P&G TO SPEND $50M ON REFLECT.COM PROJECT

Byline: Pete Born

NEW YORK — The Procter & Gamble Co. unveiled an ambitious $50 million initiative Monday that promises to reinvent beauty as a creature of cyberspace.
P&G and Institutional Venture Partners, a Silicon Valley venture capital firm, have created a stand-alone subsidiary, called Reflect.com, that will operate a beauty web site of the same name. The site will serve as a springboard for a new beauty brand, called Reflect, that was created to be sold only on the site. It was touted in a statement Monday as “the first personalized line of beauty products and services created for and available solely through the Internet.”
P&G expects to go online in time to catch the holiday gift-buying season.
What sets this site apart from the dozens of others that have popped up on the web recently is the concept of personalization. A consumer can tailor a beauty purchase, according to the company, with 50,000 variations possible when combining different aspects of product and packaging.
“We are trying to create a precision of personalization that only can be achieved on the Internet,” said A.G. Lafley, president of global beauty care and North America at P&G. He said the range will encompass hair and skin care and makeup.
Such a level of customization would be too difficult and too costly to accomplish in a typical bricks-and-mortar venue.
Since there will be such a high level of customer consultation involved, the products will be priced on a par with department store brands, Lafley noted, seeing that this is all about satisfying consumer needs.
“This is not about e-tailing,” he said. “We are not selling existing brands. We are not trying to create an interpretation of a retail environment. This is about personalization and reaching a new group of consumers.”
Lafley underscored the point: “This is not a distribution play.”
P&G is the majority equity partner in the venture with Institutional Venture Partners holding a minority share and Reflect.com employees hold another piece. The company will be based in Silicon Valley. Two members of the board will come from P&G — Lafley and chief financial officer Clayton C. Daley — and another two represent Institutional Partners, Tim Haley and Geoff Yang, both partners in the firm.
An independent director and a chief executive officer will be chosen in coming months. Until then, Lafley will serve as interim ceo. Denis Beausejour, P&G vice president of global marketing, will lead the start-up effort, according to the company.
The $50 million investment represents the total amount earmarked by both P&G and Institutional Partners combined.
“The launch of Reflect.com is a new building block that will help accelerate our growth,” according to a statement by Durk I. Jager, P&G chairman and ceo. “We chose to form Reflect.com as a stand-alone company to blend P&G’s strengths in consumer knowledge and product innovation with the online savvy and speed of Silicon Valley. This will allow us to learn how to bring personalized products and services to consumers online.”
Lafley added that P&G executives think the concept is applicable to other categories of products.
“There is an emerging consumer need for more personalization and customization.”
These consumers, he added, are very involved with beauty products and the shopping experience. “They are confident enough in making their own prescriptions,” he said, “and confident enough to shop online. We wanted to test the boundaries of stretch, innovation and speed.”
Between hair care, body care, personal care, traditional makeup, skin care and prestige fragrance, P&G claims a global beauty volume of $7.5 billion. Among the more prominent brands are Pantene Pro-V hair care, Vidal Sassoon, Head & Shoulders, Oil of Olay, the upscale Japanese SK-II skin care, Max Factor, Cover Girl, Giorgio, Hugo Boss, Old Spice and Safeguard.
Recently, the firm, which has a total of 300 brands, has been diversifying further with the addition of a pet food marketing company and water purifying firm and the creation of an e-commerce group within P&G.
Lafley stressed, however, that Reflect.com will be independent of the P&G group and that its employees will be hired outside of the Cincinnati-based consumer products giant.