If you’re in the health or beauty industry, you’re likely feeling both excited and overwhelmed by the opportunities ahead in 2025. The good news? You’re in a sector where customers return regularly, and your products tend to have healthy margins. The challenge? The competition is fierce, and simply running an e-commerce store isn’t the goldmine it once was.
Health and beauty brands, in particular, are facing a pivotal moment. Over the last few years, launching an online store was relatively easy. Access to cheap capital and affordable advertising meant you could grow without keeping a tight grip on your margins. But those days are gone. Now, rising costs and a saturated market mean you need to get your numbers right or risk being left behind.
So, how do you thrive in 2025? Let’s break it down.
Strengths and Weaknesses of Health & Beauty Brands.
Before we dive into the strategies, it’s important to understand the strengths and weaknesses typical of health and beauty brands:
- Good underlying margins: The nature of health and beauty products often allows for high margins.
- High repeat purchase rates: Whether it’s skincare or supplements, your customers tend to return for more.
- Opportunities to cross-sell: You can introduce complementary products and grow average order values (AOV).
- More competition: High margins attract competitors like bees to honey.
- Ad costs are rising: The more players in the market, the more expensive it becomes to reach your customers.
- Waiting for sales: Many brands have to wait for repeat purchases to become profitable.
- Breaking customer routines is tough: If people are loyal to other brands, it takes time (and sometimes discounts) to win them over.
So, how can you overcome these challenges and set your brand up for sustainable growth? Here are four key steps that successful brands are using to thrive.
1. Set your North Star goal
As a health and beauty brand, the first thing you need to do is get clear on your North Star goal. Whether it’s maximizing revenue, growing new customer acquisitions, or achieving inventory sell-through, having one primary focus will provide a clear direction for your entire team.
When each department operates with different priorities, it creates confusion and pulls the business in multiple directions. By setting one clear goal, you can make every subsequent decision easier. This will align everyone’s efforts, ensuring that all parts of the business are rowing in the same direction.
2. Understand your risk tolerance
Next, get clear on your risk tolerance. How much are you willing to invest upfront to acquire customers profitably on the first, second, or third order?
Health and beauty brands have a unique advantage due to high repeat purchase rates. Your customers often return quicker compared to other industries, meaning you can recover your acquisition costs faster. This is a blessing, but it can also be a challenge—if you rely too heavily on future sales to become profitable, you could run into cash flow issues.
Make sure you know exactly how long it takes to become profitable and build your marketing strategies around these timelines. Be cautious not to overspend in the pursuit of acquiring customers, especially if you lack the data to support future profits. Knowing your break-even point is crucial.
3. Identify and leverage your unfair advantage
Every successful e-commerce brand has one key to success: an unfair advantage. For some, this could be better margins, allowing you to outspend competitors on customer acquisition. For others, it might be a recognizable brand name, a loyal community, or a killer influencer marketing strategy that helps you stand out on social media.
The important thing is to identify where your advantage lies and double down on it. Don’t get distracted by what other brands are doing. If you try to copy a competitor who has a different advantage—like spending big on influencers when your strength is in margins—you risk driving unprofitable sales.
Instead, focus on what makes your brand unique. Maybe you can spend more on paid ads because of your margins, or perhaps you have a cult-following that doesn’t require the same ad spend as others. Whatever it is, play your own game and don’t try to mimic strategies that don’t align with your strengths.
4. Look deeper than ROAS
ROAS (Return on Ad Spend) is a useful metric, but don’t make it the only one you track. It’s easy to get lost in channel attribution and overanalyze where each sale is coming from. While ROAS tells you how your marketing spend is performing at a channel level, it doesn’t always paint the full picture of profitability.
Instead, focus on contribution margin—gross profit after marketing spend. This metric gives you a better understanding of whether your business is truly profitable. Look at whether your contribution margin increases as you spend more on ads. If it does, you’re in a great position to scale. If not, it’s time to reassess your strategy before pouring more money into ads.
For a profit-first approach, using a tool like StoreHero’s Contribution Margin Calculator can help you gain clarity on how much profit you’re really making from each marketing dollar. This is the key to ensuring long-term profitability as you grow.
Set your brand up for success in 2025
Scaling a health and beauty brand in 2025 will be challenging, but by honing in on the right metrics and strategies, you can achieve profitable growth. For further inspiration, Gerard Keohane, Founder & Director of StudioForty9, shares a the month-by-month strategy for peak trading success in the Q4 Profit First Playbook.
With a focus on profitability and data-driven insights, 2025 could be the year your brand soars to new heights.
