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Going, Going, Growth: Beauty’s Expanding Reach on eBay

Ten years after its launch, eBay is becoming one of beauty's hottest retail outlets, with 157 million registered users worldwide.

NEW YORK — Ten years after its launch, eBay is becoming one of beauty’s hottest retail outlets.

With 157 million registered users worldwide — 75 million of whom live in the U.S., the remainder spread amongst 32 other countries — the auction site is a natural market for nearly all segments of the beauty market, said Sam McDonagh, senior category manager for eBay health and beauty.

“At any given time, there are more than 300,000 beauty products available for sale on eBay in the U.S.,” he pointed out, adding that sellers run the gamut from bricks-and-mortar retailers aiming to clear out discontinued products to consumers making a buck from impossible-to-find products. Wholesalers and manufacturers are also part of the mix. “EBay works across the entire product life cycle — from new and hard-to-find to discontinued products.”

In 2004, the last year for which full-year figures in beauty and health sales were tallied, the category racked up $196 million, a 63 percent gain over the previous year.

Brian Rudie, senior brand manager for Jergens, believes that the site actually helped drive demand for one of its most successful recent drugstore launches, Jergens Natural Glow, a body lotion/self-tanner hybrid. “The brand planned for a successful product launch and had sufficient plans to handle typical consumer demand for a new lotion,” said Rudie. “What we did not count on was the tremendous amount of buzz that this product would have with consumers. We have not previously had products reselling on eBay for a 50 percent premium over what it is sold for in stores. Also, we have never had over 38,000 people sign up on a waiting list for a new product,” he said, referring to requests logged by mass retailers.

“There are always vintage Jergens items available for sale on eBay, so we are already connected to eBay’s community,” added Rudie. “The Jergens Natural Glow eBay auction situation was interesting because that is the most attention that has been given online to a new innovation from Jergens. We believe that much of the popularity of the online buzz for Jergens natural glow was the merging of a trusted American icon brand with breakthrough new product innovation.”

However, while eBay supports the beauty industry in every way it can, “we don’t actively pursue sellers,” said McDonagh. “We entertain discussions about opportunities, though, and many businesses are using eBay as a complementary channel of distribution.”

In the second quarter of fiscal 2005, McDonagh noted, an average of 6,700 makeup products, 4,400 perfumes and colognes and 5,100 skin care products were sold daily.

In June 2005, Chanel, Estée Lauder, Victoria’s Secret, Ralph Lauren, Dolce & Gabbana, Christian Dior, Calvin Klein, Lancôme, Escada and Clinique topped the list of hot women’s fragrances on the site, with top buyer searches including Vera Wang, Burberry, Gucci, DKNY and Obsession, according to eBay. During that time, a rare Estée Lauder slot machine compact in its original box fetched more than $500, while a vintage Cartier 14-karat gold perfume flask brought in $760.

For men’s fragrances, the top 10 brands were Calvin Klein, Armani, Ralph Lauren, Dolce & Gabbana, Hugo Boss, Davidoff, Chanel, Liz Claiborne, Creed and Aramis. Top buyer searches included the words cologne, Hugo Boss, Armani, Curve, Chanel, Lacoste, Issey Miyake, Burberry and Eternity.

In color cosmetics, the top 10 categories in June were eye shadow, sets and kits, foundation, face powder, lipstick, lip gloss, beauty tools, mascara, blush and cases/bags/totes. Brands cracking the top 10 in user searches included MAC Cosmetics, Stila, Clinique, Bare Escentuals, Lancôme, Victoria’s Secret, Mary Kay, Chanel, BeneFit and Avon. A Mary Kay lot of more than 900 products fetched $2,003.22, while a Louis Vuitton Beauty Train Case earned $1,470.

The top skin care categories were antiaging products, sun care, moisturizers, acne/blemish control, sets/kits, microdermabrasion, masks/peels, exfoliators/scrubs, toners/astringents and men’s skin care, and the top skin care buyer searches included the words Clinique, Estée Lauder, Aveda, Hauschka, Juice Beauty, Avon, L’Occitane, Lancôme, Mary Kay and LaMer.

For hair care, the top 10 categories were straightening irons, salon equipment, shampoo, gel/mousse/spray, hair loss products, conditioner, hair dryers, hair color, rollers/curlers and curling irons, and the top 10 buyer searches were Chi, Redken, flat iron, Kerastase, Bumble and bumble, Sebastian, hair dryer, TIGI, Clinique and Nioxin.

Beauty is far from the only industry that has found the site to be lucrative. For instance, Sears Holdings operates three storefronts on eBay, selling everything from appliances to consumer electronics. Executives have noted that the strategy yields more profits than traditional industry liquidation procedures. “It’s creating another channel within a multichannel,” David Southworth, divisional merchandise manager for hardlines at Sears Holdings, told WWD in June. “The idea here is to take the Sears brand name, leverage it in a value-oriented product and actually turn this into a plus for the customer, instead of selling [the merchandise] to a third party.”

Indeed, consumers seem to be embracing the site for reasons past simply getting a good deal.

“EBay has elements that add excitement to the experience — there’s a bit of gamesmanship, or psychology and the attraction to the bargain shopper of making a deal,” Scott Evans, partner in Ernst & Young for Real Estate Advisory Services in the Southeast, told WWD in June. “Internet sales haven’t hit a plateau. There’ll be continued growth, although maybe not as much as a few years ago.”