Now that beauty executives have proven shoppers will buy cosmetics online, retailers and manufacturers are charging ahead with more dynamic, multi-channel approaches to e-tailing in the hopes of sealing a larger deal.
Numerous companies, including Sephora, Bare Escentuals, The Body Shop and Lancome, have recently updated their web efforts -with video clips and blogs, among other techniques-to encourage people to stay on their sites and browse longer. In doing so, their strategy is to try and strengthen their brands' images in the minds of consumers, who, in turn, will buy more. And many say that tactic is working.
Last year, online cosmetics and toiletries sales in the U.S. totaled $924 million (?681.9 million/£464.3 million), a 18.9% rise year-on-year, according to London-based tracking firm Euromonitor International. Thanks largely to upped marketing flair, that business is expected to grow even further. Online beauty sales in the U.S. are forecast to hit $1.09 billion by year-end and $1.28 billion in 2008.
Of course, compared to the overall $23.54 billion beauty industry, which incudes sales from color cosmetics, fragrance, hair care and skin care, such revenues still only represent a drop in the bucket. It's not been easy for beauty e-tailers so far. Seven years following the dot-com implosion, competition in cyberspace remains tough.
"There's not a lot of space for pure online retailers, particularly with the presence of Sephora," said Heather Dougherty, New Yorkbased senior Internet analyst for Nielsen/NetRatings tracking firm, referring to the world's biggest prestige beauty e-tailer, owned by LVMH Moët Hennessy Louis Vuitton, which industry sources expect will ring up $100 million this year. By comparison, they say the topfi ve beauty brand sites generate $15 million to $20 million annually.
Yet, e-tailers provide a key window for a brand, particularly among consumers who can't easily access products in the real world. Already numerous beauty e-tailers represent some manufacturers' and retailers' single largest door sales-wise. That's true for Sephora, whose U.S. e-tail site went live eight years ago, according to David Suliteanu, president and chief executive officer of Sephora U.S.A.
It's the same for some of the Estee Lauder Cos.-owned companies. "Most of our branded websites are the brands' largest retail door in the world, and they have been for years," said Dennis McEniry, president of the Estee Lauder Cos. Online. "It's one of those unheralded success stories. We have not seen e-commerce slow down at all since the late Nineties, and now the trend is accelerating around the world."
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