How Is Estee Lauder Growing Its Online Presence?
Estee Lauder ended its fiscal 2017 (fiscal year ends in June) on a strong note. After delivering one of its best quarters in Q3 FY 2017 (fiscal year ends in June), it delivered an even better fourth quarter. One of the biggest drivers for Estee Lauder’s robust growth in the recent times has been its soaring online sales. Here, we discuss how Estee Lauder has grown its online presence and what initiatives the company is undertaking to grow its digital sales even further in the future.
Where Does Its Online Division Stand Now?
The online division created over two decades ago currently employs around 700 people internationally. With a presence in around 39 countries, the online division works with hundreds of direct-to-customer and retail websites (these two sources contribute around 60% and 40% of Estee Lauder’s total online business). Historically, this division has demonstrated around 25% y-o-y annual growth, however, in fiscal 2017, the figure rose to 33% amounting to $1.3 billion. Some of the most successful brands sold online in the past fiscal year have been Estee Lauder, La Mer, MAC, and Tom Ford. The company’s recent acquisition, Too Faced, more than doubled its online sales on a 12-month comparable basis. Currently, online sales contribute 11% of the company’s total sales, a significantly higher contribution when compared to a 4% contribution just five years back. The company outperformed total online retail growth in its top online markets, the U.S. and the U.K. In its third largest market, China, and also in markets such as Russia, Turkey, South Africa, the company almost doubled its online sales. It recently expanded its online presence in the UAE, Saudi Arabia, and India.
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The company has so far launched 45 direct-to-consumer websites on its own platforms and on third parties, such as Tmall. Other than that, it engages beauty experts with a comprehensive knowledge on beauty products as well as artificial intelligence and related technologies to provide some of the best beauty advice through the online channels. Mobile technology accounts for half of its online sales and around two-third of the online traffic comes through mobiles. These proportions are expected to grow further with time.
Partnerships To Boost The Digital Game
Technologies such as virtual makeup try-on applications are helping the company in luring millennial users to the brick-and-mortar-stores. Just a few quarters ago, Estee Lauder was struggling to rope in customers in its biggest market, North America. The most important customer segment currently for the beauty companies is millennials. In order to address these issues, Estee Lauder acquired some of the brands popular among the millennials in North America. Coupled with this, the company upped its digital game like never before. It partnered with YouCam Makeup (to launch Pure Color Love Lipstick) in order to provide personalized experiences to its customers both through the online and offline channels.
In May, it collaborated with ModiFace, the company dealing with augmented reality, to help create try-on features for its desktop and mobile websites. The partnership lets users virtually test products by using the Light Field Rendering technology by Modiface. This technology responds to the exposure of light, texture, and shine of a photo or video. This will facilitate customers across mobiles, web and tablets to virtually try out a product before making a decision to buy it. This might have a significant positive impact on Estee Lauder’s product sales as the digitally connected millennials will be more prone to buy a product if they can check that it suits their face.
Potential For Further Growth
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