L'oreal E-commerce makeover

Makeup Genius App

In class this week, we were shown an app that L'Oreal developed called Makeup Genius. Curious what it is, I downloaded the app. The premise of the app is to instantly apply makeup virtually by clicking on the products. I can see the appeal of trying it out once or twice, but I somehow fail to see how this alone will bring consistent revenue to L'Oreal the brand. Bloomberg Business seems to agree with me: 1.7 million downloads in US and France by Sep. 2014 but the company won't share sales numbers driven from the app. 

L'Oreal Makeup Genius App

One reason L'Oreal won't share sales numbers may be that they cannot get an accurate read on sales from the app: I go to a Duane Reade looking for a L'Oreal lipstick, open the app and try on a few shades and decide to buy in store. How will the app know which shade(s) I purchase??

CPG E-commerce

L'Oreal like other CPG companies have been relying on their distribution partners (Walmart, CVS, drugstore.com, etc)to complete the "Last Mile", using their brick&mortar locations and online retailers as third-party logistics provider for warehouse carrying capacity, order management and transportation services. 

Overall more than 5% of all CPG sales will come from online channels in 2015, and OTC & Personal Care will be amongst the fastest growing categories online. 

Retail E-commerce Sales Growth

This collaboration is missing the branded experience, which L'Oreal admittedly sacrifice to trade for reach and thus sales volume instead. Although I agree this approach makes sense for the lower end drugstore brands like L'Oreal, Garnier and Maybelline where individual margin is small, for luxury brands there should be a better way to shop than redirecting customers to department store websites where customers not only have to fill out shipping and billing information, but losing the customer at point of conversion and failure to collect the 411s of the customer  (Email, mailing address, phone number, etc) is a bigger marketing opportunity missed. 

L'Oreal Luxe brands are already taking action to open their own E-commerce websites, but professional and active skin care lines still have some catchup to do. For example, L'Oreal can open its own salons and spas using products from its professional haircare and active skin care lines (Kerastase, Redken, Decleor, Essie, SkinCeuticals, etc) for a one-stop shopping experience catered to high-income customers. This could lead to a L'Oreal branded online store that carries salon-grade products from its family of brands.  

Songza Taking on Pandora

John Cusack in the movie Say Anything... (1989)

Music Player Timeline

When we look at portable music players, we have come a long way since the era of boomboxes and Sony Walkman: from CDs to minidiscs (MDs) to the first mp3 player, onto the iPod family and now online music players such as Pandora, Spotify, SoundCloud and Songza. The shift not only means a decrease in the size of the portable music player, but more importantly a change in the ownership of content. Up till iPod, I can only listen to songs that I purchased, either physically in the form of a cassette or CD or digitally downloaded from iTunes. Online music players - using different angles/algorithms on recommending music - provide us with a plethora of choices. 

When Google announced the acquisition of Songza last July, I had been a loyal Songza user for over a year. While unhappy that my favorite music player now belongs to a tech giant famous for collecting user data, I wonder what this means for Pandora and the wider implications.

Songza vs. Pandora

• Curated vs. Personalized Playlists: Songza provides curated playlists made by DJs, while Pandora gives users full capability creating their own. For an unmotivated individual who just wants some music or a hard-to-please crowd, creating personal playlists sounds painful and unrealistic;
• Ads: Songza has no audio ads once the playlist starts (although there are occasional pre-roll video ads) while Pandora interrupts the user experience with not so targeted messages (massage school in VA? No thank you.);
• Full customization vs. limited customization: This goes beyond the comparison between Songza and Pandora but I find it interesting that people don't always welcome having 100% autonomy, for example: defined-benefit pension plan vs. 401k, Match.com vs. OkCupid. When our choices are narrowed down a bit, we make decisions faster. When Pandora first came out, everyone is amazed by the precision of song matching based on the Music Genome Project, but then the majority is overwhelmed, if not intimidated by the amount of choices to make.

Lessons Learned

From an app development perspective, there is a lot to learn from the success of Songza. Easiness to sign up, navigate and play music intuitively as well as limiting our choices all make this a small but mighty music player app. 

Everlane - a true e-commerce fashion brand

I used to be a huge J.Crew fan. I receive their catalog, flip through to find an item I like, go to the website, enter the SKU number and see more angles of the shirt and either buy it online or try it in the store when I have a chance. The buying process could take me days, not counting how long it takes for the catalog to be made and sent to me. 

Then I heard of Everlane, a company that promotes transparent costs while producing basic apparel items with good design in soothing hues. I was immediately drawn to the idea of breaking down the cost and telling you clearly what the markup is (40%) and where your shirts and tees are made. 

The comparison between J.Crew and Everlane is the perfect example of the coming era of E-commerce. J.Crew started as a catalog ordering apparel company with closet staples in multiple colors, they opened brick & mortar stores as more people like the style and later added the website for convenient online shopping. Brands like J.Crew followed the traditional retail path while more disruptive brands have the opportunity to be born in the golden age of E-commerce and start with a clean slate.

While J.Crew struggles to identify customers like me and connect all the touch points together for integrated marketing, Everlane did everything through digital media: transaction emails like order confirmation, shipping notification and return processing as well as tailored marketing emails, social media platforms that seamlessly promote new product arrivals and highlight featured customers. Since everyone has to have an account to put an order online, it is much easier to track where the marketing dollar goes and manage inventory count better.

Granted, I still shop at J.Crew and I enjoy going to the store and simply browse. I don't think brands like J.Crew will be replaced by Everlane because it has a much bigger audience and a much diverse selection of products, however making the right choices - improving and upgrading IT infrastructure, CRM system, etc - to prepare for a more digital shopping experience should be a top priority for fellow retailers.