Expert says online retailing spells cheaper cosmetics but less choice
However, the upstart is that resulting cost savings in logistics, combined with the benefits of buying raw materials in greater bulk, could lead to cost savings being passed on to consumers.
According to Yunchuan Liu, a professor of business at the university, retailers will increasingly be able to eliminate the middle man’s price mark up, as well as serving to make the manufacturing process simpler and more efficient.
Many fast moving consumer goods categories, including cosmetics and clothing, are increasingly going down this route, and consumers are likely to notice that there is less choice.
Avon well positioned for online expansion
Within the cosmetics market, Professor Liu cited the example of direct sales player Avon, which has a smaller number of personal care products per category, helping to give the company its price advantage.
Alternatively he gives the example of the premium positioned Estee Lauder, which has an extensive selection of products that are designed to match the individual tastes and requirements of a far broader range of consumers.
In view of the fact that the current economic climate is fueling a growing trend for direct sales players gravitating towards the internet to take advantage of lower prices, all the indications are that players such as Avon will be better placed to take advantage of this trend.
The upside and the downside
"We should cautiously celebrate the price benefits of buying through the Internet because there's a trade-off that some consumers might not like," Liu said.
"There's some good news – low price. But there's also some bad news – less choice," he added.
Ultimately Liu believes that a ‘universal product migration’ to the internet is unlikely to take place, because consumers consider that certain products, particularly color cosmetics, need to be tried and tested in-store.