Only 7% of colour cosmetics sales, 4% of fragrance sales, and just 1% of skin care sales occur via digital channels in Germany, according to L2 Inc’s latest digital beauty report, falling short of other nations such as the UK, where nearly half of Beauty brands provide Direct-to- Consumer (DTC) e-commerce, compared to only 35% of Index brands surveyed in Germany.
Low penetration
Lead researcher Sarah Hynes says that the dominance of Health & Beauty specialist retailers is partly to blame for the low e-commerce penetration in Germany.
“This highly fragmented channel accounts for 63% of offline Beauty sales. Market leaders Dm-Drogerie Markt and Rossmann capture 9% and 7% of the market, respectively,” she tells CosmeticsDesign-Europe.com.
“Dm-Drogerie does not offer online sales from dm.de, driving exclusively to its stores, while Rossmann.de is experimenting with e-commerce through a secondary site, rosmannversand.de.”
Department stores are not helping the situation either as they have arrived at the e-commerce party a bit late.
“Douglas stands out from the pack with the most sophisticated online offering among German e-tailers, investing in extensive merchandising on product pages, in-store pickup, and multiple payment options,” Sarah explains.
The opportunities
One opportunity for beauty brands lies in upgrading the mobile experience as under two-thirds of Beauty brands in Germany have an optimised site.
Although this represents a big increase compared with last year, Hynes states that many brands are still lagging; particularly in comparison with the US, where nearly all Beauty brands have an optimised site experience.
Some brands are doing well, such as local favourites Nivea and Art Deco, which L2 ranked as ‘Genius’ in its Index this year due to robust e-commerce offerings, very strong visibility on e-tailers and on google.de, and a robust mobile experience.
“As the e-tailers mature and evolve brands will need to engage with their distribution partners,” continues Hynes. “Amazon is the biggest player in German e-commerce and is evolving into a media platform, where 93% of Beauty brand search on amazon.de now show ads.”
The digital expert also explains that digital discovery is as important as e-commerce, as search volumes for core Beauty keywords have grown significantly in the last year.
“The number of monthly average searches for the core Beauty terms increased 35% in December 2014 compared with December 2013. Mobile search volumes have now overtaken desktop on google.de for these key terms,” she ends.