Online sales grew by more than 30% in the fourth quarter, but store sales slid by 6.1% year over year.
Estee Lauder tries to meet the needs of product managers, customers and retail outlets with its web strategy.
Like most manufacturers and marketers of brand name products, Estee Lauder Cos. has to please a lot of different and sometimes conflicting interests. There are product managers who want to extend and protect Lauder’s valuable fragrance and cosmetic brands, such as Clinique, Bobbi Brown, Aramis and its flagship Estee Lauder name. There are the 9,000 retail outlets worldwide that merchandise its products. And, there are the customers who buy them, typically not through Estee Lauder but through branded retail chains.
It is a matrix of marketing relationship that at the same time creates an opportunity for manufacturers on the web-and considerable risk. Yves Le Breton, vice president of business development for Estee Lauder Online, told his audience at eTail 2001 this week that after trial and error, the company has adopted a three-tiered strategy designed to satisfy “all of our stakeholders.”
The evolution process began in 1996 with the formation of its first marketing web site. “We were very early into the Internet game,” Le Breton recalled. “Women were nowhere to be seen on the Net, and it was a very tough time.”
Two years later, the company launched its first Clinique web site that sold product on-line, and it has since launched six other sites to sell other branded products. But that left open the question of what to do about its retail chain partners, many of whom were aggressively developing their own sites. While its branded web sites very soon had become among the top 10 of its merchandising groups, it depended heavily on the major retail chains that accounted for the great bulk of its business, and that was not about to change by virtue of its web development. “We really don’t see ourselves as retailers,” Le Breton said.
Yet, the retail chains it depended on, conceded Le Breton, felt threatened that Estee Lauder’s aggressive web development would erode their own sales of Estee Lauder products and were protective of the relationships they had forged with customers who bought those products in their stores. Further complicating the strategy was a Boston Consulting Group study that revealed that shoppers could be broken down into two types when it came to fragrances and cosmetics-diehard loyalists of a single brand and those who preferred a variety of brands, one for each beauty need.
This complex marketing challenge has resulted in a three-tier web strategy that Estee Lauder will implement this fall with the creation of Gloss.com, an independent fragrance and cosmetic web venture that is owned in partnership by Estee Lauder and two of its prime rivals-Chanel and Clarins. “The consumer is telling us that they do not want to go to different sites to purchase their fragrances and cosmetics, but they also want a lipstick from one manufacturer, a fragrance from another and a blush from a third,” Le Breton told IRNewsLink immediately after his eTail presentation. “We believe Gloss.com will account for a very ambitious portion of our business, but it will be an independent on-line retailer,” and not an extension of any one of Estee Lauder’s brands. And, predicted Le Breton, “it will be like no place else on the Internet to purchase high-end cosmestics.”
To satisfy the retailers with whom Estee Lauder has strong merchandising relationships, the company this fall will also implement a “retail syndication” program that will provide branded content for the web sites of its major retail chain customers. “These will be mini versions of our branded sites that our retail partners can use on their site,” Le Breton said. The syndication program efficiently re-purposes the content Estee has developed for its own sites and retains the company’s control over brand positioning, while at the same time enhancing the performance and profitability of the web sites of its retail partners.
And what about its own branded web sites that took it into the web business in the first place? Those, said Le Breton, will be converted into primarily marketing web sites that will perform some e-commerce to satisfy one core constituency. “They will now be directed toward the diehard users of the brand,” explained Le Breton, noting that the company’s Internet retailing strategy will now be directed toward “making Gloss.com the leader in e-commerce in the cosmetic field.”