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The Online World—Beauty Counter of Tomorrow

By: Liz Grubow
Posted: April 6, 2010, from the April 2010 issue of GCI Magazine.

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Still blog networks, such as Sugar and Total Beauty, are taking the beauty industry by storm, reporting more than 45% growth in advertising revenues in 2009. These sites function as a digital publication, producing editorial content on various beauty topics generated by hundreds of different bloggers. In 2007, Sugar acquired ShopStyle, an e-commerce site that brings in more than half of the blog network’s revenue. At ShopStyle, shoppers can browse for items and then click through to a retailer’s Web site to make a purchase. According to comScore, women are spending an average of 3.6 minutes per visit to gathering information on beauty products. This is higher than even top print-media Web sites such as and Total Beauty attributes this success to providing a valuable online beauty resource, consumer research and thousands of user-generated product reviews for both prestige and mass-market beauty products.

In China, online shops on Taobao, an Internet marketplace and the largest online retail platform in the country, has become the most popular retail outlet there. However, Chinese consumers still prefer a more experiential environment for considering and purchasing cosmetics, and rely on traditional cosmetic stores to receive customized skin advice from beauty advisors. After gathering tips at the beauty counter, research shows that consumers return to online resources to compare prices and products, and to make their final purchase decision with Taobao retailers.

In South Korea, beauty product sales are booming with a steady momentum of new product launches targeting women in their teens and 20s. As surfing online is a major part of the everyday lifestyle of young Korean consumers, it is becoming more convenient to shop and gather information online.

As technology advances, the beauty industry continues to adapt new strategies to interact with consumers online, making their online communication with consumers more personal and more experiential. L’Oréal Paris recently created an interactive site to help consumers find cosmetics based on their own skin type, personal features and taste. Sites such as Daily Makeover provide visitors with virtual try-on technology to create customized makeovers. As LPK has seen in its caseload, mega brands like Olay continue to expand their use of social media on sites such as YouTube, Facebook and Twitter to engage brand fans and promote loyalty. Olay’s was created to provide a way for the consumer to interact with the brand and gain specialized skin care recommendations. also offers another outlet for product purchase.

Although brick-and-mortar stores have traditionally ruled the beauty industry, within the past decade, department store beauty counters have continued to struggle, losing more than half of their market share to specialty stores like Sephora and Ulta. Some specialty stores have also been impacted. Crabtree & Evelyn filed for bankruptcy in July 2009, but will emerge in 2010 with a strategy focused less on retail locations and more on e-commerce. Mass marketers like Procter & Gamble continue to experiment with e-commerce sites, where they are offering many of their big brands, including Olay, traditionally only found at mass stores. CVS, which recently launched eight Beauty 360 stores in the U.S., will now include an e-commerce alternative. Similarly, is still the largest retail outlet for the company in North America, in terms of sales and selection of products and brands. Supermarkets, hypermarkets and drug stores are blurring the lines with department and specialty stores, sometimes offering a more experiential and personal experience with a brand.

Where Retail Strategies Counter the Trend, Sales Lag