Driving Impulse Buys Can Help Grow Online Personal-Product Sales

Improvements in online marketing can help cosmetic and personal-care product manufacturers capitalize on impulse shopping, which has long been an advantage enjoyed by brick-and-mortar stores, Euromonitor suggests. The National Retail Foundation predicts overall online sales will increase as much as 12% in 2013.

Learning how to prompt impulse buying over the Internet will help cosmetics and personal-care marketers continue to grow online sales, the fastest-growing channel for the segment, according to data from Euromonitor.

Year-over-year online sales of beauty and personal care “is beating everyone,” said Antonia Branston, a senior retail analyst with Euromonitor.

Internet retailers added $3 billion worth of beauty and personal-care sales in 2012 while some formerly dominant channels, such as department stores, lost nearly $1 billion of sales in the same time period, Branston said at the in-cosmetics conference and trade show in Paris. Sales at supermarkets and discounters also fell in 2012, but sales at boutiques, hypermarkets and drugstores grew.

The National Retail Federation predicts this trend will continue, with overall online sales increasing as much as 12% in 2013, according to an economic forecast released in January. NRF notes overall online retail sales grew 11% in 2011.

Room For Improvement

Even though Internet sales of personal-care products are “growing incredibly well,” it is still a comparatively small channel in terms of total sales and per capita spend and will benefit from evolving marketing targeting impulse shoppers, Branston said.

Internet retailers recorded less than $25 billion in sales in 2012 compared with supermarkets, which claimed roughly $75 billion, and drugstores, which captured about $50 billion.

Along the same lines, online beauty and personal-care sales accounted for $2 per capita versus store-based health and beauty retail’s $170 and total retail’s $1,884, Branston said.

She also noted sales of personal-care products at the per capita level are “very patchy for Internet retailing.” For example, consumers are very comfortable buying skin-care products on the Internet, which generated $9 billion in 2012, making it the most successful subcategory. The second most successful personal-care subcategory online was color cosmetics, which dropped to $3 billion, followed by fragrance at $2 billion and hair care at $1.5 billion, according to Euromonitor data.

Online retailers are becoming more creative about reaching buyers in new places – for example through developing smart-phone applications that enable consumers to snap a picture of a product and immediately find out what it is and where it is sold, Euromonitor’s Antonia Branston noted.

Internet retailers’ relatively low current share of beauty and personal-care products may be due partly to consumers’ impulse shopping more in stores than online.

More than three-quarters of consumers admit to impulse shopping often or sometimes in stores compared with only 50% online, according to a survey of more than 5,710 online shoppers in six countries conducted by Live Person and released in January.

A Euromonitor survey across 15 major markets suggested that brick-and-mortar store settings traditionally are more conducive to impulse shopping because the main purchasing drivers there are immediacy, seeing and trying before buying, convenient location for access and better warranty or easier returns, Branston said.

“These,” she said, “are aspects that complement the four steps to impulse buying” – seeing, trying, buying and immediately possessing.

Consumers mainly like online shopping for best price, the ability to buy anytime and anywhere and the ability to buy a variety of brands and products that are not locally available, she noted.

However, evolution in online marketing techniques aimed at impulse shoppers and increasing awareness of and comfort with technology is changing this, Branston said.

Improve Visibility To Improve Sales

First of all, Internet retailers are changing the way consumers see products sold online.

“What we are starting to see is Internet retailers starting to move off the computer screen to catch buyers in new places,” Branston said. For example, supermarkets are establishing virtual stores in subways, airports and at bus stops. These billboards include images of products with QR codes that people can scan with their smartphones to order for delivery to their home.

Retailers also are developing smart phone applications that identify products and tell consumers where they are for sale based on a picture the consumer takes of something they see while walking down the street. Examples include Chic Engine, WINEfindr, eBay Motors and Tesco By The Case, Branston noted.

“The problem with a lot of these applications so far is, although they look good, they involve an enormous amount of work on the back end,” creating and maintaining a database to search to find a matching image to what the consumer snapped, she said.

However, they can make “a real enormous impact” for cosmetics if consumers can take a picture of a lipstick someone is wearing and an app can tell them what the lipstick is and offer them a way to immediately buy it, Branston said.

Online Trying And Buying

The inability to easily try products sold online is another obstacle to impulse buying on the Internet, but firms can lower this barrier by making returns easier so consumers can buy, try and either keep or send back a product, Branston said.

Some online retailers are teaming with local retailers and corner shops that will collect unwanted returns from consumers, relieving shoppers of the hassle of going to an inconvenient post office, she said. Others offer free returns and provide a pre-paid postage label.

Some cosmetic firms also are creating smartphone apps that allow consumers to try products virtually. For example, L’Oreal S.A.’s luxury Lancome division created the House of Color app that involves uploading a photograph and trying makeup by clicking on a color and moving it to the picture to see how an eye shadow would look. Consumers can then share the photo via Facebook or Twitter, which is an important aspect since consumers value their peers’ opinions and often make purchases based on opinions and feedback.

Another key to capturing an impulse sale is making the process quick and easy so consumers do not have time to talk themselves out of a purchase, Branston said. One way to do this is with emerging technology that allows consumers to charge something to their telephone number, she noted. The smartphone application currently is “quite small, but very well suited to small retailers” and small cosmetic producers who need a quick and easy way to get payments without developing infrastructure.

Near-Instant Gratification

The instant gratification of walking out of a store with a purchase in hand is a significant driver of impulse buys and one that is difficult for online retailers to replicate, Branston said.

Big retailers, like Amazon, are addressing this by creating almost-instant gratification through same-day delivery. This requires storing products in multiple locations closer to consumers, Branston said.

Another option is establishing “collection” sites where consumers who buy goods online can pick up the product. Amazon and Google offer this service in some areas, she notes. Since cosmetics tend to be small, consumers likely will not mind picking them up on the way to or from work and carrying them in their purse, she said.

While many of these strategies for increasing online impulse purchases are just emerging or still on the horizon, Branston expects them to impact Internet sales of beauty and personal care products significantly – making this channel a key for future category growth, she said.