Whole Paycheck Tracker: Walmart Still Leads Amazon In Health And Beauty

It’s the one category where Walmart still owns Amazon. Exclusive PYMNTS data analysis shows that health and beauty has been tracking at a high rate of growth for Amazon, but the everyday nature of Walmart gives it the edge.

With Amazon’s Prime Day wrapped up and its counterprogramming from Walmart and other retailers still in progress, the U.S. consumer’s whole paycheck is being picked clean this week, and will continue to be under pressure as the holiday season proceeds. As it does, the Whole Paycheck Tracker is looking beyond the holiday. Because it’s in 2021 when the digital-first economy will continue to prove itself. One of the categories pointing to that future is health and beauty.

Amazon has already stated its intention to get deeper into the category through its Halo device. The marketplace powerhouse entered the wearables market in August with a wristband device that tracks various health performance indicators, allows for third-party integrations and also puts Amazon deeper into the subscriptions and services arena. Halo will directly compete with Apple Watch as well as Fitbit and other wearables on the market. The move also puts Amazon back into the device market.

While the health and beauty category has its share of expensive devices (Halo is mid-range at $64.99), the lion’s share of the health and beauty category include the basic consumer packaged goods items like shampoo, toothpaste and cosmetics. None of these products, or the whole category for that matter, have ever achieved much market share online. But with the onset of COVID-19, that is changing rapidly and dramatically. According to new data from PriceSpider, the health and beauty category easily beat out all others for growth during the pandemic, with 173.5 percent year-over-year online growth for Q3.

That’s good news for Amazon, and it comes in one of the rare categories where it can use a boost. The short version: Walmart is beating out Amazon in health and beauty. However, with a growth rate like 173 percent, it will be interesting to see how Amazon fares in this category as it continues to take close to a majority of the U.S. eCommerce business.

For now, it’s Walmart’s game to lose. PYMNTS’ exclusive data analysis developed for the most recent quarterly Whole Paycheck Tracker goes back to 2016, when the mass-market giant took $36.7 billion in the category online and in-store. That started a steady rise to $42.5 billion in 2019 for 5.4 percent of total consumer spending, just a shade under the percentage measured in 2016. Amazon started from way behind, getting $8.3 billion in 2016 but then spiking to $19.4 billion in 2019. That $19.4 billion was good for 2.5 percent of the total consumer spend.

The game got a bit closer in Q2 2020, when Amazon posted $6.5 billion, up from $4.4 billion in Q2 2019. It also posted a full percentage point gain from 2.4 to 3.5 percent of total spend. Walmart was roughly double the volume, tracking at $10.6 billion in Q2 2019 and $11.6 billion in Q2 2020. That last number was good for 6.2 percent of spend.

Looking at current inventory online, Amazon seems to be headed for higher-end, higher-ticket items. Its No. 1 seller in the category is Crest Whitestrips at $44.95. Among its top 10: Collagen Peptides powder kits, priced between $68 and $74, and the Philips Sonicare toothbrush at $199. Walmart.com is decidedly downscale, with its top sellers dominated by shampoos and conditioners under $10.

The two companies’ selections match their strategies. Walmart is positioned as the everyday low price and everyday product source, and its online selection aligns with their stores. Amazon wants higher tickets to justify its fulfillment and shipping spend. But again, it’s hard to believe Amazon is going to sleep on its market share when the category is part of the $2 trillion annual spend on consumer packaged goods, which includes health and beauty.

“At this stage in eCommerce, the largest advantage of a brick-and-mortar store over an online offering is the shopper’s ability to experience the look and feel of a new product,” according to Big Commerce. “But with consumer packaged goods, once a shopper has tried the product or has come to trust the brand, there’s little incentive to visit a retail location to experiment further or deepen their understanding of the product. In that way, brick-and-mortar stores have more incentive to lock in a consumer through either a unique and memorable experience or convenience — ease of access and use. Brick and mortar, as a result, ends up deeply polarized, providing either rich, in-person experiences or stripped down, affordable and easy-to-use services.”