Forum Archive Index - April 2000

["john paine" <painej@hotmail.com>]

Disclosure of interest - have bought shares in BDO.

Following may be of interest.

First, copy of notice sent to NZSE yesterday.

31 March 2000

Market Information Services Section
New Zealand Stock Exchange
04 473 1470

BeautyDirect Clarification

The Directors of BeautyDirect & Online Limited are concerned that a number 
of assertions made in a New Zealand Herald article today (‘Cosmetic giants 
shun e-tailer’) and Rod Oram’s comments last night on Newstalk ZB, could be 
misleading to the Company’s shareholders.

The Company would like to reiterate the following points:

1. BeautyDirect has strong penetration across a number of brands and the 
Directors are confident that over the long term more brands will be 
introduced to the BeautyDirect stores. The Directors recognise that 
BeautyDirect is introducing a new distribution mix that offers direct and 
healthy competition to existing retail distribution networks. The Company’s 
current suppliers have indicated they are satisfied that Beauty Direct’s 
distribution channels (mix of ‘bricks & mortar’ and an online store) support 
their brands appropriately as well as offering customers more convenience.  
Certain brands are still evaluating what their Internet strategies will be 
so as to ensure it fits with their current brand positioning.

2. All supply contracts disclosed in the prospectus remain in place.

3. To the best of the knowledge of the Company the cosmetic firms referred 
to in the article as not supplying BeautyDirect, do not currently supply any 
e-tailer anywhere in the world, only retailing businesses.

4. BeautyDirect continues to add new products to its haircare, cosmetics and 
perfumes range and will inform the market when materially important 
contracts are put in place.  Brands currenty carried by BeautyDirect include 
Elizabeth Arden, La Prairie, Christian Dior, Joico, Clarins,  YSL, Calvin 
Klein, Hugo Boss, ICE Haircare, Fudge, Freeman Range, Lagerfeld, Bvlgari and 
Georgio.

5. BeautyDirect’s market capitalisation is approximately $6.5 million, not 
$2.6 million as reported in the article.

6. BeautyDirect is listed on the main board of the New Zealand Stock 
Exchange. It was not a New Capital Markets listing.

Second, article obtained from the Internet.

Consumers Showing Interest in Online Health and Beauty Sector

By Michael Pastore
Managing Editor, CyberAtlas
[March 24, 2000] Online beauty product sales accounted for approximately 1 
percent of the $25 billion-plus total US beauty market in 1999, but could 
gain significant market share in the near term, according to a report by The 
NPD Group and Media Metrix.
Why Shop for Beauty Products Online
Instead of Traditional Stores
Shop any time 75%
Delivery of purchases 54%
Ease of comparison shopping 46%
Faster 42%
Avoid sales tax 38%
Find hard-to-find/
exclusive brands 37%
Better prices 31%
Avoid interacting with salespeople 19%
Stores too far away 13%
Source: NPD Online Research

While a relatively small percentage of Internet users reported previously 
purchasing beauty products online, nearly two-thirds of those polled said 
they would consider doing so in the future.
According to the report, fragrance, makeup, and skin care products accounted 
for 2 percent of all health and beauty products online. Fifteen percent of 
consumers with Web access have shopped on the Internet for fragrances, 
makeup, skin care, bath and body or hair products. Eight percent of these 
consumers have purchased a beauty product on the Internet.
Boding well for the future of the industry, NPD’s BeautyTrends® reports that 
62 percent of consumers surveyed for the report said they would consider 
purchasing beauty products online in the future. Thirty-three percent said 
they were very or extremely likely to purchase beauty products online in the 
future. Among women only, this number rose to 37 percent.
For consumers of health and beauty products, convenience, not price, is 
driving most of these consumers to the Internet for beauty products.  
Seventy-five percent of online beauty shoppers cited “shop anytime” as a 
reason for choosing the Internet over traditional retail stores for beauty 
products to find better prices. Online beauty shoppers value time over 
money, and beauty e-tailers are listening: many of the recently launched 
beauty e-commerce sites do not offer discounted prices, but they do offer 
coupons and other incentives for shopping online, according to the report.
Brand name has also emerged as another important factor in online beauty 
purchasing decisions. Sixty-four percent of online beauty purchasers said 
they mostly buy products that they have tried before, evidence of how 
important replenishment has been to the success of beauty e-commerce sites.  
Only 5 percent of purchasers said they mostly buy products they have never 
tried. Another 31 percent said “it’s equally fair”-they purchase both 
products they have tried before as well as products new to them. NPD 
BeautyTrends expects replenishment and brand equity to remain key drivers of 
online beauty sales.
Top Beauty E-Commerce Sites
Unique Visitors, Dec. 1999

Total
Persons
All shopping sites 49,735
Sites selling beauty products only
ibeauty.com 759
eve.com 387
avon.com 293
avonorder.com 241
Sites selling some beauty products
mothernature.com 1,843
drugstore.com 1,628
planetrx.com 1,099
more.com 584
ashford.com 528
Source: Media Metrix

Supporting these findings, separate NPD brand analysis determined that brand 
names matter more than price to consumers in the fragrance, makeup, and skin 
care categories. These shoppers understand the differences between brands, 
show loyalty to their favorite brands and will seek out and pay premium 
prices for their brands. On the other hand, while bath and body users know 
and respect the differences between brands and tend to have favorite brands, 
these shoppers try to find their top brands at lower prices.
“Brand equity will take on increased importance in the world of beauty 
e-commerce, especially as well-known department stores previously without a 
Web presence introduce proprietary Web sites,” said Karyn Schoenbart, NPD 
group president for Tracking Services. “Existing pure-play sites, many of 
which offer specialty or niche brands, will have their work cut out for them 
if they intend to compete with the well-established brands that are heading 
to the Web. Those that survive on the Net will be those carrying the key 
brands. These could be the big brands but also the ‘hot’ brands. E-tailers 
who have secure relationships with the most valuable brands will remain 
standing as competition heats up.”
According to Timra Carson, vice president, NPD Beauty Trends, consumers can 
expect to see more consolidation among beauty e-tailers as existing sites 
scramble to carry the top brands and the proprietary sites of the top brands 
begin to steal market share from the specialty brands marketed online.
“We’re also seeing blurred lines between mass and class in the online beauty 
market,” Carlson said. “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.”
The most visited beauty e-commerce sites are those that have existed for a 
longer time and have a high level of advertising, according to the report.  
Sites that focus on health and beauty are more visited than beauty-only 
sites. Health-related sites typically carry mass merchandise beauty brands.  
Beauty-only sites tend to carry only prestige or exclusive brands.
More E-Commerce Market Reports from NPD and Media Metrix:
Online Apparel Market
Online Toy Market
Reprinted from CyberAtlas.com



>From: "Gordon King" <gordon.k@clear.net.nz>
>Reply-To: sharechat@sharechat.co.nz
>To: <sharechat@sharechat.co.nz>
>Subject: RE: [sharechat] BDO - Congratulations???
>Date: Fri, 31 Mar 2000 17:32:47 +1200
>
>Yep sorry Ben, can't agree. Slightly twisted logic on your part.
>
>Bronwen Evans is an entrepreneur (agreed)
>Being an entreprenuer is a good thing (agreed)
>Therefore, Browen Evans is a good thing (also agreed)
>
>However, you seem to follow on that
>
>Browyn Evans is launching Beauty Direct Online (fact)
>Therefore, BDO is a good thing (doesn't follow)
>
>In a previous post way back the importance of surety of supply, not only
>here but in the markets for expansion (needed to support the grand revenue
>claims) was stressed.
>
>These have failed to materialise, we now get a better feel for the facts
>about the company's 'prestigious' supply alliances (lacking many important
>players and seemingly domestic only).  Frankly not a great debut, and no
>credit really to DFM.
>
>Gordon
>
>-----Original Message-----
>From: owner-sharechat@sharechat.co.nz
>[mailto:owner-sharechat@sharechat.co.nz]On Behalf Of Oliver Shapleski
>Sent: Friday, 31 March 2000 17:14
>To: sharechat@sharechat.co.nz
>Subject: Re: [sharechat] BDO - Congratulations???
>
>
>Spot on Mike.  I felt that the investment statement even suggested that the
>suppliers were queuing up!
>In the main however, I'd like to comment on this idea of supporting kiwi
>entrepreneurs.  IMHO, an entrepreneur is not necessarily someone who does
>something currently not in NZ.  There has to be more than that.
>Entrepreneurship to me seems to suggest a process of adding value.  It
>involves the entrepreneur getting into an area where he or she can add
>something not already there.  Where is the added-value with BDO?
>
>ITC - that's a value-adding business if ever I saw one.  From memory those
>two words are plastered thru-out its website, but they also walk as well as
>talk.  Anyone who used Virtual Spectator and follows the development of 
>that
>product can see new value at every stage.
>
>So why is BDO different from Amazon.com?  Amazon is self-evidently a
>value-adding business.  It even loses more money than BDO but the share
>value climbs up and up.  Why?  Amazon's CEO (I should know his name but 
>I've
>forgotten) IS an entrepreneur.  He didn't just say "we'll sell books 
>on-line
>around the world".  His vision was of an Amazon that could sell EVERY book
>around the world - hence the huge losses - the inventory required to 
>achieve
>that vision is immense.  The vision focuses not just on on-line reselling 
>of
>a limited number of products, but of the construction of an immense
>distribution network - a real empire - that can meet ANYONE's book needs
>quickly and at a low price.  Unless Bronwen Evans was to do this, frankly
>BDO might as well be a secondary school student's economics project (it
>reminds me of something we used to do with the Young Enterprise Scheme run
>at schools...!)
>
>Keep the change.
>
>
> > Ben,
> >
> > I agree with your sentiments entirely. But a company setting itself up 
>to
> > sell cosmetics, listing on the sharemarket and in the process soliciting
> > investors funds has surely an obligation to first of all clarify it's 
>line
> > of supply. To find out one day after listing that there will be
> > difficulties with major brands is failing the investors.
>
>
>
>----------------------------------------------------------------------------
>http://www.sharechat.co.nz/          New Zealand's home for market 
>investors
>To remove yourself from this list, please us the form at
>http://www.sharechat.co.nz/forum.html.
>
>
>----------------------------------------------------------------------------
>http://www.sharechat.co.nz/          New Zealand's home for market 
>investors
>To remove yourself from this list, please us the form at
>http://www.sharechat.co.nz/forum.html.

______________________________________________________
Get Your Private, Free Email at http://www.hotmail.com


----------------------------------------------------------------------------
http://www.sharechat.co.nz/          New Zealand's home for market investors
To remove yourself from this list, please us the form at
http://www.sharechat.co.nz/forum.html.