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.