Online beauty? Feel the Fear and Do It Anyway

With just under 6 weeks to go to Christmas, retailers are moving into their most critical period of the year when they can expect to achieve up to 75% of their annual profits. It’s always been that way, but now they have to contend with competition from the internet, which is becoming slicker and smarter at connecting with consumers than ever before. But is premium beauty doing enough?

The fashion industry has been extremely proactive in delivering a relevant online experience for customers through successful websites such as ASOS, Net a Porter and My Wardrobe. Who would have thought that consumers would buy high-end clothes and footwear without seeing them first or trying them on? Stella McCartney boots for £600, anyone?

So why not fragrance, which surely consumers want to test out first? Sold in the right way, consumers will buy online. Here’s an example. Beauty etailer Escentual runs a clever promotion which takes the uncertainty out of buying fragrance. Founder Rakesh Aggarwal explained to me how it works:

“For some brands, such as Lalique, we offer a sample set of their most popular fragrances for £15 which comes with a voucher for £15. If the customer buys the full size, they can use the voucher and effectively get their money back.”

It’s clear that those who think that luxury cosmetics and fragrance can’t be sold online need to think again. The stats speak for themselves:

  • Online beauty doubled in size between 2005 and 2010 {Mintel}

  • Online beauty will be worth £532m in 2012 {Euromonitor}

  • 1 in 5 women are now buying beauty online {YouGov}

  • 8% of premium beauty is sold online and will peak at 12% {beauty etailer Escentual}

Feelunique is projecting 76% growth on its £26.7m business over the next 12 months, which will take it to £46.8m. Its biggest challenge since launching seven years ago has been to secure the luxury brands. Things changed for the better after Feelunique acquired two high street stores and took the bold step to have a 100% no grey market product policy. However, CEO Aaron Chatterley admitted to me that the online beauty market has been slower to take off than other industries.

“I believe this is due in no small part to the justifiable nervousness of the key brands about the internet and therefore the reliable availability of legitimate, authorized product.”

This needs to change. Plenty of niche brands make a living from just selling online, but the most successful beauty brands have a multi-platform strategy. The fashion industry has set a splendid example of how high-end and online can be best buddies. There’s no reason why premium beauty shouldn’t lose their fear and do the same.