Ulta Beauty’s UB Marketplace And What It Means For Consumers And Brands

Ulta Beauty, the $12.1 billion beauty specialty retailer, on Oct. 14 launched UB Marketplace expanding consumers’ shopping journeys with access to more than 100 new independent and direct-to-consumer brands in yet another example of a major shift in how large retailers are embracing platform-driven commerce.

UB, a curated marketplace dedicated to beauty and wellness is live on ulta.com and the Ulta Beauty app, part of the retailer’s Beauty’s Unleashed strategy to scale new businesses, and marks an evolution in how the retailer serves, inspires and connects with beauty enthusiasts.

The Mirakl-powered UB Marketplace is incorporated into Ulta’s shopping platform, and brand participation is by invitation. The company said its goal is to deliver a more seamless shopping experience with unified search, cart and checkout. The strategy also allows Ulta to delve more quickly into emerging subcategories and trends. Ulta Beauty Rewards are available on eligible purchases, and returns can be made at one of Ulta’s 1,500 stores.

Juan Pellerano-Rendòn, chief marketing officer of Swap, which calls itself the commerce operating system for brands’ global operations, explained why giant retailers such as Ulta – the largest specialty beauty retailer in the U.S. – are betting on marketplaces and what that means to consumers and the beauty industry.

Online marketplaces are sating consumers’ hunger for newness.

“Marketplaces are now launchpads for startups and new brands, but they face operational challenges,” Pellerano-Rendòn said. This is part of a larger trend evolving in today’s fragmented e-commerce landscape where customer loyalty is at a low point and shoppers are opportunistically making purchase decisions that more often than not are based solely on price.

“It’s going to be good for consumers, particularly those shopping in the beauty and wellness space,” Pellerano-Rendòn said of Ulta’s move. “Beauty and wellness is one of the areas where we’re seeing investment for new brands and venture capital. With that, there’s the rapid acceleration of newness and Ulta wants to be able to offer these new brands to its customers. This gives the brands accessibility through Ulta to scale more quickly.”

An example of the range of products featured on UB Marketplace includes Manucurist, Apotheke, ATWATER, Oars + Alps, Babe Lash, A313, Ogee and Saturday Skin. Ulta Beauty plans to quickly scale the assortment over the next 12 to 18 months with brands available on the “New Arrivals” page on ulta.com.

Pellerano-Rendòn said the strategy creates brand loyalty for Ulta. “Obviously, nowadays it’s harder to get a new consumer versus keep an existing one,” he said. “For them to have a marketplace that’s not disrupting their logistics in any way is very different from Amazon. The brands on the marketplace will drop-ship to consumers directly. It’s basically a way for brands to increase their visibility and target new consumers.”

Ulta said speed to newness and brand building create an extended aisle across emerging categories and trends while giving brands visibility across the 45 million-plus Ulta Beauty Rewards members and integrated digital ecosystem. Brands will be able to glean information about consumers and their buying habits through Mirakl’s data, which will be shared with the brands.

The retailer is leaning into logistics to improve online shopping for customers and boost its own performance.

Pellerano-Rendòn said Ulta doesn’t have to keep as much inventory as it typically would if it were putting everything in a store. “They’re trying to get more omnichannel, which is really smart for them as a business,” he said. “A majority of their business is brick and mortar and this is a way for them to really enhance their digital experience.”

The difference between partnering with Ulta and UB Marketplace directly rather than a logistics company can benefit the brands, which may lose margin on products they’re storing with e-commerce logistics firms. Since Ulta doesn’t have to get involved in supply chain management, it becomes an affiliate or a vessel for brand partners.

“UB goes directly through the brand itself whereas Ulta is just the intermediary to give the brand the platform and access it needs,” Pellerano-Rendòn said. “It creates a real win-win scenario for customers, the brands they’re bringing onto the marketplace and also in terms of validating their digital presence.

“At the end of the day, Ulta is looking for ways to pick more winners,” Pellerano-Rendòn explained. “They’re giving themselves more flexibility in terms of what brands they stock. This should give them the option to expand their inventory in a low cost manner. For Ulta, this can be a really good indicator of what it wants to stock in its stores. It shows who’s really accelerating quickly, and conversely, what are some bets it doesn’t want to take.”

If Ulta sees that a brand is taking off in the marketplace, it knows it can expand the skews of that brand. The marketplace platform strategy gives it a lot more data about what’s successful at the direct-to-consumer level so that it can then implement that into its brick and mortar stores.

While operational strategies can help improve financial metrics, there remain questions about the consumer’s mindset.

UBS Evidence Lab said a favorable combination of factors unfolding across the retail landscape should bolster Ulta’s competitive position and help the retailer sustain positive earnings revisions in the quarters ahead, however, shoppers remain budget-conscious amid economic uncertainty.

“We think this will support further outperformance for its shares,” UBS said. Shares were trending downward from a high of $520.90 on Friday’s close to $520.10 this morning on the NASDAQ stock exchange.

Ulta updated its guidance for fiscal year 2025 to $12.1 billion in net sales from $12 billion in 2024. The company projected comp-store sales growth of 3.5% this year over 2.5% the previous year. The estimates were raised due to strong performance, especially in the second quarter.

Ulta in 2021 partnered with Target Corp. to open shop-in-shops at the mass retailer’s stores. The two companies in August announced that they had mutually agreed not to renew the Ulta Beauty at Target partnership when the agreement ends in August 2026. Until then, the Ulta Beauty at Target experience will continue in Target stores and on Target.com.

UBS said the impact from exiting the partnership will be minimal. For one thing, the beauty industry’s “course correction of closing underperforming doors is rationalizing a little.” According to Evidence Lab’s Beauty Competition Monitor, there are 45.8 thousand points of distribution today compared to a peak of 47.1 thousand in late 2023.

“This should alleviate the cannibalistic drag on existing stores and beauty destinations in the future,” UBS said, adding, “Specific to Ulta, the number of recent industry closures has exceeded the ~600 shop-in-shops it will lose in Target stores next year.”

UBS said this “cushion” of supply provides another reason why the impact from exiting the partnership will be minimal, adding that Target customers are able to sign up for Ulta’s loyalty program when shopping at the mass merchant’s in-store shops and some of those consumers may shift of their beauty purchases to Ulta’s standalone stores.

Overall, UB Marketplace play should benefit Ulta Beauty by allowing it to cater to consumers more quickly, including Gen Zers and Millennials, who are increasingly impatient to see results.