BEAUTY E-TAILERS DELEGATE OPERATIONS

Byline: Valerie Seckler

NEW YORK — Beauty cybermerchants — from Christian Dior and Clarins to Walmart.com and JCPenney.com — are angling to accelerate sales growth by farming out various aspects of their e-commerce operations to third parties.
In this vein, Walmart.com has just forged an Internet venture with Elizabeth Arden, calling for Arden to manage the Web site’s fragrance classification, which has 50 brands. Approximately half of them are Arden’s own — including White Diamonds, Red Door and Fifth Avenue — with the rest simply distributed by the company. The idea is to pump up the volume produced by the entire category. The deal, for undisclosed terms, follows a similar one struck last year between Arden and JCPenney.com.
At the same time, megabrands like Dior and Clarins have engaged an e-commerce software provider, iMediation, to help insure that the companies’ beauty brands are merchandised and marketed online in a manner consistent with their brick-and-mortar presentation. Using a third party also will enable syndication of a single e-boutique model across numerous e-tail partners for Clarins and Dior.
“Sephora.com and macys.com are the two priorities for Dior [beauty] online,” Gilles Kortzagadarian, manager of Customer Relationship Management (CRM) and interactive marketing at Christian Dior, told WWD. “We plan to launch our e-boutique on them, with iMediation, during the second quarter of 2002. In the second quarter of 2003, we plan to syndicate the boutique on another eight or 10 sites of our major partners simultaneously.” Those partners include Ulta.com and eLuxury.com, a joint venture between LVMH Moet Hennessy Louis Vuitton and Europatweb, LVMH chairman Bernard Arnault’s Internet development vehicle — which also holds a stake in Paris-based iMediation.
The Dior e-boutique will carry about 500 stockkeeping units, with 90 percent of the range reflecting the same assortment that shoppers would find at stores and the balance devoted to exclusives for particular Web sites. Kortzagadarian said Dior is investing “hundreds of thousands of dollars” on its new Internet effort, but did not specify further. Dior began e-tailing beauty products in 1998 at Sephora.com.
When asked what sparked Dior’s third-party play, Kortzagadarian, who is based in the brand’s New York office, replied: “We are very interested in our business online, but what really matters is the volume generated via the Internet at the stores. We call it the iceberg model: online sales are the tip. The bigger part of the mass, hidden underwater, is the offline volume generated online.”
According to a study released this summer by Internet consultant Jupiter Media Metrix, nearly two-thirds of the total Web benefit for retailers will be offline transactions influenced by consumers’ online research.
Arden’s aim is slightly different as it is targeting bigger volumes in cyberspace, along with offline benefits.
“We want to raise the visibility of the fragrance subsite at Walmart.com, one of the most active commercial Web sites,” noted Scott Beattie, chairman and chief executive officer of Arden. “There are other candidates, but these are the best ones because of their traffic. Short term, we will focus on making them successful.” In October, for instance, Walmart.com had 3.97 million visitors, or 3.9 percent of the Web’s 102.1 million users that month, while JCPenney.com was visited by 3.9 million, according to JMM’s Traffic Report, compiled monthly for WWD.
The move could position Arden to capitalize on the “relative strength” that it cited in its mass and mid-tier channels, when reporting Wednesday that its earnings for the third quarter ended Sept. 27 ran up 158 percent, to $32 million, as sales surged 85 percent, to $303 million.
The arrangement calls for Arden to accept Walmart.com’s orders for fragrance products via electronic data interchange, or EDI, and then distribute them to the Web site and fill consumers’ orders. The deal, Beattie said, has required “some money to be invested in technology, nothing significant.” The Arden ceo added: “It’s mostly an integration of our computer platforms and the placement of [fragrance] micropages on the Web site.”
Sounds simple. But there’s at least one wrinkle that will need to be ironed out.
There is no tab, or graphic of any sort, on Walmart.com’s home page to show that it offers fragrance products, nor is fragrance listed as a category on the site’s drop-down menu. In contrast, the Arden fragrance shop is highlighted on JCPenney.com’s landing pad. Further, a search for fragrance via Walmart.com’s search engine brought WWD to the jewelry area, where some fragrances are displayed, rather than the gifts department — where Arden’s subsite, launched two weeks ago, is located.
Asked if there are plans to remedy the problem, a Walmart.com spokeswoman said simply, “The home page changes all the time.”

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