Online Beauty Sites Face Uncertain Future

This week’s announcements that e-tailers and are up for sale are a strong indication that online beauty products firms will be among the early victims of the projected e-commerce shakeout.

“With the plethora of beauty sites out there, it has all come down to which few are going to survive,” said Lisa Allen, an analyst with Forrester Research. “Only those with strong brand presence, a solid customer base and a bricks-and-mortar presence will be around in the long term.”

Some Products Not Net-Friendly

Many analysts believe that most online beauty firms have tried to sell products that are too personal to be sold properly online.

“The sites can’t duplicate the department store experience,” says Mike May, a digital commerce analyst with Jupiter Communications.

“We’re seeing a blurred line between mass and class in the online beauty market,” adds Timra Carson, vice-president of NPD, a firm that tracks retail industry trends. “Prestige beauty products traditionally sold only in department stores are featured next to mass beauty products on some e-commerce sites. This detracts from the perceived exclusivity of the prestige brands, one reason some of the top brands have not authorized sales on pure-play sites that carry several brands.”

Procter & Gamble’s Different Direction

To make matters worse for the struggling online beauty sites, branded products giant Procter & Gamble (P&G) is adding to the competition with a beauty site where it claims customers can get their own customized lines of cosmetics and beauty products at lower prices than they would typically pay for upscale brands.

The site,, says it uses a mass customization manufacturing process in which products with unique chemical contents and labels are created in high volumes.

Leveraging P&G’s Products Research

Andrew Swinand,’s director of marketing, told the E-Commerce Times that the site is “leveraging the massive investment in research and development that P&G puts into beauty care products worldwide.”

Swinand went on to comment that, “Movie stars and other celebrities have long had cosmetics and beauty products created exclusively for them. We can now do it for anyone. To give just one example, P&G’s research indicates that 70 percent of all women are using a shampoo that is not well-formulated for their hair. We can create a shampoo for each customer with the exact formula they need.”

Interactive Process to Create Products

According to Alex Zelikovsky, the firm’s head of logistics, the customer goes through an interactive process on the site that includes answering detailed questions about skin or hair quality and personal tastes.

To fine tune each product, the firm has created a “concierge service” with trained specialists that work with each customer directly. The idea, Zelikovsky says, is to invest up front to get an exact product for the customer because “once it is created, there is no other place in the world for the customer to re-order it. That is the ultimate point of mass customization.”

Mass Customization as New Competitor

P&G refuses to disclose exactly how the products are manufactured, other than to say that each product is truly created uniquely. However, Zelikovsky did say that the firm has applied for several patents associated with the mass customization process.

Until those patents are issued, he said, the firm is treating the actual process as a trade secret.

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