With 4 billion queries annually, “Beauty” is one of the most searched terms on internet . Intuitively though, beauty and technology do not go hand in hand. Consumers prefer the real experience – seeing what a product looks or smells like, before making a decision. More recently, a new hybrid millennial consumer is emerging, who is mixing online and offline channels as sources of information and purchase. For instance, when shopping in store 80% of women in US use their smartphone to get product details before they buy it . Meaning, there could be up to 40 points of contact before a purchase even takes place .
Beauty and Digital: A Perfect Match
L’Oréal the global leader in beauty, clocking revenues of $28 billion  is integrating technology into its new age digital beauty model. With beauty market projected to cross $461 billion revenue by 2018 , that’s a 4.5% CAGR over 5 years , the company has appointed a Chief Digital Officer in its Executive Committee and launched a “GMAT for Digital” training program to get internal teams onboard its transformation agenda. L’Oréal’s mandate is clear: Be No. 1 in the digital beauty through early adoption of e-commerce, lovemark consumer interactions and engaging data technologies to capture the next billion consumers.
- Acceleration of E-Commerce: With 87% of people expected shop online by 2020 , L’Oréal has forged winning online partnerships to secure 75% of web revenues from indirect sales . In fast-growth countries like India, Brazil and China, L’Oréal is investing to support the digital explosion, locking global agreements with Amazon, eBay and Alibaba that provide structure for national partnerships. In mature markets, such as Europe and North America, L’Oréal’s is working with long-standing retailers like Carrefour and Walmart as they make the move to e-commerce. In Brazil, Africa, Indonesia and Middle East where conventional offline retail networks are spread out, L’Oréal is counting on local and regional e-commerce firms including Lazada in Indonesia, Flipkart in India and Souq in the Middle East.
- Transformation to “Digital Love Brand” In the past, conceptions of beauty were driven by celebrity influencers or established “taste makers” through their personal choices or professional endorsements. However, in a recent survey 82% women believe that social media determines the definition of beauty . This is a shift to an inclusionary approach to beauty which relies on friends and an entire universe of strangers. In Turkey L’Oréal has launched an online magazine, Makyaj.com, attracting large numbers of young, connected consumers, with local media partnerships and bloggers to boost social dialogue and exchange, whilst directing sales to major Turkish e-commerce websites.
- Personalization of consumer experience through Big Data and Analytics. L’Oréal is accompanying consumers on the online path to purchase, and pairing products with digital beauty services that feature appealing experiences and practical information. L’Oréal Paris has launched a beauty app called Makeup Genius that transforms the front-facing camera of an iPhone or iPad into a virtual mirror where users can ‘try on’ products virtually. The app uses advanced facial mapping technology to overlay makeup onto the user’s face. A huge global success, the app has over 11 million downloads and +65 million online product trials .
Blazing a Trail in the Online Beauty Market
Early results seem promising. L’Oréal dominates the online beauty market, with 40% annual growth, that is twice the sector average .
More than 1000 employees 25.5% net media spending 37.9% e-commerce 5.2% digital share of
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Src: L’Oréal 2015 Annual Report
What more can be done: Innovations and Acquisitions
Data technologies are providing a more precise understanding of consumer needs which can be leveraged to shape L’Oréal innovation churn and acquisitions. For instance:
- L’Oréal is conducting research towards connecting its makeup products through the Internet of Things (IoT) i.e a network of objects or “things” which can collect and exchange data with help of their embedded electronics, software, sensors, and network connectivity. IoT technology will let L’Oréal track and target customers via products such as lipstick or mascara, see what customers are buying and, in turn, let the cosmetics giant target consumers for future purchases.
- L’Oréal has launched a stretchable skin sensor called My UV patch. Designed as a wearable, it uses a sensor to help consumers measure exposure to UV radiation & to select right sun protection based on skin type.
- L’Oréal brand YSL, has launched a partnership with Google Glass to allow makeup artists to capture makeup sessions on video with customers& email the video to customers. The customer can then replay the video at home and mimick the makeup artist’s techniques.
- Strategic investment in “Founders Factory”, a multi sector digital accelerator and incubator, can enable L’Oréal to deeply and exclusively connect itself to a global ecosystem of world-class beauty tech start-ups and entrepreneurs.
The possibilities seem endless. Question is how fast can L’Oréal scale these globally whilst managing pace of its technological innovation with rate of consumer adoption for the new connected beauty model. [798 words]
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