blog article

The growth of online cosmetics

BeOn Argentina 10 JUN 2019

Cosmetics is facing the consumption crisis, that hurts many of the key regional economies, with a digital strategy and trusts eCommerce to help them drive further sales. Consequently, online sales of these categories are growing above the general digital average. In this article we will review the situation in detail and analyze the particular case of L’Oreal.

During 2018 in Argentina, Cosmetics was the second most sold online category, only behind kids supplies. The growth was 25 points higher than the channel’s average, with means 50% more. This category represents today 3% of online sales. In order to achieve this growth, Beauty companies are betting on special dates such as the Hot Sale and Cyber Monday, where they seek to keep boosting consumption through special discounts.

Pablo Sanchez Liste, L’Oreal’s Marketing Director in Argentina explained the during last Cyber Monday, the company sold in that period a volume equivalent to almost 4 months of regular sales. He added that, despite the crisis, the digital channel works and provides more access to consumers since they can check the online catalogue from anywhere and at any time.

The case of L’Oreal

L’Óreal has more than 50 years of presence in the country. This first level company owns a portfolio with more than 20 brands organized in four divisions: professional products, active cosmetics, mass consumption and luxury. In Argentina and around the world, L’Oreal is the number 1 company for cosmetics. Due to the volume of sales, Argentina is one of its main markets worldwide.

The company grew a 7% at a global level during 2018. Digging deeper in the online channel, we appreciate that it grew almost 6 times (above a 40%). Online sales remain the most powerful growth engine for L’Oreal this year too, since revenues of 2019 are growing more than last year.

Within their expansion strategies for this channel, the company counts with more than 9 brands with official stores at Mercado Libre, a site of direct sales for Lancome and and active presence of all brands at all local eTailers. L’Oreal is creating in Argentina a new consumption habit for their clients: only in Mercado Libre, the demand for beauty products rose a79% from one year to another.

Some challenges for development

Beyond the great growth that the digital channel presents in the region and, specially, in Argentina, there still are some obstacles for the development of online sales. Juan Luis Pereira Barranco, eCommerce Manager at L’Oreal, stressed that “it is still not highly profitable for retails and it is yet difficult to find all products online”. Pereira Barranco also mentioned that delivery costs are too a barrier.

The amount of cases that prove that betting for the digital commerce for CPG generate extraordinary results are increasing. The growth rate for this channel is 5 times above traditional ones and it is definitely making a revolution at the way that shoppers consume. Partners we help LATAM CPG industry to digitally transform their businesses by developing winning eCommerce capabilities.

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