Online Retail - Time to step up

As much of the world’s business trade tightens its purse strings to ride out the current financial storm, the online beauty world is booming. And with the rise of applications such as Web2 continuing to capture consumer’s attention, web retail seems to be creating a storm all of its own.

Last month the press reported that online entertainment retailer Play.com had seen sales that were 40% up on the previous year. Likewise, style website ASOS.com, the online bible for all fashion forward thinkers, has soared an unprecedented 104% in the past six months. However, in the same breath, Britain is allegedly already in a recession, the world over is suffering a financial crisis and many companies are being forced to shut up shop amid fears the worst is yet to come. So how is online retail surviving this tornado and are beauty consumers starting to view it not as a secondary form of retail to the high street but as an equal?

Around a year ago the word was that websites have a shelf-life of 18 months, which has probably gone down to about 15 months now. And with many brand’s online sites still in their infancy, getting up to speed, fast, is vital in order to prolong this limited life span. An example of a corporate update prompted by continuing pressure to be one step ahead is the announcement last month of the allegiance between Vivalis, a private UK-based owner of health and beauty brands such as Collection 2000 and Steel, a full service digital communications company. The collaboration will see Steel design and launch the new Vivalis corporate website and, in a bid to keep up with the level of creativity and innovation on the web, will create separate digital channels for each of the beauty brands. The industry, it seems, is shaping up in order to cash in on the glowing sales record of the dot com era.

Covering all bases

Many brands are now waking up to the effectiveness of having a two-pronged attack on their consumers and the benefits that having an online presence brings. But Neil Mason, senior retail consultant at market research firm Mintel, suggests that although the internet as a whole is a decade old, online retail is still relatively new and retailers and many manufacturers are just waking up to the opportunities available. “Retailers have been fairly slow on the uptake of the internet and are only now really starting to embrace it. The internet still only represents less than 5% of all retail sales, however we predict that figure will grow as it becomes more important for retailers to have a presence online,” says Mason. And with 67% of all UK people now having access to the internet, it is more essential than ever to target these potential buyers with online shopping options. “Consumers are now expecting retailers to have an alternative option to their stores on the high street. And retailers need to evolve to cater to this demand,” says Mason. “Retailers now need to have a multi-channelled offer for their customers as consumers become more confident buying online. It is not simply a tool for buying or advertising or vice versa. Consumers are shopping in many different ways and may research on the high street and buy online, or may research online and buy on the high street. If retailers aren’t present in both areas they are in grave danger of missing out on a golden opportunity.”

What retailers also need to be aware of is that the internet is evolving at the same pace as the typical online browser. It is no longer just the stereotypical blueprint buyer (young, affluent, male) that is shopping online. Females and the baby boomer generation are also logging on. “The traditional profile has changed. It is no longer just the young male that is calling the shots,” says Mason. But with each age group comes a very different shopping pattern and online experience.

To this end, most beauty brands and retailers have, or are starting to, create and develop that all important online base for their loyal consumers, adjusting to accommodate the increasing variety of shoppers. For example Lancôme (L’Oréal) has recently announced the decision to develop an online theme for its new Magnifique fragrance, with a video for the line featuring US actress Anne Hathaway. Meanwhile Coty Prestige has recently created an online

e-coaching programme for each of the products from its new cosmeceutical skin care brand – Home Skin Lab by Dr Pastorek Institute. Sainsbury’s has also launched a digital strategy to give shoppers tips on how to save money during the credit crisis. Clearly, in the attempts to win the battle of the web, companies are starting to create more ingenious ways to get their websites noticed.

Upping the ante

For a consumer, the plethora of beauty websites and discussion forums available on the web is undeniably great. But for manufacturers the growing competition leads to a greater need to up the ante of their online bases and develop sites that are now stretching the boundaries of yesterday and pushing forward innovative and eye catching features for the sites. “Web2 is definitely the next phase,” says Mason. “It allows for greater interaction with the consumer and makes them more accessible. Features such as RSS Feeds, blogs and video diaries are all elements of Web2 and allow companies to develop a more sophisticated site rather than just a static front page.” A key feature of any site is the Ask the Expert page, which allows consumers to get up close and personal with the people behind the products to discuss everything from ingredient formulations to application techniques. The Body Shop is the most recent advocate of this with the company launching a new feature last month called The Lounge.

This is a new section of the website that allows customers to learn how to make the best of their products. Interactive features, such as video clips, show how to achieve different looks and apply the make-up correctly while The Body Shop’s representatives and editorial stylist for magazines like Vogue and Elle, Chase Aston, give expert advice. No doubt this is a nod towards enticing the savvy beauty consumer that is looking for professional recommendations for their products. With consumers trusting the level of experience of Ask the Expert features on beauty sites, similar features are becoming more popular. Similarly to The Body Shop’s expert blog panellist, OPI also features a professional blog. Lisa Bennett, director of Lena White, the UK distributor of OPI nail products says: “OPI’s main site has a blog from its creative director, Suzi Weiss-Fischmann, which keeps readers up to date on what’s happening at OPI. Our site will have an Ask the Expert area where customers can ask questions on their personal nail care queries, a feature we anticipate to be well received.” However, not everyone is of the mindset that blogs have a completely positive outcome, with Bennett being wary of consumer-based blogs. “Customers definitely enjoy blogs, however sometimes chatting can lead readers down the wrong path. Everyone’s experience of a product is different and not necessarily the experience that you would have if you tried the same product.” Another way to differentiate from others is to pick a unique selling point that is individual to your site. Simple has a website that is dedicated to interacting with its consumers and a focal point of this site is its skin analysis feature. Lisa Rickhuss of Simple says: “This is a key part of the site as it provides the most comprehensive report on skin health that we have seen online. It provides an in-depth personal analysis of a person’s skin, diet and lifestyle, at a competitive price. The answers are compiled by beauty expert Caroline Frazer, top dermatologist Dr Susie Morris and several Simple experts. With over six million possible versions of the report, it provides very personal and thorough feedback. The response from consumers is that it is extremely interesting and informative.”

Feedback seems to be a vital part of communication between online brand and consumer, with no other forum creating this feedback quite as well as the beauty blog, with an increasing amount of consumers trusting this form of testing over brand science.

Blog off

Such is the power of the beauty blog that The Benchmarking Company, a US research and branding firm focused exclusively on the beauty industry, has created an entire report analysing and assessing the prominence and hold the beauty blog has over the consumer buying process. And with blogging now a pastime of many, it is clear that there is a different attitude to this activity in relation to the age of the consumer. “In general, 30% of women got beauty advice or information from blogs, message boards or social networking sites. However, this percentage reaches 50% for those women 29 or younger. Women over 50 are more likely to rate a product or post a comment online to receive an offered incentive; they are less motivated than other age groups by the idea of sharing their opinions or expressing themselves.” (excerpt from Beauty and the Blog.) Therefore, women over a certain age are less likely to take the time out to pay attention to customer reviews and blogs regarding a product and its benefits and are more driven by the advantages of doing so.

Despite the differing attitudes to shopping amongst the age groups there is no denying that the use of blogs helps sales. Simple values its consumer blog to such an extent that the company has a mailing list of VIPs and will dispatch new products for them to try, gaining insight from the views that are shared about the item. According to Rickhuss, hundreds of people responded to a recent dispatch of a product sample and were forthcoming about sharing their views, good or bad, on the site. The company also recently completed a survey amongst its VIP members in which 70% of them said they trusted a recommendation from a fellow consumer more than from advertising alone.

Indeed traffic flowing through the Simple site speaks volumes for the impact of the interactive features and the blog. “The number of unique visitors has increased by 500% over the past year, while the database of members has more than doubled in just two months,” says Rickhuss. Consumers, despite wanting independent advice, still head to a branded site first, with 47% choosing to go to a manufacturer’s website, followed by a retail site (eg Sephora, Superdrug) at 29%, a magazine site (eg Oprah, Glamour) at 29% and then a woman’s interest site (eg iVillage) at 27%.

No margin for error

For brands, gaining a respected and positive online reputation should be a case of creating online features that are adapted to the wants and needs of their target consumers. They should take into account the age, sex and beauty needs of their online visitors whilst capturing, and most importantly keeping, the online consumer’s attention. The web is becoming increasingly advanced with web browsers giving faster connections, enabling previously unrivalled technological innovations, and developing an eye-catching and sophisticated site is a must.

Mankind director, Hilary Andrews says: “Faster broadband connection has been the biggest single factor in increasing internet use. A website needs a lot of attention and focus to make it work. Many consumers research online before making their purchases so the website has to be very attractive and easy to use to keep them there.”

Matt Poepsel, vice president of performance strategies at Gomez, a leading provider of web application experience management services, mirrors this view: “The stakes are higher than ever for online retailers. Delivering quality web experiences is even harder than it was a year ago, yet online shoppers’ expectations are at an all time high. There is no margin for error in web performance this season.” The company also warns online brands that sites must match technological expectations or risk losing vital customers. “As shoppers increasingly adopt new web browsers such as Firefox, Safari, Internet Explorer 8 and Google Chrome, online retailers need to be sure that their websites look good and perform correctly on all browsers – or risk frustrated customers and lost opportunities. They must also ensure that their websites can withstand peak loads without impacting on customers’ website experiences, whatever their location, connection speed or browser choice”.

Advertising or sales?

Despite the obvious need for a company to get acquainted with the worldwide web and the extra target audience it brings, does having an online presence actually spell success financially for a beauty brand, or is it more a chance to gain extra coverage and recognition for the brand which will, in turn, result in additional sales in the high street stores?

“The online sales are only a small percentage of total Simple sales,” said Rickhuss. “So we recommend where people can buy products in store too and tell them about promotions that are going on. The online shop simply allows us to offer the whole package.” So are online retail sites more about a sophisticated advertising and marketing package that allows the consumer to forge a psychological relationship with a brand, with any online sales an additional bonus? Angela Kokshoorn, global marketing director at Vivalis thinks it’s a mixture of both: “I think all brands should have an online presence so that the brand is represented accurately online but also as a very sharp marketing tool.” Jerrod Blandino, creator of UK beauty brand Too Faced speaks of the brand’s recent foray into the sea of online opportunities: “This autumn, Too Faced re-launched a brand new website with great success and we see online marketing as integral to the future growth and expansion of the brand. In addition, the site encourages users to get a more intimate experience with the brand through a variety of lifestyle sessions such as Beauty School, where shoppers can view my ‘how-to’ videos and download step-by-step instructional application tutorials.”

However, beauty retailing online does look to spell success for those that aren’t too focused on one brand or have a limited high street distribution, with websites such as Mankind and OPI (predominantly a salon brand) boasting huge online sales. “Beauty is the third biggest growth category online and Mankind has been developed over the past year in order to bring in new features,” says Andrews. Bennett has also experienced growth over the past year: “OPI and Lena White sales are growing month- on-month. We definitely see online sales as the future.”

Small but steady

For the beauty brand it seems that having an online presence is no longer an afterthought to their high street presence, it’s an essential part of brand sales and advertising. And despite online sales at present representing a small margin of overall figures, persistence and perseverance is thought to pay off in the long run. “Consumers ideally want interaction with a beauty brand such as smelling a fragrance and trying out a lipstick colour, but beauty sites are starting to provide such a wealth of information that it makes up for this. We predict that online sales will rise to a 10% share in the next five years,” says Mason.

Sitting below other areas such as entertainment and clothing, the C&T sector could be mistaken for the poor relative in the online retail arena. But the C&T market has been deemed the most successful in relation to customer experiences, with a report by e-Consultancy stating that health and beauty retailers provided the best customer experience, with an average score of 65%. Combining this with the continued influence of consumer blogs and with technological advances exceeding expectations, there is little doubt that the future is wide open for beauty manufacturers, niche and mass, to carve out success online.