Online Beauty: L’Oréal’s e-commerce strategy
L’Oréal dominates the online beauty market, enjoying 40% annual growth – twice the sector average – and heading for 2015 revenues of $1 billion. Antoine Borde, L’Oréal’s digital acceleration programme Director, unpicks the e-commerce strategy followed by the world’s number-one cosmetics company.
“We blazed a trail in the online beauty market”
“Indirect sales make up three-quarters of our revenues”
Antoine believes that L’Oréal has been an online beauty pioneer because it understands how the market works. “From 1997 onwards, when the first Lancôme e-boutique opened, we blazed a trail in the online beauty market, gaining valuable years of experience over our competitors”. While L’Oréal cut its teeth in direct retailing with Lancôme, it also crucially got into the indirect sales market at an early stage, when pure players arrived at the end of the 1990s. “Direct sales generate one-quarter of our web revenues today, while indirect sales make up three-quarters”.
“There is not one online beauty market, but multiple markets”
So who should L’Oréal’s online sales partners be? “There is not one online beauty market, but multiple markets, each with its own players” says Antoine. On well-structured, mature markets, such as those of Western Europe and North America, L’Oréal’s priority is to work with long-standing retailers like Carrefour and Walmart as they make the move to e-commerce. In fast-growth countries such as India, Brazil and China, the Group is investing to support the digital explosion, hammering out global framework agreements with pure players such as Amazon, eBay and Alibaba that provide the structure for national partnerships. Meanwhile, in places such as Brazil, Africa, Indonesia and the Middle East where conventional offline retail networks are more spread out, L’Oréal is counting on the internet to drive growth, making up for coverage gaps and reaching out to new consumers locally. Talks are in process with local and regional e-commerce firms including Lazada in Indonesia, Flipkart in India and Souq in the Middle East.
“We helped e-tailers to sell beauty more effectively on the internet”
Drawing a parallel with the early days of mass market retailing in the 1960s and 1970s, Antoine says that L’Oréal helped e-tailers to sell beauty more effectively on the internet. “Just like when mega-supermarkets came on the scene in the 1960s, we had to educate our partners in areas such as category management, consumer insight and offer development.” Back in the early 2000s, e-tailers, particularly local operators, were accustomed to selling electronics and mass consumer products, and did not understand the peculiarities of the beauty market.
L’Oréal, profiling beauty 2.0
“How do I do a smokey eye?”
“Online beauty consumers want a proper shopping experience” explains Antoine. First and foremost, this means product info. “The more sophisticated a product is, the keener the consumer will be to get information about it.” Personalised services are part of the picture too. “We make thousands of video tutorials available to our consumers, showing them for example how to recreate the look of their favourite stars, or how to do a smokey eye”. This content is produced either in-house, which is what Maybelline does, or posted directly by web influencers, which is the approach taken up by NYX, a US brand recently acquired by L’Oréal. Other technologies go even further. The new Make-up Genius app, for example, lets users try out make-up products on their smartphone and see the results in their reflection.
“There could be up to 40 points of contact before a purchase takes place”
“Online consumption is getting mixed up with offline channels, which has resulted in a new kind of consumer”, says Antoine. He backs up his assertion with a revealing statistic: when shopping in a store, 80% of women in the US use their smartphone to get a product’s details before buying it. “There could be up to 40 points of contact before a purchase takes place”, he says. In response, L’Oréal is stepping up its range of web services and content to constantly enhance consumers’ shopping experience and leverage these new “hybrid” profiles.
“Spread the digital transformation throughout all our services and divisions”
While the online beauty market still accounts for just 4,6% of L’Oréal’s total worldwide revenues, its rapid growth has prompted the Group to introduce a large-scale internal digitalisation campaign, which is being steered by the 20-person digital acceleration team headed by Lubomira Rochet. The process is being taken forward through recruitment, with L’Oréal hiring “a thousand young digital talents”. Internal training campaigns have also been launched: “We need to spread the digital transformation throughout all our services and divisions”.
Antoine and team have been tasked with getting all personnel involved in growing e-commerce, and, by extension, L’Oréal’s business. “E-commerce is not a gimmick but a bona fide growth driver for the Group, and we are proud to be leading its acceleration”.
Source : The Monthly Digest