Ulta Beauty's Marketplace Launch - Curation vs. Scale | Fast Five Shorts

Ulta Beauty has launched its Marketplace according to Retail Dive, dubbed the Ulta Beauty Marketplace and created with Miracle, a longtime sponsor of this podcast.

I should note the platform launched a couple of weeks ago, according to an email that Ulta sent customers on September 29.

In a press release from the beauty retailer on Tuesday, Ulta said it plans to quickly scale its Ulta Beauty Marketplace assortment over the next 12 to 18 months.

The seller listings are integrated into Ulta's other online offerings with unified search results, shopping carts, returns and checkout processes.

While shoppers can earn Ulta Beauty Rewards points on Marketplace purchases, they cannot, however, redeem those points on Marketplace listed items per the same September email.

Notably different than some other online retail marketplaces like on Best Buy and Walmart, the platform is also not available to just any third party seller and is only open by invitation directly to brands.

Manola, what is your consultative point of view on what Ulta needs to get right in order to make its marketplace successful?

I mean, listen, I think it's a, it's a balance between offering a breadth of assortment, right?

But still something that feels curated, right?

You don't want to feel like you're kind of out in the world without a lens on beauty and just kind of shopping random things.

I think people are more open to shopping other categories in an open, more open marketplace apparel, but things that you put directly on your body that are, you know, kind of near your eyes and things like that.

I think consumers are a bit more, more cautious.

But it's striking that balance between the, the breath and the curation which I think they've, they've taken a good first step in having only it's by invitation, right.

And they're doing some level of bedding of the quality and the, the types of, of products that are, that are being sold.

So I think that's going to be different than other marketplaces.

But they do have, I think, to maintain that, that standard.

The other thing that comes to mind is, you know, the points integration, that feels a little bit clunky, right?

Maybe they'll, that's something that down the road they'll figure out how to, how to integrate.

But if I'm an alta consumer, you know, I like racking up those points and I don't want to be limited in what I'm going to use them, where I can go and then spend them, right?

Especially when the website, I think there's no way to kind of filter out for the marketplace offering.

So it all kind of comes together.

It becomes hard to parse through, like, okay, where can I use my points?

Where can I not use the points so that, you know, probably some opportunity for, for streamlining there.

So, no, I'm curious, like, one question I have, like, so I, I love the move overall.

You know, I'm big on marketplaces in general.

I love the curation approach for now as well.

But, you know, in a lot of ways, you know, as.

Lisa, you'll probably joke at this one too when I go to you for the next commentary, but, you know, it's kind of a predictable approach.

Like every retailer says, we want a curated marketplace.

We want to be conscious of the brand, but to really be in the marketplace game, you have to, you have to at some point move quicker and open, you know, open the doors a little bit wider than you're probably comfortable with.

So I'm curious, Manola, you know, based on, based on your work in transformation and organizational structuring, how would you recommend people go faster in terms of the curation of their marketplace to bring more vendors on more quickly?

I mean, there's, there's ways to kind of standardize and in beauty, there's, you know, for example, if we're concerned about quality, there's external third parties that certify on, you know, different quality levels.

So you're able to know where these, you know, products are manufactured and have kind of a, kind of a ring fence that's not quite as tight.

Right.

And you're, it's a supply chain that's fairly transparent.

Right.

So you're able to maybe come at it from, from that angle.

I think the curation piece is, yes, you need to get scale in order to have a marketplace that works, but you also need to serve people the right product within that marketplace.

Right.

So it's kind of also an internal kind of personalization and processes that you need to set up so that within this enormous assortment, people can come in and see things that are relevant to them.

Right.

So, you know, I don't know, maybe it links back to the AI question, right, of like, how do you then navigate the, the marketpl?

I think it's, it's duration from those two senses of like, who do you let in, but also who do you serve to people when they show up?

And is that right for, for each individual person?

Yeah, I like what you're saying there too, because that's what I always think about.

Like, there should be a defined rubric for who you're going to let come in so that it, you know, quickens the process versus you're just finding them and deciding if they're right for you, you know.

Lisa, what do you think though?

Look, I think the, the first two things that came to my mind is, is in order for it to be successful, it has to be an Ulta experience.

And how do they think about that experience?

That's true to Ulta.

And then I think speed of delivery is going to be another thing.

You know, as we think about the other competitors, if they are not fast enough, why would I go to their marketplace?

I think the risk could be that they're having the brand shift direct.

Right.

So I think the risk could be is the service level, you know, stacked up to people like Walmart and Amazon in the end because that's going to be critical to the consumer.

And then when I think about it, I do think in order for it to be meaningful, they are going to have to broaden the assortment.

But it needs to be true to who Ulta is and how they've made that selection.

Yeah, and that's a good point on the curation too.

Like you want to, if you're going to build your marketplace, you want to make sure that the vendors you're leaning into are as differentiated as possible, possible against Walmart and Amazon as well.

And what is your take here?

I, I agree with Lisa and Manola.

I think this is different than other marketplaces and if I were Ulta, I would be very slow in building this marketplace up for all the reasons they talked about.

Beauty is different than a mass retailer, than, you know, a Walmart or an Amazon.

This is an area where people spend time and they invest, you know, lots of money in these products and they're putting them on their body.

So I think that this is a, is a category where curation sense.

I also really like this move from the Ulta perspective for their customers, as Lisa was alluding to, because if this product doesn't work, they're also able to bring this back to an Ulta store and then they have that interaction point.

So I think this is actually going to help drive some traffic to Ulta stores.

If they don't find the right product or if that product isn't good, good for them.

That gives another sales opportunity post purchase for Ulta customers and for Ulta staff to kind of get them into the right product, maybe that is in store so they're not leaving without anything in hand.

They see, okay, you liked, what were the attributes of this product that you chose online and how do we find you something next to either test or to walk home with in store.

So, so I like this move in general for Ulta as, you know, one, providing their consumers with a curated assortment both online and offline and then two, as a potential post purchase traffic driver.

So I'm all in on it.

I love it.

Manila.

That brings up another question for me that I want to go to you for.

The last point here is, you know, part of a marketplace idea is also the category expansion, you know, and so like I could think of, you know, categories that might be very relevant to a beauty purchase, like a vanity, let's say, you know, how do you think about that and how would you advise Ulta to handle the category expansion question, if at all?

That's an interesting lens.

And I think, you know, beauty has been expanding into kind of adjacent categories and kind of blurring with, you know, wellness comes to mind.

Right.

So it's, you know, are you taking vitamins to feel good or to look good or a little bit of both and then that's a quick step into, you know, yoga or you know, other wellness related spheres.

So I do think there's kind of, there is probably a lifestyle angle that you can anchor on beauty and it does need, you know, there's a limit to how much you can stretch.

But I think as long as it is.

No pun intended.

Yes.

I think as long as consumers, you know, you're not cluttering them and they can, it can be a pull versus a push.

Right.

I think it's a good point and it's an opportunity to expand into other categories without dragging vanities, for example, into the Ulta stores.

Right.

You can play into these higher ticket, maybe difficult inventory to manage without cluttering the, the brick and mortar channel, for example.