In its second-largest acquisition, Amazon buys the company for $970 million.
Online beauty sales accounted for approximately 1% of the $25 billion-plus total U.S. beauty market in 1999, but could gain significant market share in the near term, according to a new e-Visory Report released by marketing information provider The NPD Group Inc. and Internet measurement company Media Metrix.
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% of all products sold online. Some 15% of consumers with Web access have shopped on the Internet for fragrances, makeup, skin care, bath and body or hair products. Some 8% of these consumers have purchased a beauty product on the Internet.
Convenience, not price, is driving most of these consumers to the Internet for beauty products. And 75% of online beauty shoppers cited "shop any time'' as a reason for choosing the Internet over traditional retail stores for beauty purchases. By contrast, only 31% indicated they shopped online for beauty products to find better prices. Supporting these findings, a separate NPD brand analysis determined that brand names matter more than price to consumers in the fragrance, makeup and skin care categories.
"We expect to see more consolidation among beauty e-tailers as existing sites scramble to carry the top brands and as better-known brands' proprietary sites start 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. Prestige beauty products traditionally sold only in department stores are featured next to mass beauty products on some e-commerce sites,'' says Timra Carlson, vice president of NPD BeautyTrends.