Yet one tough question is keeping online sellers awake at night: Will online’s convenient delivery, wider product selection, competitive pricing and access to information complement the in-store experience, or will it instead cripple traditional retailers’ sales and margins?
We recently conducted a study of 800 American women who shop online for beauty and personal care products, and three of its findings shed light on the potential answer to this question.
The first finding is that online shoppers may be loyal to brands, but not to a point of sale — 67% of the survey participants said they shop on four or more sites to fulfill their beauty and personal care needs. Some even admitted to shopping on 10 or 15 sites. Even more interesting is that 45% feel that their online experience is better than the in-store experience.
The second finding points to a lack of personalization in existing digital marketing methods, where 91% of the participants felt that messages they receive from brands or retailers are not (or not sufficiently) personalized to them. This indicates a gap on part of the brand in understanding who they are.
Finally, 37% stated they try new beauty and personal care products after seeing them on social media or reading consumer reviews.
Put simply, consumers have mastered the art of omnichannel retail, shopping both online and in stores, but for the first time they are expressing a stronger preference for the former. As loyalty has become so hard to achieve, traditional approaches to building traffic in both channels have become obsolete, and require new ones.
These findings point to three imperatives for beauty brands and retailers:
• Enhance omnichannel capabilities: The path to purchase is increasingly digital and cross- channel. Shopping journeys can start online and end with in-store pickup, or start in-store and end online. Brands and retailers need to optimize their omnichannel capabilities, defining the role each channel plays. Stores can act as delivery points or customer experience hubs. In the latter case, stores educate consumers, enabling them to interact with the products and experience the brand through all their senses.
Using stores as experience hubs requires highly trained sales associates who add value to an already highly educated consumer, as well as “experience elements” such as events or technological tools that support the sales process and brand interaction. Think of Sephora’s Color IQ or Dior’s Virtual Reality headset.
Stores can also be used as fulfillment nodes. By carrying inventory to meet local demand, stores could support click-and-collect by customers, providing greater speed while also generating more foot traffic. This requires an integrated order management system, with an assortment more skewed to fast-moving items to support in-store pickups and resources to support the additional workload.
• Improve personalization: Over the past 20 years, personalization at scale has been the holy grail of marketing. Today, with the evolution of marketing technology, automation and advanced analytics, marketing to segments of one is finally possible. New developments in the area of artificial intelligence allow us to understand not only who the consumer is, but what they want, how and when they want it, and even what colors or shapes they react to more positively.
But practice doesn’t yet match theory. As noted above, only 9% of respondents felt that the marketing emails they received were truly personalized. Online beauty consumers are faced with an incredible amount of choice and content. The ability to direct the right product or message to the right person at the right time would significantly impact top lines and improve consumer relationships.
• Communicate with authenticity: Consumers demand authentic communication, including peer reviews and recommendations from “influencers,” and advertising showcasing “real people” or “people like us” instead of idealized models. Brands and retailers have to reconsider their communication strategies; establish new ways to engage consumers and make them part of the brand; and leverage the power of influencers to increase reach. As we move further into an era where consumer power reigns, companies will have to find the delicate balance between engagement and control if they hope to build authentic consumer relationships.
So in a nutshell, the state of e-commerce in the beauty industry is a juggling act — on the one hand, the increasing challenge of loyalty, and on the other, the daily demand on retailers and brands to excel in delivering a seamless experience between online, offline and mobile.
Succeeding in this new environment will require an artful approach to the integration of various industry participants who have come to inhabit the digital path to purchase, and in doing so, have changed consumer behavior forever.
Hana Ben-Shabat is the author of the 2016-2017 edition of “Beauty and the E-Commerce Beast” and a partner in the consumer and retail practice of A.T. Kearney, a global strategy and management consulting firm. She can be reached at firstname.lastname@example.org.