Analysts at Verdict Retail have predicted that the online health and beauty market will grow by around 80% between now and 2019. With millennials (other names include Gen Y and the ‘selfie’ generation) consuming ubiquitously across multiple devices, and that much more concerned with their appearance, this shouldn’t come as a surprise.
So how does Escentual.com stand out in a sea of readily available beauty e-commerce players? And how did its parent company RK Aggarwal Ltd secure a position on a list of fastest growing beauty retailers in the London Stock Exchange’s landmark list of 1,000 Companies to Inspire Britain 2015?
“Much of this is down to the huge amount growth we’ve seen in the past three years,” explains Rakesh Aggarwal, founder and CEO of Escentual. “More and more beauty customers are looking to buy online and we’ve been successful in carving out a significant amount of online market share despite having to compete more and more with the big department stores."
The Cardiff based e-tailer was commended in the report for sustained growth over the past four years, achieving a turnover of over £14m in the last year alone. As a result, it recently made the move to a bigger warehouse space in order to keep up with sale expansion. In the 12 months to March, Escentual shipped 300,000 orders from over 200 premium beauty brands.
And it all started in his parent’s garage.
The high-end online beauty retailer, which stocks brands including Burberry, Clarins and Dior is a family-grown business, launched by Raj Aggarwal 15 years ago as an online arm to his father’s chain of pharmacies in and around Cardiff.
I congratulate Aggarwal on the mention in the report and he thanks me profusely. “It’s nice to have a benchmark to compare ourselves against,” he explains. “We work in isolation so it can be difficult to know how we’re doing compared to the rest of the market. Because we don’t have external capital, we have to be careful about how we grow.”
The company currently employs a team of 51 full-timers and by the end of this year it will increase to a headcount of 90 – well they had to do something with all the extra space in the new 37, 675sq ft warehouse.
“Our staff turnover is very low,” Aggarwal tells me, “if you cut members of the team through the middle you’d see the brand through and through. They’re the business really; I just ask some questions. We have a daily head of department meeting and I’m simply there to make them accountable to each other, I’m more ‘chair of the committee’ than leader.”
Online beauty sales have been kept buoyant by the mélange of Amazon's branded offer, while pureplay specialists continue to grow share by providing the latest beauty trends and sourcing niche brands. But there’s more than one online destination that focuses on cosmetics, for exmaple FeelUnique.com, so why would a consumer choose Escentual?
“We retain a lot of organic customers,” Aggarwal says proudly. “Every site has its legacy and there are differences in terms of how we do our customer acquisition. I still have customers who shopped with us at the start, that continue to do so once or twice a year.
We started in fragrances [Escentual is a play on the word scent] and we have a strong heritage in the scents and premium makeup category,” he adds. “FeelUnique specialised in ‘hair and salon’ and then they moved across categories. We have a longstanding relationship with these brands and we were the first to coin ‘French pharmacy’ as a category”
As a longstanding fan of Bioderma, a French brand renowned for its micellar water makeup remover, I can instantly relate.
“We were the first to approach Bioderma,” Aggarwal says in an excited response to this, “and we were the first to approach La Roche Posay in order to bring SeroZinc to the market, we had that as an exclusive product before it went to Boots.
We’ll concentrate 3 months of the year on one category, and we tend to find that customers then purchase hero products across categories, so we offer monthly promotions on specific categories" (note to self: this month it’s French pharmacy).
It’s clear that the 39 year-old is fully immersed in the business; he knows his products and customer base and takes every compliment or complaint personally, prone to reaching out to customers directly following feedback.
“There’s always demand for a quality retailer who cares about their customer,” insists the British businessman, “customer service is so significant.”
I ask him about his core customer, who up until 4 years ago was middle aged, between 35-55, and traditionally buying into high end brands such as Guerlain.
“Then we developed the French Pharmacy category,” Aggarwal says “and brought in what we call a ‘pro-consumer’, one that’s more digitally aware and more influenced by blogs and e-zines”.
It’s true that social media has brought in a new wave for Escentual and other beauty pureplays. “Brand ambassadors from the likes of ‘Made in Chelsea’ have encouraged consumers who are more trend led, helping to boost the sale of colour cosmetics,” says the entrepreneur.
In 2013, ‘selfie’ was made an official word by the Oxford Dictionary and personal image through social media has now become a paragon of communication. It’s so prominent that products in cult colours and innovative textures, which allow wearers to express individual style, are having something of a moment.
Aggarwal makes it easy for customers who don’t live in the vicinity of a Selfridges or a John Lewis to shop celebrated brands at some of the best prices, and like several other online only retailers, offers editorial content to help with the purchasing journey. “Not everyone lives within an hour’s commute of a good department store, but that doesn’t mean the desire to access fabulous products isn’t there” he says. That’s where his old school customer service approach comes in handy.
“We’ve taken a slightly more conservative and slower approach then what could have been, but we chose not to be aggressive,” says Aggarwal thoughtfully after I ask about the future. “We wanted to make the revenue before we spent it.”
Will Escentual look to broaden overseas? “We’d have to do it properly,” decides the Wales-born Chief Exec. “Shipping internationally is not a prominent focus for us because that there’s a significant amount of growth potential in the UK. If we can capture just 1% of the £1.7bn beauty industry, we’d be happy.”
For now the investment will be in the user experience, personalisation and how the team can improve what the customer sees. “It’s all about optimising what we do” Aggarwal concludes.