Digital Strategies Serve All Aspects of Operations in Global Beauty

Strategy Briefing

About This Report

Mar 2015

Beauty companies have a growing focus and rising investments into developing their digital strategies and online presence. The objective of these strategies does not only include online sales but also to build strong brand image, raise brand recognition, analyse consumer habits, drive innovation and also to offer a competitive pricing platform. There are good growth prospects in the digital space but it is not without challenges, such as the intense competition in a fragmented market space.

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Digital Strategies Serve All Aspects of Operations in Global Beauty

Beauty internet retailing doubles in value in five years

Albeit still a small channel, it has more than doubled in value between 2009 and 2014, reaching US$25.2 billion. Industry trends, such as customisation or demand for niche beauty and technological developments have been driving growth in this channel.

Digital market space in beauty expands most in Asia

Internet retailing has reached its highest penetration of almost 8% in Asia Pacific, and, given the region’s major appetite for technological innovations, this trend is likely to continue.

Mobile internet subscriptions enable growth of beauty m-commerce

With growth in mobile-based internet retailing especially dynamic in markets such as China and Africa, retailers need to optimise their sales platforms to handheld devices.

Customisation through consumer engagement

Beauty product customisation is a growing trend to watch in global beauty and rising number of virtual “try on” and skin analysis sites and apps, e.g. L’Oréal?s Make-up Genius or SkinBetter, aim to tap into it.

Growing number of digital platforms for online beauty sales

Digital platforms for beauty product online sales are growing in numbers and scale, these include multi-channel retailers, e-tailers, social media sites, mobile apps, direct sellers and beauty box subscription services.

Rising challenge from online-only beauty brands

Online-only brands, such as Glossier, with a strong story or emotive associations engage more closely with consumers which can help them differentiate themselves from competition.

Weighing up opportunities and challenges contained in online customer digital assets

Encouraging clients to share product information, comments and ideas can be utilised as an effective and relatively cost-efficient marketing tool, however consumer-generated content needs to be managed carefully.

Introduction

Scope
Key finding

Digital Market Space In Beauty

Internet retailing still a relative small channel in BPC
Beauty internet retailing doubles in value in five years
Category differences at play for selling beauty products online
Demand for personal service in a self-service environment
Frequency of online activities shows a more engaged consumer
Digital market space in beauty expands most in Asia
Asian expansion driven by 20-fold growth in China
China has the highest frequency of online beauty buys
Mobile internet subscriptions enable growth of beauty m-commerce
Growth prospects in ownership of internet-enabled devices
Top global internet merchants selling beauty products
Selling to an informed consumer

Strategy Growth Pillars

Four pillars to digital beauty strategies
Consumer engagement, image building
Engagement through third party bloggers/vloggers
Timely digital marketing campaigns to build brand recognition
Key objectives of strong consumer engagement
Virtual “try on” tools target demand for customisation
Mono-brand versus multi-brand applications
Skin analysis sites offer best opportunities to pharma brands
Brand positioning by suitable price platforms

Growth Platforms

Growing number of digital platforms for online beauty sales
Beauty retailers develop stronger online presence
In-store digital technologies aid consumer engagement
Increasingly fragmenting online marketplace
Rising challenge from online-only beauty brands
Mobile chat apps open a new channel for beauty retail
Social media e-commerce has taken off
Direct sellers need digital engagement directly with consumers

Retail Curation

The impact of curated retail in beauty
Managing consumer-generated digital curation
Beauty boxes raise strong competition in online curation
Weighing up opportunities and challenges for beauty retail curation

Future Impacts

Digital space for beauty products continues to expand
Digital strategies need to serve all aspects of beauty operations

Report Definitions

Definitions

RESEARCH OVERVIEW

Overview of survey methodology