Beauty Business To See Ecommerce Rise 30%

makeup_1Beauty has its benefits -- particularly when it comes to ecommerce. Indeed, the beauty sector will see its ecommerce fortunes soar nearly 30% this year.

Even more remarkable is the secret to the beauty business’s digital success: research-crazy consumers, per L2, a think tank founded by NYU Stern clinical professor of marketing Scott Galloway.

“Beauty -- especially prestige beauty -- is a highly research-oriented category,” according to Stasha Rosen, a lead researcher at L2. “Shoppers can find a wealth of information available on digital platforms, whether on a brand or retailer Web site or one of the thousands of YouTube how-to videos produced by Beauty vloggers.

“Usage information along with features such as user ratings and reviews and live chat-based customer service fortify a shopper’s confidence before she makes an online purchase,” Rosen explained. “In general, this enhanced product information combined with the convenience of shopping online has helped to increase e-commerce's share of total sales in the Beauty sector.”

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One example of increased convenience is the auto-replenishment model, which encourages shoppers to subscribe to periodical auto-shipments of products, according to Rosen.

By L2's estimate, 44% of the e-commerce sites offered auto-replenishment, this year, compared to just 22% in 2011. Yet the health of the beauty industry has perpetuated an "arms race" across both traditional media investment and digital channels, L2 reports.

Estée Lauder has made aggressive investments in its online division, while L’Oréal increased its domestic media budget to $1.5 billion last year, and has indicated that digital -- as a percentage of spend -- has grown double digits annually since 2010.

Procter & Gamble, whose beauty business has stalled according to L2, recently indicated that 25%-to-35% of its media budget is allocated to digital, and that it views investments online and a renewed focus on product innovation as key to turning the tide.

Can other sectors follow the beauty business to ecommerce success? Rosen thinks they can, but suggests they should start slow. 

“Brands across sectors can best benefit from the growth in e-commerce by first mastering the basics -- a solid e-commerce site, a commanding search presence, a robust email program, and a seamless mobile experience -- before being distracted by some of the flashy, yet untested, fads that inevitably arise in the digital realm.”

“Sephora is a best-in-class example of a brand that has added tangible value to its beauty shoppers by integrating its multichannel beauty insider loyalty program across these dimensions.”

 
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