The Lipstick Indicator: What sacrifices are consumers making?
There’s an economic theory called the Lipstick Indicator — in brief terms, this is a trend observed in times of economic downturn, coined when retailers noticed women spending money on small luxury items (ie. lipstick) instead of high-end items (cars, new homes, etc). It seemed that people were compensating for lack of “big ticket” items by choosing smaller specialty goods.
Today, we can see this trend reflected in eBay sales. Terapeak has been comparing the trend-lines of middle-to-high-end luxury items, and one of our first instincts was to examine the sales of ladies’ handbags — a market we’ve been following for quite some time. Here’s a category trend taken from the past 365 days:
As you can see, there’s a decline over the past year — about 25% — though it’s by no means a “dead” market.
So then what about smaller items? What sacrifices are these buyers making, if not investing in luxury items? Instead of lipstick, we’ve selected another luxe good — anti-aging products. Check out this trend-line for the “Anti-Aging Products” category:
Pretty striking, don’t you think? It’s just one more example of how a fluid online market is near-impossible to contain, and how being forward-thinking and mindful of the Lipstick Indicator will help any seller find their niche.
Tags: accessories, blog, ebay, economy, handbags, market, savings, terapeak
March 23rd, 2009 at 11:31 pm
Wow, very good findings. I will check back more often, way to give us an example of how the theory really hits home to all of us who sell on eBay.
Thanks!
Dale at Bikewagon
March 25th, 2009 at 8:46 am
Hello,
Can you provide me more examples of other commonly known small luxury items?
March 25th, 2009 at 11:44 am
Thanks, Dale — we’re always excited when Terapeak can be used to back up tried-and-true sales theories!
And Monica, thanks for your question. There’s a whole host of opportunities out there right now, but do a bit of digging around in categories like make-up, fragrances, hair products, etc… The eBay popularity of Health & Beauty continues to soar, so we think you’ll find something there!