Beauty & Balance

What Will Drive L’Oréal’s Digital Growth?

PARIS — L’Oréal has set some new benchmarks for its digital business, which today, if it were a country, would be the group’s largest, making 4.8 billion euros in sales in the first nine months of this year.

The world’s biggest beauty group aims to have digital comprise 50 percent of its revenues, 50 percent of its growth drivers and 80 percent of all interactions with consumers.

“Is it in five years, seven years, three years or four years — we don’t really know, but we know that it’s close, so we have to get prepared for it,” said Lubomira Rochet, L’Oréal’s chief digital officer, during a virtual press conference on Thursday.

To help spur the company’s e-commerce business, which today represents 24 percent of the group’s sales, L’Oréal plans to maximize various forms. The most traditional are direct-to-consumer, e-retail and pure players.

“We have started to invest, test, learn and scale the emerging forms of e-commerce,” said Rochet, referring to the likes of live shopping, affiliate social commerce and group buying.

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The total social shopping channel in a country like China is already massive — generating about $130 billion in sales. Social shopping today represents 10 percent of L’Oréal’s e-commerce sales there.

The group is experimenting with a subscription-based model of e-commerce in the U.S., with Color&Co, a tech platform for customized hair color.

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“Those models are really interesting, because they allow us to create a very intimate and personalized relationship with the consumer,” said Rochet.

A focus on another trend, retail-tainment, can help drive L’Oréal’s digital expansion. Of gaming and livestreaming, Rochet said they “are literally rewriting the codes of beauty shopping for Gen Z and beyond. Gaming and e-sports are becoming increasingly hot marketing channels for beauty.”

Maybelline, for one, began livestreaming on Twitch, and on China’s Tencent QQ, the brand enabled users to make up their avatars in the games they were playing.

“The future beauty experience will definitely lie at the intersection between livestreaming, gaming, beauty tech — retail-tainment — because entertainment is a bigger part of this whole journey,” said Rochet.

Online advocacy and social selling are other key digital drivers in today’s world where peer-to-peer systems of prescription are developing fast, and microinfluencers and “pro consumers” — also now referred to as “prosumers” — are having an increasing impact on people’s buying decisions.

L’Oréal will benefit from that trend, said Rochet, not least because the group has for 110 years built on relationships with people such as hairstylists, dermatologists and makeup artists.

“When, in fact, those prescribers go online, when they become influencers [in their own right], they become a very powerful ecosystem of millions of social advocates and social sellers for our brands,” said Rochet.

Take the case of Lancôme. In one week in the run-up to Women’s Day in China in March, the brand trained 2,300 of its beauty advisers to become what Rochet called “e-BAs — social sellers and social-media influencers.”

“Beauty marketing used to be very visual, about highly produced pictures or videos broadcast to people,” she said. “Today, it’s more a conversation. It is not a monologue.”

That trend has been accelerated by the coronavirus pandemic.

“We saw 40 percent more requests addressed to our brands on all the different channels we are operating,” said Rochet, adding L’Oréal aims to respond to each one, on all channels. “We have repeatedly seen that this has been having a direct impact on consumer satisfaction, on consumer loyalty and on consumer advocacy.”

The future of beauty is also about tech and services, L’Oréal believes.

“Our intent has been to create — think of it as a beauty services app store — open [throughout] our ecosystem to enrich the beauty experience, to elevate the beauty experience everywhere where people are actually shopping or looking for beauty,” said Rochet.

After deploying its ModiFace AR technology on some digital retailers such as Tmall and Amazon, platforms like WeChat and Pinterest, as well as on its own brands’ web sites, she noted people spend more than seven minutes doing the virtual beauty try-ons. And the conversion rate has tripled.

Rochet revealed during the press conference that L’Oréal is integrating ModiFace AR technologies onto Google’s YouTube channel and search platform.

“The idea here would be that you would be looking, for example, for an eyeliner or for a lipstick on Google’s search bar and directly from the research results page you will be able to trigger a virtual try-on,” said Rochet.

Or while watching a beauty influencer’s video, one could, by liking the product being reviewed, access a virtual try-on.

“It’s the first time Google allows a third party to be embedded in their back-end platform,” she explained.

Google is a major beauty player. Yearly, 2.5 billion beauty videos are viewed on YouTube, and there are hundreds of millions of beauty-related searches made through Google.

Rochet believes beauty will be increasingly “personalized, but also personal and private.” For personalized beauty services, algorithms must be nourished with first-party data, and L’Oréal is careful to protect that.

Alongside complying with local regulations about data protection, Rochet said transparency and consent are also paramount.

“On all our web sites, you will find privacy policies [with] an explanation of how we collect the data, why we collect the data,” she said. There are similar explanations on partners’ platforms.

But Rochet deems that this is not enough.

“We are convinced that people will trust us with collecting and using their personal data if we bring an added value to them,” she said, giving as examples providing a thorough skin-care diagnostic or helping find the right hairdresser.

She called these a “value exchange.”

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