s Fragrance advertisers:
Key performance indicators
Average order value (AOV)
With revenue growing faster than sales in the sector, the AOV has increased over the past few years, with an average of £44.70 seen in 2015 compared with £38.43 in 2013.
We’ve seen conversion rates improve, with a considerably high 7.29% witnessed in 2015, against 6.93% in 2013. The strongest conversion rate growth has been seen on smartphones at 5.65% this year, compared with 4.98% in 2013.
EPC and commissions
Overall traffic has increased at a higher rate than revenue, and subsequently EPCs have dropped slightly in 2015 to £0.16 versus £0.17 in 2013. Likewise, the average commission has fallen from £2.41 in 2013 to £2.14 this year.
Mobile performance has been pronounced in the fragrance sector, and smartphones have accounted for 18.15% of total transactions this year, (7.60% in 2013). Tablets grew at a slower rate, but accounted for 22.04% of transaction in 2015 (14.87% in 2013).
Tools for affiliates
Typically most fragrance programmes will offer affiliates standard banner creative and text links. Some programmes also offer product feeds, various voucher codes and deals.
In the chart below, we’ve broken out the percentage of affiliate transactions by publisher type. We have seen a gradual increase in the contribution from cashback sites over the past few years, accounting for 36.57% of sales in 2015. Discount code sites have also increased their role in the fragrance sector, contributing up to 34.54% of sales.
Editorial content sites hold a 3.31% share of sales on average in 2015, but still drive 17.14% of traffic. Advertisers keen to engage with these sites may want to consider other payment models to reward their earlier funnel influence within the channel. We’ve also seen a decline in loyalty sites, which now account for 4.98% of sales in 2015.
Finally, we've put together some niche sites to consider for the sector: