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Beauty Digital Forum: Prama Bhatt of Ulta Ramps Up Online Plan

E-commerce accounts for 3 1/2 to 4 1/2 percent of sales.

In five years’ time, Ulta Beauty’s goal is for digital to account for 10 percent of the company’s business, said Prama Bhatt, vice president, digital and e-commerce at Ulta Beauty.

For 2013-2014, e-commerce accounted for 3.5 to 4.5 percent of Ulta’s business. “We know that is not where we think we should be,” said Bhatt, in her presentation. Ulta generated $3.2 billion in net sales for the 2014 fiscal year.

Bhatt noted that overall in the industry, 90 percent of retail is still occurring in brick-and-mortar stores. E-commerce at Ulta has grown from $17 million in 2009 to $150 million in 2014.

Frequently Bhatt is asked whether most of the online beauty business is about replenishment, but she thinks otherwise. “She’s just as excited about newness online as she is in-store,” said Bhatt. “As we’ve brought all those brands online that are in our store, what we found is all boats rise. Rarely is there a trade-off between one or the other channels.” She said if a brand does better in the stores, it also does better online. “It’s all incremental,” she said.

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In business for 25 years, Ulta opened about 100 stores a year over the last few years and offers a broad product mix of high- and low-price points and services. “We want to make sure we’re replicating [online] what our stores have,” said Bhatt. She said an important element is offering digital storytelling and providing content to make it easier for their guests to shop. Personalized services are also critical. Last year they launched a new salon site to provide that content, as well as online booking, which is driving new registrations and appointments and supporting their loyalty program. She said that 80 percent of their sales are coming from their loyal members.

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Further, she noted that mobile was the tipping point for them, and 60 percent of their traffic is coming from mobile sites. Even though their customer researches products on her mobile, she still comes into the store. In fact, one in four global browsers end up in a store.

Interestingly, Bhatt said they have very few omnichannel guests, but they’re very valuable. Only five percent of their members shop in-store and online and they represent only 13 percent of the company’s sales, but their multichannel guests spend 2.4 times to 4.3 times more than their single channel guests. “My team has its work cut out for us in terms of improving the penetration rates,” she said.

One thing that’s certain is that Ulta has a highly engaged guest, she said. Generally, beauty customers are either looking for a lot of help and instruction, or don’t want any help. “We think we’re right in the middle, offering help when she needs it but allowing her to play and explore when she wants to be on her own,” said Bhatt.