As reported, Estée Lauder posted a 5% gain in fiscal Q1 sales, but its online business did even better, posting double-digit increases, as prestige retailers migrate toward e-commerce, according to Seeking Alpha, which notes that the overall US e-commerce market is expected to grow at 10% CAGR between 2012 and 2017.
According to the U.S. Department of Commerce, sales from online channels totaled up to $225 billion in 2012 and is expected to reach $262 billion in 2013. This growth rate is much higher than the 3.4% annual growth rate predicted for the beauty and personal products industry. Prospects of high growth coupled with limited additional expenditures into building an e-commerce system is driving investments into the e-commerce market.
At the same time, sales of cosmetics within the Chinese market are increasing from the online channel, indicating faster migration towards online sales from Chinese retailers. Chinese online sales, albeit representing a small percentage of total sales from China, have grown by more than 100% from a year ago. For more on the Chinese online beauty market, see Ally Dai's Notes from China column.