The State of Ecommerce: Beauty category
Beauty Q1 2026: Why margin is up, but revenue and ROAS are down
See what's behind the shift:
- OOS losses climbed 40%+ YoY and conversion masked a shrinking funnel.
- Beauty's Q1 ordered revenue fell 4% while CPC jumped up to 52%. Ad spend is scaling faster than it's earning.
Q1 Beauty data: tighter funnels, rising CPCs, and OOS gaps. Download the report.
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Key takeaways
Volume traded for profitability:
Ordered revenue declined ~43% YoY on an indexed basis as the category reset toward higher-quality business
Pricing discipline lifted margins:
ASP rose ~33% YoY while discount rates compressed from ~27–28% to ~17%, driving gross unit margins to ~54%, up 18+ ppts YoY
Top-of-funnel visibility eroded sharply:
Glance views fell ~50% YoY and conversion rates softened to ~1.3–1.6%, down from ~1.5–1.9% a year prior
Ad efficiency held despite pullback:
Ad spend dropped ~25% YoY while ROAS remained steady, with CPC easing to $0.56–$0.65 from $0.63–$0.73
PO fill rate surged to category-leading levels:
PO fill rate climbed to ~68% on average, up ~25 ppts YoY, even as on-hand inventory dropped 25% YoY
Out-of-stock losses compressed to multi-year lows:
OOS revenue loss fell ~53% YoY, and Rep OOS rates hit 26-month lows of ~0.9–1.4%, down from 2.6–4.6% a year earlier
