French cosmetics giant L'Oréal will focus on the internet as it aims to launch 200 websites, mostly web shops, worldwide in the next 10 years. Its own "digital factory" has to keep everything in check.
From "brand-focused" to "consumer-focused"
CEO Jean-Paul Agon had already started the revolution of L'Oréal's large e-business strategy in 2011. The world's largest cosmetics group, owning 28 large brands and active in 130 countries worldwide, currently manages a 22.98 billion euro consolidated turnover.
The board realizes that, in the wake of a negatively-altered forecast for 2014's growth expectation, it has to focus on e-growth in the next few years. The problem is that the cosmetics giant is hampered by what is currently happening: it is much too dependent on retailers doing what they please online, while L'Oréal wishes to "get in contact with the end-user through a direct web shop for each of its brands".
According to Vincent Stuhlen, who has been in charge of L'Oréal Luxe's worldwide e-business since 2011, the "internet, the smartphone and the tablet are wonderful sources to get consumer information in order to develop new products, a marketing mix and a digital experience. Much more than a digital revolution, it is a customer revolution."
L'Oréal Luxe will be the first
L'Oréal has chosen its luxury division to speed up the digital expansion and Stuhlen has said that its "selective offer of products, the average price of its top products which lead to higher purchases" made it the obvious choice.
It is aiming high from the start: "The division has to generate an online turnover of at least 600 million euro by 2017. That is equal to 8 % of total turnover, which means that the internet will become the division's largest organic growth stimulus".
L'Oréal will get rid of its "all too decentralized approach" which left everything to each single country. That did not really benefit its brand identity and it also meant that the IT architecture was vastly different for every country. The "best practices" from one country can therefore not easily be replicated in another country.
Own "Digital Factory" in New York and Paris
The decentralized approach has now been replaced by a technical framework, the so-called "Flagship Digital", which allows each brand to use its own identity. The group can easily check that each website reaches its targets regarding average spend and conversion ratio.
That is why L'Oréal has created its 'Digital Factory', an internal start-up located in New York and Paris. That "digital factory", employing 50 people, has to define the business needs and has to steer the IT projects for each of the 16 brands in the luxury division.
The first "new" websites have already been launched in the United States and soon Europe and Asia will get their first websites. "The L'Oréal Group will launch more websites in the next 10 years than it has done in its history so far. Some 200 sites will go online, mostly web shops", Stuhlen said.