Is Estee Lauder Looking To Attract Young Shoppers Through Its Facebook Push?

Recently, Estee Lauder (NYSE:EL) launched a mobile service on Facebook’s Messenger app that will allow shoppers to purchase a Christmas gift through the app and get it delivered within an hour. This service is restricted to the company’s London shoppers and will be delivered via a seasonal pop store in the country.  Estee Lauder is taking several digital initiatives to boost its sales and this effort via Facebook’s Messenger can attract  younger consumers to its products.  Earlier this year, the company launched a service whereby users can purchase products via text messages without going to a store or the e-commerce website. In November of this year, it acquired “Too Faced”, a make-up brand which is extremely popular with young shoppers. We believe that, as Estee Lauders targets shoppers in the 18-34 age group, digital initiatives will be a key factor to entice this segment of consumers. Active use of social media, especially Facebook, will engage the audience and provide them with a convenient purchase option.  This in turn can attract this segment to the company’s products, driving revenues over the long term.

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Expanding Its Digital Initiatives

Estee Lauder is looking to revive its brand by luring in younger shoppers and digital initiatives are a key part of this strategy. Facebook’s Messenger app uses intelligent “chat bots” which allows businesses to engage with users. In addition to a shopping option on Facebook’s Messenger, Estee Lauder is also experimenting with Facebook’s chatbot technology to offer shoppers a direct line of communication with their specialist make up consultants. With changing consumer preferences, the company is looking to provide greater choice and flexibility to its users in terms of shopping options.  Make Up is the most valuable segment for Estee Lauder, accounting for nearly half of its revenues and nearly 45% of its valuation, according to our estimates. We expect the company’s make-up market share to increase slightly and reach around 13% by the end of our forecast period, from the 12.5% figure for 2016.

Estee Lauder is a strong player in the prestige cosmetics segment.  But with the acquisition of Too Faced, the company now appears to be targeting younger shoppers. Digital initiatives are extremely critical to attract younger consumers and using the Facebook Messenger to engage users and entice them to shop for its products is the right strategy. We believe offering conveniences to consumers and engaging them using social media will be the key digital initiatives for Estee Lauder in the future, driving revenues for the company.

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