‘Human approach to beauty’: L’Occitane online sales grow 69% thanks to social selling initiatives

By Amanda Lim contact

- Last updated on GMT

L’Occitane credited the growth of its online sales in part to its successful social selling initiatives. [L’Occitane International]
L’Occitane credited the growth of its online sales in part to its successful social selling initiatives. [L’Occitane International]

Related tags: L'Occitane, Finance, e-commerce

Hong Kong-listed L’Occitane International has credited the growth of its online sales in part to its successful social selling initiatives in markets including South Korea, Europe and the US.

L’Occitane International is a beauty retailer and manufacturer of brands including L’OCCITANE en Provence, Melvita, Erborian and Elemis.

Sales through its online channels expanded 69.2% in the fiscal year ending March, accounting for more than one-third of the group’s total sales.

These strong online sales compensated for most of the sales lost through its brick-and-mortar stores, of which more than 75% were shuttered at the peak of the global COVID-19 pandemic.

L’Occitane said this remarkable growth was underpinned by its proactive approach to social selling.

Social selling is a strategy that leverages a brand’s social media channels and emphasises deeply on relationship building with the consumer to drive sales.

This allowed the company to “strengthen its human approach to beauty despite the need for social distance”, ​said the company.

In South Korea, for instance, the company utilised KakaoTalk Gift, an e-commerce platform within the KakaoTalk ecosystem where users can give and receive gifts.

KakaoTalk is a popular messaging application in South Korea that is similar to China’s WeChat.

L’OCCITANE en Provence even attained the top spot in the beauty category on the gifting platform.

Overall, South Korea had one of the highest online sales mix across its key markets thanks to its performance on KakaoTalk Gift.

In Europe, the company rolled out 68 social selling initiatives and launched a pilot clientele program in the US.

Exceeds expectations

For a year marked by challenges and uncertainty from the COVID-19 pandemic, the group said it exceeded expectations and delivered a strong set of results overall.

Although its net sales declined slightly by 1.1% to €1.53bn (U$1.83bn), its operating profit grew 17.6% to a record €220m ($262m). Additionally, its operating profit margin expanded by 2.9 points to 14.3%.

The company also delivered its highest ever net profit of €157m (U$187m), up 36.3% and representing 10.2% of net sales.

“Our resilience and adaptability in the face of the incredible challenges of COVID-19 has seen our business blossom in terms of its development and profitability. This is a credit to the solidarity and passion of our teams around the world,”​ said Reinold Geiger, chairman and CEO of L’Occitane.

The company attributed this to its strong performance in Asia, the solid profit contribution from ELEMIS and LimeLife, the aforementioned increase in online sales, as well as factors such as cost reductions.

Flagship brand L’OCCITANE en Provence proved to be particularly resilient over the past year as demand for products such as soaps and hand and body moisturisers spiked as the pandemic stimulated awareness of hygiene.

Asian markets, especially China, Taiwan and South Korea, delivered strong growth. In particular, sales in China grew 36% and became the group’s best-performing and largest market.

At the same time, sales in Hong Kong continued to be affected by COVID-19 restriction measures, a plunge in tourist traffic and store closures.

The travel retail business in Asia also faced challenges, but the firm saw improvements in the latter part of the year as a result of a domestic travel boom.

ELEMIS ramps up expansion

This year, ELEMIS launched in China through an exclusive retail partnership with Sephora, which saw the brand launched in all 269 stores

The company said the brand’s performance in China has gone “from strength to strength”​ and is highly profitable.

ELEMIS also rolled out in new markets across Asia, Europe and the Middle East, launching more than a dozen e-commerce websites in key markets including France, Germany, Italy, Hong Kong, Taiwan, Singapore and Thailand.

Despite the ongoing impact of the resurgence of COVID-19 infections in countries such as Japan, Taiwan and Malaysia, the company said it had confidence in its resilience.

Geiger said: “While the impacts from COVID-19 may still linger, we expect online sales and sales in high-growth Asian markets to remain robust. With the inherent strength of our brands, the determination and focus of our management team, as well as our targeted investments, we believe we have laid a strong foundation to accelerate growth and expand profitability further in the coming years.”

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