L’Oreal Targets 50% Digital Sales with New E-Commerce Tie-Ins

Need to Know

• The beauty company aims to have digital sales comprise 50% of its revenues and 80% of its customer interactions, it said in a conference on November 6.
• To achieve these goals, L’Oreal is investing in new forms of e-commerce, including live shopping, subscriptions, and social shopping.
• L’Oreal is also integrating its ModiFace AR technologies onto Google’s YouTube channel and search platform, marking the first time a third party has embedded in Google’s back end.
• L’Oreal also recently launched virtual make-up try-on technology with Snapchat, Google Duo, and more.

Analysis

Beauty giant L’Oreal has unveiled an ambitious digital growth strategy, saying in a conference on November 6 that it aims to have digital sales comprise 50% of its revenue across brands.

Speaking at a digital press conference on Friday, L’Oreal chief digital officer Lubomira Rochet said the company does not have set timelines for this goal (“five years, seven years, three years or four years—we don’t really know, but we know that it’s close,” she said), but added that L’Oreal hopes that 50% of its growth drivers and 80% of consumer interactions will soon take place in the digital space, as well.

Today, digital sales comprise 24% of L’Oreal’s overall business. To increase this number, Rochet said, the company will employ a number of strategies and technologies. These include subscriptions models, and social shopping, the e-commerce method that has taken off in countries such as China, where it is a $130-billion industry. L’Oreal makes about 10% of its revenue via social shopping in China but is aiming to increase that number substantially.

Notably, the company has recognized the power of micro-influencers and “pro consumers,” or “prosumers,” which are trusted social media users who review and display products for their followings. L’Oreal is hoping to leverage prosumers for social selling, in addition to using its vast established network of stylists, makeup artists, and hairdressers who use and trust the company’s products.

“When, in fact, those [individuals] go online, when they become influencers [in their own right], they become a very powerful ecosystem of millions of social advocates and social sellers for our brands,” Rochet said. “Beauty marketing used to be very visual, about highly produced pictures or videos broadcast to people. Today, it’s more a conversation. It is not a monologue.”

L’Oreal is also eyeing gaming and e-sports as potential new avenues for e-commerce, having already experimented with selling products from Maybelline, one of its subsidiaries, on Twitch. Rochet said that L’Oreal believes the future beauty experience lies “at the intersection between livestreaming, gaming, beauty tech—retail-tainment—because entertainment is a bigger part of this whole journey.”

Notably, the company will be entering into a partnership with Google whereby consumers who are using Google to search for a specific colour cosmetic from the brand will be able to virtually try it on using L’Oreal’s ModiFace AR technologies. According to Rochet, L’Oreal will be integrating ModiFace into Google’s YouTube channel and search platform, marking the first third-party integration into Google’s back-end. News of the Google-ModiFace integration come one day after L’Oreal launched a digital makeup line, Signature Faces, via Google Duo, Snapchat and Instagram.

The strong commitment from L’Oreal to digital commerce comes near the end of a year in which the beauty company has shown a strong ability to compete in the e-commerce arena. The company launched shoppable livestreams via Livescale in July, shortly after announcing the expansion of its capacities with Toronto-based AR tool ModiFace, which it acquired in 2018, in June. By the end of July, digital sales accounted for nearly a quarter of L’Oreal’s overall sales.