E-commerce has emerged as a strong driving force in the beauty sector according to L2ThinkTank.com. The New York-based agency highlights that while growth in the beauty sector was predicted to stand at 6% in 2013, e-commerce was forecast to witness an impressive 29.1% rise during the period.
Robust gains, low ship-to-weight ratios and high margins have seen a raft of investment in e-commerce in 2013 according to the firm. A notable example is Amazon (the preferred online channel for beauty and personal care purchases for 27% of North Americans in 2012), which launched its luxury beauty store in the US market in October.
The internet plays a key role when it comes to the beauty purchasing process, with one third of consumers researching online before buying a product, L2ThinkTank.com says. This percentage is highest among consumers in South America, at 38%, followed by Europe at 36% and North America at 33%.
Digital engagement is high in the UK, with market researcher Mintel noting that six out of 10 Britons conduct online research prior to making a beauty purchase, with one third turning to social media to do so.
Importance of online communities
Furthermore, Diagonal Reports recently pointed to the importance of online beauty communities in shaping sales, suggesting this conversation is often ‘under-analysed’.
While discussions taking place on online consumer sites, feedback forums and social platforms are not transactional, they contribute to shaping beauty market transactions, the market researcher says.
“These groups differ fundamentally from the e-commerce sites or digital shops, which are totally functional, existing only to sell products, and they also are quite unlike individual blogs.”
L’Oreal is digital genius
A good example of a firm that is reaping the rewards of investing in the digital channel is L’Oreal. The cosmetics giant increased its US media budget to $1.5bn in 2012, and indicated that digital, as a percentage of spend, has seen annual double-digit growth since 2010.
Three L’Oreal brands were named ‘Genius’ in L2ThinkTank’s recent Digital Beauty report, which ranks the digital competence of the top beauty brands and awarded ‘Genius’ status to just six brands in total.
L’Oreal’s Lancome, Kiehl’s and L’Oreal Paris brands were labelled ‘Genius’. Their commended efforts in the digital arena include Lancome’s mobile and tablet site upgrades, and the location-based text alerts and the Snap and Shop mobile app strategy employed by Kiehl’s.
L’Oreal also recently teamed up with YouTube make-up star Michelle Phan to launch ‘em’, a colour cosmetics brand sold exclusively online. L’Oreal hopes to create a new ‘social e-commerce experience’ via the initiative.
Aziza Johnson, a spokesperson for L’Oreal via Outcast PR, told CosmeticsDesign-Europe.com that, “em has its own Facebook, Instagram, Pinterest and Twitter accounts. We are also leveraging Michelle’s social channels, which include 4 million YouTube subscribers and 1.3 million Facebook fans.”