Cosmetics giants shun e-tailer

By KARYN SCHERER

Several of New Zealand's top cosmetics companies are refusing to supply newly listed e-tailer BeautyDirect, amid global confusion over how the internet will affect cosmetics sales.

At least three big companies, including Shiseido, Estee Lauder and L'Oreal, insist internet sales could potentially damage their upmarket images and destroy their expensive marketing campaigns.

Their move comes amid an explosion of interest in websites selling cosmetics in the United States, and growing interest in Australasia.

One of New Zealand's biggest cosmetics companies, Estee Lauder, which includes the Clinique, MAC, Aramis, Tommy Hilfiger and Donna Karan brands, says it is hamstrung by company policy from doing any local deals.

Although Estee Lauder operates its own Clinique website in the US, it does not allow internet sales anywhere else.

Its New Zealand managing director, Penny Thompson, said the company was determined to keep a tight control over its image.

"We get calls every day from retailers wanting to put us up on their site. Some of them just want advice, but we're just not allowed to do anything at this stage."

Other big companies such as Shiseido and Chanel are also refusing to supply BeautyDirect. Shiseido was last year ranked as New Zealand's second-biggest seller of what is known in the industry as skincare and colour products.

Marketing manager Mark Luty said the company wanted to ensure customers received the right advice.

L'Oreal, which includes such brands as Revlon and Lancome, will only supply fragrances at this stage.

BeautyDirect chief executive Bronwen Evans said yesterday that she had received numerous e-mails from customers annoyed that they could not buy their favourite products.

"It's incredibly frustrating ... what we've found quite reassuring, though, is the number of people who are willing to change brands."

Ms Evans, who saw the company she founded listed on the stock exchange this week with a market capitalisation of $2.6 million, admitted she was considering parallel importing some haircare products that local agents were refusing to supply.

"I'd prefer to work with the New Zealand guys but if they can't work with me, and my customers are asking for it and I can get it somewhere else, then I'll do so."

The fledgling company, which is predicting sales of $1.1 million by next March, is also grappling with the issue of how to expand overseas, given that many cosmetics companies do not allow suppliers to sell in more than one market. Ms Evans said she would deal with the issue case by case.

When BeautyDirect was launched in New Zealand a year ago, there was just one major beauty e-tailer in the United States and none in Australia.

There are now more than six main websites in the US, and several are expected to be launched in Australia in the next few months.

Australian department store giants Myers and David Jones are believed to be considering sites. A former buyer for David Jones is also understood to be close to launching a company called BeautySpot, with backing from Fairfax and Amazon.com.

Ms Evans said she was unconcerned. "Competition to me in terms of other sites coming on is great because it just raises the general level of buying online. It also means product supply may become more open if there's more of us doing it."

BeautyDirect closed down 2c at 24c yesterday.

Related sites:

BeautyDirect

Amazon.com