Beauty is one of the most digitally savvy categories studied by L2, as evidenced by the five Geniuses that topped 2015 Digital IQ Index: Beauty. (Most category studies yield one to three in the top IQ division.) This year’s study was full of site relaunches, especially in the Estée Lauder Companies portfolio. Bobbi Brown, MAC Cosmetics and Origins all upgraded to responsive site designers with cleaner content integration and streamlined navigation elements. OPI – which experienced the highest boost in Digital IQ among all brands in the Beauty Index – moved from the Challenged category to Gifted due to completing a relaunch that integrated a geolocation-enabled store locator and user reviews. Several brands that avoided complete overhauls added innovative touches to their sites. Urban Decay, for example, collected user-generated content posted by its fans and developed a shoppable UGC Gallery.
Despite all the focus on brand sites, brand.com e-commerce accounts for a small portion of the $300 billion U.S. e-commerce market. The top 10 players – mostly retailers – generate half of e-commerce sales, with Goliaths Amazon, Apple, Walmart, and Staples responsible for a full quarter of all online sales. This phenomenon is especially true in the Beauty industry. Estée Lauder Companies brand sites generate a fraction of its entire sales ($0.60 billion of $10.79 billion) and pale in comparison to sales generated by Macys.com ($5.40 billion), Nordstrom.com ($2.50 billion) and NeimanMarcus.com ($1.1 billion).
Brands should invest in their own sites as they attract shoppers from the top of the funnel, but not at the cost of neglecting their presence on online retailers. While brand sites allow more control over the shopping experience, 70% of consumers prefer to purchase from retailer sites. Furthermore, the average Index brand site attracted only 110 thousand unique site visitors in the month of August—a fraction of Sephora’s four million visitors.
As of now, the majority of Index brand distribute through more than one retailer. However, their efforts lag. For example, just 40% of brands in the Index distribute on all the three Beauty behemoths Macy’s, Nordstrom and Sephora. And most enterprises have yet to develop an Amazon strategy that leverages their scale.