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US tops the beauty e-commerce tree but Europe shows potential

By Andrew MCDOUGALL , 11-Dec-2012
Last updated on 03-May-2013 at 10:56 GMT

The US leads the pack when it comes to penetration and innovation in e-commerce, but there is now an opportunity for beauty brands in Europe following years of underinvestment in the channel.

In total, 68 percent of beauty brands support e-commerce in the US and an additional 27 percent link to online retail partners, whilst penetration is less than 50 percent in Europe, according to new research from L2 ThinkTank.

European potential

In its 2012 Digital IQ Index: Beauty the research firm suggests that e-commerce will be key to the industry’s efforts to disengage from traditional third party retail channels that are flat or declining, with Europe holding great potential.

Total European advertising spend across industries is projected to increase 1.7 percent from 2011 to 2012, versus 6.8 percent globally.

The UK is the only market comparable to the US, with Germany, France, Italy and Spain lagging behind, meaning digital media is the lone pocket of growth in Western Europe, according to L2 ThinkTank.

With the recession still hitting many consumers hard, this may also see the shift to online channels.

Battle of the brands

In 2011, Estée Lauder brands generated an estimated $50 million in EU e-commerce sales, an increase of 28.4 percent, compared to the previous year.

Over the last 12 months the company spearheaded eight of the 21 new e-commerce launches by beauty brands in Western Europe and 16 of the 29 mobile site launches.

L’Oréal, which maintains a significantly larger offline business in Europe than its American rival, achieved 10 percent growth and approximately $24.8 million in e-commerce sales.

Going digital

Despite Europe being the largest market for cosmetics, the industry’s focus has shifted to developing markets as macroeconomic challenges in Europe have meant underinvestment in e-commerce, new media and mobile.

L2 ThinkTank suggests that penetration through online channels could improve the situation in Europe, particularly as there is a vast opportunity for improvement and the potential to become more comparable to the US.

The research firm is focused on digital marketing innovation and produces its Digital IQ Index to score brands against peers on more than 600 quantitative and qualitative data points, diagnosing their digital strengths and weaknesses.

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