- Despite lower overall sales, Ulta Beauty’s ecommerce sales were up 90% in the third quarter of 2020.
- Prama Bhatt, chief digital officer, said it was working toward a more robust online presence before COVID-19.
- The company expanded the app and plans to debut an in-person experience at 100 Targets across the US.
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Ulta Beauty’s ecommerce sales were up 90% year-over-year in the third quarter of 2020, following strong growth in the second quarter of 200%. This is despite overall company sales being down 8.9% due to ongoing in-store COVID-19 restrictions.
Ulta Beauty’s Chief Digital Officer Prama Bhatt told Insider roughly 15% of the company’s more than 32 million “Ultamate Rewards” members have used its mobile app, which launched in November 2012. “That’s five million members, with 88% returning,” she added, noting that they’ve experienced three to four times higher conversion rates with users that interact with innovative offerings like GLAMlab.
GLAMlab, a virtual try-on tool that offers shoppers the chance to sample 97 million shades of eyeshadow, eyeliner, mascara, blush, lipstick, foundation, and hair color, saw a 1,200% increase in use over the course of 2020. The skin analysis feature, added last summer, has had nearly 6 million visits, according to Bhatt.
Although Ulta doesn’t report lifetime app downloads, Amir Ghodrati of the mobile data analytics firm App Annie estimates Ulta’s lifetime downloads to be 16 million as of February 1, 2021, a 39% increase in lifetime downloads from a year ago.
A fast pivot years in the making
Bhatt said although there was much to adapt to when the coronavirus crisis began to shut down stores last March, the company had been on a journey to create a more robust online presence long before the pandemic hit.
Ulta Beauty CEO Mary Dillon introduced the company’s digital imperative in 2013, with Bhatt joining the company soon after. In 2016, they launched GLAMlab and began investing in artificial intelligence and augmented reality with the 2018 acquisition of startups QM Scientific and GlamST.
In December 2019, Dillon reorganized leadership and created the chief digital officer role for Bhatt. Together with Shelley Haus, the company’s chief marketing officer and Monica Arnaudo, chief merchandising officer, they began to build Ulta Beauty’s brand strategy around the omnichannel shopper. This would become Ulta’s most valuable customer, spending three times more than those who shopped through a single channel, whether it was the physical store, salon, website, or app. In the third quarter of 2020, omnichannel customers jumped to 22% of Ulta’s total base, from 12% the year prior, the company reported.
“What we saw with 2020 was an acceleration of roadmaps we already had in place,” Bhatt said. “Digital became our business continuity vehicle not just to drive sales but to create more meaningful relationships with our members and guests.”
“The challenge became, how do we stay close to the changes in consumer behavior around self-care, wellness, and DIY beauty, both from a content perspective and a commerce perspective,” she added. “The other was supporting the sheer volume of the digital channel, which became an operational feat.”
Bhatt explained it had launched “Buy Online, Pickup In Store'” days before quarantine in March, which made it easier to shift to curbside pickup in April. From May to July as stores reopened, GLAMlab was reintroduced as an in-store shopping assistant when testers became display-only to comply with new safety standards. From July through December, they began to offer online masterclasses and experimented with virtual one-on-one consultations.
Bolstering the shop-in-shop experience
Prior to the pandemic, Ulta Beauty, an American company, had planned to expand into Canada, but shelved those plans in the third quarter to focus on strengthening US operations through strategic partnerships. For 2021, Bhatt said they’re continuing to invest in AI and AR capabilities and are leveraging advanced analytics to develop greater in-app personalization for richer, more immersive experiences.
They’re also bolstering ecommerce capacity to prepare for the launch of the 1,000-square-foot Ulta shop-in-shop experience at Target, which is expected to debut in 100 stores, on the website, and in the app by year end with drive-up, order pickup, and delivery options. With Target customers earning Ultamate Rewards points for their purchases, the deal triples Ulta’s reach from over 32 million members to a combined 100 million members.
Not to be outdone by its largest competitor, Sephora announced a similar partnership with Kohl’s featuring a 2,500 square foot branded shop-in-shop experience expected to debut at 200 stores, on the website, and in the app by year end. A 10-year partnership, Sephora is expected to be in 850 Kohl’s stores by 2023. With Kohl’s customers earning Beauty Insider points for purchases, the deal doubles Sephora’s reach from 65 million customers to a combined 130 million customers.