Forum Archive Index - April 2000

[pat troup <troupie@ihug.co.nz>]

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pat troup, troupie@ihug.co.nz 
sent you the following article using internet.com's 
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The E-Business and Internet Technology Network
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The outlook for BDO may not be so bad after all


Consumers Showing Interest in Online Health and Beauty Sector








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.


 
* This article contains an HTML table showing comparative data. 
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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.


 
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To view the table, visit....




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.internet.com
http://cyberatlas.internet.com
Copyright 2000 internet.com Corporation
http://www.internet.com
The E-Business and Internet Technology Network
All rights reserved.






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