E-commerce strategy for Beauty Solutions cosmetics company

E-Commerce

The following pages focus on discussing the necessity and the advantages of addressing the ecommerce as a mean of expanding the customer horizon, which further leads to increased sales and profit, and better visibility and availability.

The development of an ecommerce dimension is a successful strategy for most companies. In this case, concerning a cosmetics producer, the implementation of an e-shop is intended to help reduce distribution costs. The savings can be further invested in production facility upgrading, which further leads to more efficient production, allowing the company to reduce production costs.

By implementing an e-shop the company can reduce the required human resources, given the fact that there is practically less need for traditional shops and salespersons. Also, the company can afford to reduce the number of traditional shops, boutiques, or outlets, therefore reducing costs.

The paper will also provide a description of the company, its strengths and weaknesses, and the context in which it activates, context represented by the cosmetics industry and the trends affecting this market and the company.

The company's strategy will also be discussed, providing an overview on the necessity of addressing ecommerce as a solution for the situation in which the company in case is situated.

Company Description

The company subjected to the analysis in the following pages is called Beauty Solutions. The company was founded in 1995. The field of activity consists in producing and commercializing a wide range of cosmetic products. The company activates mainly in the United States, but it also sells its products abroad.

The company currently employs 150 people, divided in the following business categories: production -- 90 employees, sales and marketing 37 employees, and top management -- 23 managers worldwide. The number of employees mentioned for the sales and marketing division only refers to specialists that develop the company's strategy in this area, in the U.S. And abroad, and does not include the actual salespersons involved in the actual sale of the company's products. This is because the company does not have its own traditional shop, but collaborates with retailers.

Since its establishment, the company has managed to continuously expand its range of cosmetic products. Currently, the company produces and commercializes cosmetic products for hair, skincare, and makeup. The products can be found in both regular variants and professional ones, for salon usage.

Cosmetics Industry Analysis

Although the financial and economic crisis that has been affecting the entire world has made an important negative impact on most industries, whether they are global or local, it seems that the cosmetics industry was not significantly affected by this financial phenomenon. Even more, there are several regions across the world where the cosmetics industry is actually expanding.

The most important developing market is considered to be the Asian region at the moment, represented mainly by China and Japan. Other developing markets include Brazil, Russia, and India. These markets present plenty of unexploited potential. The situation seems to favor niche players, smaller companies in the cosmetics industry, rather than cosmetics giants, like Beiersdorf, Procter & Gamble, and L'Oreal (Pitman, 2009).

The trends that are currently affecting this industry and its players are based on new product developments. One of the most important trends in the cosmetics industry is represented by customers' orientation towards nutri-cosmetics.

Another trend affecting the cosmetics industry is represented by natural cosmetics, or herbal cosmetics. Such products contain no synthetics. They are considered to be safe and to have no side-effects. The demand for such products is increasing because consumers are more oriented towards a healthier, more natural lifestyle that includes cosmetics also.

Marketing Plan

Strategy

Given its important experience on the cosmetics market, the company has learned that business success depends on the company's flexibility and its adaptability to market modifications. Therefore, the company's general strategy consists in adapting to the trends that are affecting the cosmetics market.

In order to achieve this objective it is very important to be one step ahead of competitors, if possible. The company cannot afford for a certain type of new product to be discovered by competitors, introduced on the market, and then produced by our company.

As a consequence, the company is periodically testing consumers' preferences, needs, and requirements. The best source of information regarding any future product developments is represented by consumers. Based on consumer surveys, the company gets an idea on potential product development directions it must follow in order to come up with new or improved products that customers would appreciate.

Product strategy. The company focuses the product strategy on diversity and quality. As mentioned above, the company commercializes a very wide range of cosmetic products that are able to address each customer category.

In addition to this, the company's new strategy focuses on developing natural, organic products, following consumers' orientation towards this type of products. The company's preoccupation for consumers' health, by developing natural products, is also intended to increase customer loyalty.

Distribution strategy. Although the financial crisis did not have a significant negative impact on the global cosmetics industry, the company's sales have decreased in comparison with the period before the crisis.

In order to revive sales, the company intends to create an e-shop in order to facilitate the sales activity. As a consequence, the company will require a smaller number of salespersons, allowing the company to reduce distribution costs. The e-shop is also intended to create a stronger image in consumers' mind, by associating the company and its products with a strong Internet presence.

The new develop e-shop will also help increase the number of customers and to expand to new, potential customers. For example, busy people, with very little for traditional shopping, or product testing, will be able to purchase the company's products directly from the website, they will be able to quickly compare prices, to check the ingredients list, and to save time by doing so.

The e-shop will provide detailed, professional information on the company's products, their usage, benefits, ingredients, or production process, information that the traditional salespersons may not be able to provide in a professional, trustworthy manner.

In addition to this information, the e-shop will provide a section with advice, tips and other useful information for hair, skincare, or makeup related issues. The e-shop will also attract customers by providing a series of video how-tos,

Pricing strategy. Ever since its establishment, the company was very aware that lower prices will attract more customers. This principle has guided the company's pricing strategy until this moment. But the organic products that the company will introduce on the market are not cheap to produce, and this fact will be reflected by the products' consumer price.

Promotional strategy. The e-shop will provide more visibility for the company and its products, information will be much more available for customers. Also, the products' ads can be posted online for customers to see. The most effective advertising solution in this case also relies on the Internet. The company's banner can be posted on several websites visited by consumers that are interested in cosmetics products commercialized by the company.

Operation Plan

The company's headquarters is located in New Jersey. The company owns a lab where the products are developed and tested, and a production facility, located in the same city. However, these facilities do not operate with cutting-edge technology, which is considered to be a weakness for the company, given the fact that it must compete with companies that are able to reach higher technological standards.

Given the circumstances, it is obvious that the company must make serious financial investments in upgrading the production facility. However, the company is not currently in the financial position that would allow for such investments.

The development and implementation of the new e-shop is designed in order to reduce certain costs. As a consequence, if financial and sales target are met, the company will be able to afford the upgrading of its production facility.

Product Design and Development Plan

The team involved in developing the company's e-shop is a complex one, gathering professionals from all fields addressed by the issue. The team is consisted of a marketing expert, a web designer, a financial manager, a software engineer, and a CRM specialist.

Product description. The e-shop will provide information on the company's products, their prices, and purchase and delivery related information. Other facilities that customers may find available on the website free of charge have been discussed above.

Product requirements. The general requirements of the e-shop are similar to any website's requirements.

Project schedule: e-shop theoretical development -- 2 months, e-shop actual development -- 1 month, e-shop testing -- 1 week.

Project costs: the entire costs of creating the e-shop, including its testing are estimated to reach $54,000.

Human resources required: given the fact that the product is basically a virtual one, the human resources involved in developing the e-shop are not numerous, and they are represented in the project team.

Risk analysis: the most important risk that must be taken into consideration is regarding the schedule. It is possible that the e-shop's launch date may not be met in case the testing of the product does not provide the forecasted results. Therefore, it is recommended to expand the testing period to 2 weeks at least.

Financial Projections

Assets:

Cash - $118,000

Tools and Equipment - $270,000

Accounts receivable - $53,000

Total - $441,000

Forecasted sales for the next 6 months following the launch of the e-shop - $97,000

Forecasted income - $90,000

Forecasted expenses - $50,000

Gross Profit - $47,000

Reference list:

1. Pitman, Simon (2009). The time is now for niche players to target the developing markets. Cosmetics Design. Retrieved October 27, 2009 from http://www.cosmeticsdesign.com/Products-Markets/the-time-is-now-for-niche-players-to-target-the-developing-markets.