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Estée Lauder expects growth to continue in e-commerce channel

By Andrew MCDOUGALL , 25-Sep-2012

e-Commerce has always been a strong channel for cosmetics giant Estée Lauder and the New York-based company sees no reason for this to change in the coming years.

The e-commerce channel accounts for more than four percent of the company’s global sales and this has been posting double digit growth for several years.

“In the last five years our online sales have tripled, posting a CAGR of over 27 percent,” explains president and CEO Fabrizio Freda, speaking on a webcast at the CLSA 2012 Hong Kong Forum.

“We see a vast opportunity in this highly profitable channel. We expect to continue our strong momentum in the foreseeable future and believe the channel will reach five percent of our total sales in fiscal 2013.”

Online pioneer

Estée Lauder was one of the first global beauty companies to mark its presence online and this has helped it cement its place as an industry leader.

The US is still the largest market for e-commerce, but Freda expects that in the next 3 years, it will be China who takes this title.

The company has built 340 marketing and e-commerce sites in more than 50 countries worldwide with products also sold through a number of retailer sites.

The benefit of online, according to the Estée Lauder chief, is that online allows the company to reach consumers where it does not have brick and mortar retail outlets.

“In China for instance, more than two thirds of our sales come from cities where we do not have traditional brick and mortar distribution,” he said.

m-Commerce on the rise…

The quick rise in mobile commerce is another avenue that the make-up maker will be looking to capitalize on too.

In Japan two thirds of our MAC brand’s online sales are done on mobile phones,” Freda continued.

“We are focusing on leveraging the growth of mobile adoption in places like China, India, and South Africa, where mobile phones are displacing PC technology.”

Consumer interaction is another benefit of online highlighted by Freda, as Estée Lauder makes great strides in its digital marketing and social media scope.

Social and digital media play a huge role in the company’s overall strategy , as Estée Lauder were industry pioneers with these platforms: rolling out social media and ecommerce campaigns for each of its beauty brands and regions.

In 2012, the New York-based firm launched e- and m-commerce sites in six new markets, bringing its total of 15, with plans of an additional 6 more countries added to that.

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