L’Oreal Reports E-Commerce Spike of 65%

Need to Know

• The beauty company’s sales rose for the first time since January, as many customers “discovered buying online for the first time.”
• Online sales now comprise a quarter of the company’s revenue, up from 16% at the end of 2019.
• Technological innovations, such as virtual try-ons, have helped L’Oreal succeed in e-commerce.
• Despite solid online sales, the brand experienced an 18.8% decrease in second-quarter comparable sales.

Analysis

French cosmetics company L’Oreal reported strong a online performance for the second quarter of 2020, with a 65% spike in digital sales over the time period.

The company’s sales increased for the first time since January 2020, the company also reported, as consumers began to purchase beauty and cosmetics products online in earnest amid store closures resulting from the ongoing COVID-19 pandemic. Chairman and CEO Jean-Paul Agon told the Financial Times that the period marked a “tipping point” for the company, as “many [consumers] discovered buying online for the first time.”

Agon characterized the spike in digital sales to be “unbelievable,” noting that it “has been the biggest phenomenon for us in the past six months.” Indeed, online sales for L’Oreal now comprise a quarter of the company’s revenue.

Despite Agon’s apparent surprise, L’Oreal has invested significantly in its technological capacities in recent months, in an effort to compensate for sales losses resulting from the coronavirus crisis (sales for L’Oreal were down this quarter, by 18.8%). Notably, its virtual try-on tool—a partnership with Canadian company Modiface, available via Amazon—helped consumers see how color cosmetics would look on their own faces, improving product confidence. The company had previously launched an AR hair-dye try-on tool with Walmart.

Also notably, L’Oreal debuted shoppable livestreams in June, which allow consumers tuning in to interact with live hosts, ask questions, and shop directly from Livescale, the platform being used by L’Oreal. Livescale also allows beauty brands to provide live makeup tutorials, offer discounts and bonuses to viewers.

These innovations are reflective of L’Oreal’s ongoing commitment to bolstering its digital presence, an initiative to which it has been committed since before the COVID-19 pandemic. In its 2019 annual report, the company’s Executive Vice-President and Chief Digital Officer, Lubomira Rochet, revealed that digital initiatives accounted for half of the company’s media spend, noting that the company believed “new technologies like augmented reality, voice assistance, artificial intelligence and sensors” were an integral part of its ongoing success and its future.