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  • Beauty's Net Value

    By Leslie Walker
    Washington Post Staff Writer
    Thursday, June 17, 1999; Page E1

    Their big break came with a cold call.

    Mariam Naficy and Varsha Rao were courting upscale cosmetic makers in New York last fall, trying to persuade the so-called "prestige" houses to let them sell their lipsticks and fragrances on the Internet.

    Nafic, 28, and Rao, 29, are among dozens of young entrepreneurs scrambling to get ahead of the wave of women logging online for the first time this year, bringing their checkbooks with them. Women now make up more than 45 percent of everyone online, and Internet researchers project they will be 50 percent by year-end. If even a fraction of the huge U.S. beauty industry switches to cyber-sales, the financial opportunities would be immense.

    But much of the beauty industry has hung back, afraid of alienating department stores and skeptical that women would really buy makeup through computers. Besides, who were Naficy and Rao? Neither had worked for an Internet operation or run a business before.

    Then the president of makeup artist Vincent Longo's cosmetic company took Naficy's phone call. And listened. And seemed impressed when she mentioned she and her partner had MBAs from Harvard and Stanford. "He said, 'Oh, you guys must be pretty smart,' " recalled Naficy.

    Thus began the first of 50 partnerships that led to the launch last week of Eve.com, an Internet beauty store that carries upscale lines of the kind available in department stores.

    After Longo signed on, others did too, names like Calvin Klein, Benefit, Philosophy, all reassured by the start-up's promise to ban drugstore brands and to create Web boutiques for each company with a unique style.

    Eve.com is among a new breed of e-tailers that is testing the willingness of Internet consumers to pay full retail price in return for well-known names, stylish Web pages, better customer service and a host of new services such as e-mail reminders and virtual makeovers.

    Longo, a cosmetic designer for 17 years with a line of 170 products, said he had been talking to potential Internet partners for at least two years, but worried that they "would not uphold the prestige of the brand and the name." He said he chose Naficy and Rao because he liked the "cleanliness" and "freshness" of their vision.

    Longo does makeup for hundreds of celebrities, including Tony Award winner Bernadette Peters last week, and makes frequent public demonstrations in stores and on television. He plans to extend his reach by filming a monthly instructional video that will be streamed from Eve.com starting next month.

    Each video will be chopped into 20-second segments so women can click on "eyebrows" or "lips" and study Longo's style at their own pace. "Women have been saying to me for years after I do their faces, 'Oh, can I take you home!' " Longo said, laughing. "Now this is a great opportunity to be in everyone's home with the click of a mouse."

    Estee Lauder, with 48 percent of U.S. department store sales the queen of the beauty market, also is aiming for wider distribution. So far, it is the only "prestige" beauty manufacturer to do heavy selling online, both at Clinique.com and BobbiBrownCosmetics.com, a joint venture with Neiman Marcus.

    Mass distribution for Bobbi Brown is new, because that high-end line has been available offline at only 125 U.S. outlets, compared with 2,000 for Clinique. That may be why the company reports that 70 percent of its Bobbi Brown sales online are coming from people who live more than 20 miles from a store that carries the line.

    Estee Lauder Vice President Angela Kapp said that while the company has authorized Macy's to sell six of Estee's 12 brands online, it is declining all the requests pouring in from Internet start-ups that want to carry them, too. "We are taking a wait-and-see attitude toward the newcomers because our customers come to us with a certain level of expectations," Kapp said. "I have built e-commerce sites and know the hiccups you go through in the first six months."

    The newcomers have names like IonBeauty.com, Mybeautybasics.com and Ingredients.com.

    Ingredients.com is one of the more unusual. Rather than signing up established brands, Ingredients.com believes it can use the Internet to jump-start an entirely new brand that it's developing under contract with a manufacturer. Founder Katherine Legatos said she believes women care about ingredients and will buy the vanilla or jasmine name as readily as they would most manufacturers' names. "Our research shows women purchase lavender first and body lotion second," she said.

    Legatos left iVillage.com, the online women's network, last December and hopes to launch her site in October. Creating its own label is meant to reduce Ingredients.com's cost of goods, so it can compete in a market known for near-zero profit margins. "Everyone you see recently coming into the beauty space online is selling other people's products, and we didn't think that would offer us the best growth and profit potential," Legatos said.

    For today's busy woman, I suspect both approaches – translating high-style cosmetic names online as well as creating lower-cost new ones – will hold some appeal.

    The fact is, most beauty purchases are refills. What woman wouldn't want her Borghese or Lancome makeup shipped to her – maybe even automatically – if the total cost was no more than she'd pay after schlepping to a store? And what woman hasn't walked away from a cosmetic counter rather than wait in line to learn about new or competing products?

    These are just a few reasons why the race to remake beauty retailing on the Web could have a happy ending for consumers, even if it pinches department store profits and sends a few Internet highfliers crashing.

    Leslie Walker's e-mail address is walkerl@washpost.com.

    © Copyright 1999 The Washington Post Company

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