Starting in March, L’Oreal Paris will launch their own online store[fr] where they will make their entire product line available for purchase. While most luxury cosmetic brands in France have widely been available online for some time, many mass market cosmetic brands have avoided setting up their own on-line shops so as to not upset their all-powerful mass retail clients. However, L’Oreal Paris has changed their tune and, as such, is one of the first mass cosmetic brands in France to set up its own e-commerce site. In an effort to ensure that they don’t tick off their big retail clients, a L’Oreal representiative stressed that they have absolutely no intention of circumventing retail distribution and very much expect mass retail to continue to be their primary sales channel. The cosmetic giant has yet to publicly discuss things such as how they’ll manage logistics or how they’ll price the products vis-a-vis their mass retail clients, but presumably they’re provide more details soon.
Setting aside for a moment the risk that mass retailers will be uneasy about his action, particularly given that they are trying to promote sales via their own on-line stores, it’s still pretty incredible that it’s taken L’Oreal so long to launch something like this. As an increasing amount of consumers shop online, it’s certainly a channel that they’re going to have to focus on more. In addition, having consumers purchase directly will give them invaluable information that, in the past, they would have had to rely exclusively on Nielsen (via their scanner data) or their retail clients to provide. It looks though like there may be a more pressing reason for this move. A couple weeks back, Les Echos ran an analysis of L’Oreal’s growth prospects and highlighted that the global cosmetics leader will need to find an additional 1 billion end-customers in order to keep up the impressive growth they’ve had in recent years (+5,1% in 2011). L’Oreal expects that the rapidly growing middle class in, particularly in emerging markets, will be a principal driver of this growth. As 52% of their sales come from mass market cosmetic products, which are most relevant to middle class consumers, they should be well-positioned to easily attract this segment. However as these consumers are migrating in mass online, its clear that the internet and mobile advertising, social media and, yes, e-commerce will need play a more prominent role in their overall strategy if they want to maintain their strength with these consumers.
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