Cosmetics

Cosmetics coupon usage just hit its lowest point since the dataset began. The promotional cycle is normalizing.

Cosmetics coupon usage came in at 1.02x baseline in March, down from 1.11x in February and a long way from the 1.51x peak the vertical reached in December 2024. For a category that has run structurally elevated coupon engagement for the better part of eighteen months, a reading this close to baseline is a meaningful inflection. It suggests Cosmetics brands have been systematically pulling back on code-based promotions, and that the buyer base is adjusting with them.

The timing matters. Cosmetics AOV has been in a quiet but steady recovery since bottoming out in early 2025, and it came in at 1.09x in March, its highest reading in over a year. These two trends moving simultaneously suggest something more than seasonal normalization. Brands that have reduced coupon dependency are not losing conversion or basket size as a result. They're generating AOV gains in the same window. That's the clearest possible signal that the category had been over-discounting, and that the pullback is not hurting the buyer relationship.

What to do: If you've been gradually reducing the prominence of your discount mechanic over the last six months, this is the data that confirms the approach is working. The next step is making sure the value you're delivering at checkout has shifted from code-based to experience-based: free shipping at a well-set threshold, visible return terms, and loyalty acknowledgment that doesn't require a promo field. The buyer is still converting without the code. Give them a reason to feel good about it.

Free shipping rate just crossed back above baseline for the first time since September 2024

Cosmetics free shipping rate reached 1.01x in March, the first reading above baseline since the category's extended pullback began in late 2024. The series had dropped as low as 0.63x in December 2024 before beginning a slow recovery through 2025. Crossing baseline now, in the same month that coupon usage is normalizing and AOV is at a multi-month high, is not a coincidence.

What it suggests is that Cosmetics brands have rebalanced their checkout value proposition. In 2024, the category was running high coupon engagement and low free shipping rates simultaneously, a combination that signals discount-led acquisition without shipping investment. That mix was expensive on margin and left buyers uncertain about the base experience. The March data looks more like a sustainable equilibrium: less code dependency, more free shipping eligibility, and AOV that's holding above baseline without promotional support.

The caution here is threshold management. A free shipping rate back at baseline is a healthy sign, but it only remains healthy if the threshold is set correctly. If brands have achieved 1.01x by lowering thresholds below AOV, they're absorbing shipping cost on orders that would have converted anyway. If they've achieved it by expanding eligibility to orders at or above AOV, the economics work.

What to do: Check where your free shipping threshold sits relative to your March AOV. If the threshold is at or below AOV, you're not stretching the basket. You're gifting shipping margin. A threshold set 10 to 15% above current AOV, paired with progress bar messaging, will maintain the free shipping rate while doing actual work on basket size.

Shipping revenue has been declining for sixteen months. March's 0.79x is the lowest reading in the dataset.

Cosmetics shipping revenue peaked at 1.11x in July 2024 and has been falling since, hitting 0.79x in March. That's a 32-point drop over sixteen months, and it's now the lowest reading the vertical has produced. The direction is unambiguous.

The cause is not a mystery. Cosmetics brands have been systematically reducing shipping revenue as a share of each checkout session, partly through free shipping expansion, partly through threshold reduction, and partly through a category-wide shift toward absorbing shipping cost as a conversion tool. The question isn't why this happened. It's whether the margin trade-off is working.

The AOV and coupon data suggests it partially is. Buyers are spending more per session and needing fewer discount codes to get there. If the shipping cost absorption is driving those outcomes, the math may pencil out. But the brands that are most exposed are the ones that lowered shipping thresholds across the board without measuring the incremental conversion lift. If your shipping revenue has declined and your conversion rate hasn't improved meaningfully, you've absorbed cost without the offset.

What to do: Run a simple audit: compare your shipping revenue per session against your conversion rate for the last six months. If both are declining, your free shipping expansion isn't converting incremental buyers, it's just reducing revenue from the ones you had. If conversion is holding and shipping revenue is down, the trade is working. If neither has moved, your threshold is set wrong in both directions.