BUSINESSWEEK ONLINE : SEPTEMBER 18, 2000 ISSUE
COVER STORY The Man behind Avon's Web Site Len Edwards likes to think of himself as an entrepreneur. Since coming to Avon Products Inc. (AVP), he has launched a bunch of new businesses. The most successful is a line of children's books and how-to videos for all ages that boasts more than $200 million in sales a year. All that, however, might be small change compared to what Edwards is trying to pull off now. He is the man behind the Avon ladies' new Web site, which Avon says will have its official launch in late September. But even the most successful corporate entrepreneur has to learn a new set of rules when it comes to the Net. And Edwards is about to come face to face with just how tough it can be to attract online customers. He's facing a rash of new and fast-growing competitors with plenty of entrepreneurial energy of their own. ''I've gone through a learning curve that is staggering,'' says Edwards, 52, who has worked at Avon for 17 years and, Net or no Net, still isn't averse to wearing a well-cut blue suit. LOOKING FOR ACTION. That alone makes him a sharp contrast to the founders of the No. 1 beauty site, Eve.com. Eve's co-founders, Mariam Naficy, 29, and Varsha Rao, 30, are former roommates who have had more than their share of bumps along the way--such as having to buy the domain name Eve.com from a precocious 7-year-old in Virginia. With financial backing from Pasadena (Calif.)-based idealab! and a new management team from posh retailer Barneys New York, they're moving past just beauty products and into jewelry and accessories as well. ''The chances of any venture succeeding are really slim,'' says Rao. ''We wanted to do something where even if it wasn't a success, we'd have learned a lot and had a good time.'' These days, everyone seems to want in on the good times. With online sales of health and beauty products at $756 million in the first six months of this year, it's no wonder major real-world beauty names like Avon, LVMH's Sephora stores, and Estee Lauder are all looking for a piece of the action. But as Avon and the rest of the pack come online, they have to face the fact that much of what they know about cosmetics in the real world just doesn't apply. For one thing, online customers are more affluent and better educated than the general population. Their purchasing behavior is different, too. Generally, makeup and skin care are thought of as ''replacement'' businesses--70% of what sells is someone's next tube of her favorite cream. But at Eve.com, Rao and Naficy have found that replenishment is only 40% of the Eve.com buying. The biggest share of sales are impulse buys, something a customer has never tried before. And the pair have also found that make-up brands with very little presence in the real world--like BeneFit and Nars--are among their most popular. ''The Web is not similar to a physical store,'' says Naficy. ''The shopping behavior is completely different.'' Still, a real-world presence can have its advantages. Jim Kenny, chief executive officer of Sephora.com, says that by knowing what the hot products are in the stores, he can better stock his site. Avon's Edwards sees another plus: He says the $100 million Avon is spending on advertising this year has helped direct more motivated buyers to his site. The result is that 4% to 6% of people visiting his site actually buy something--compared with 1% to 2% for most sites. Sites like Eve and Sephora offer a lot of choice, but it's an eclectic mix and doesn't include some of the biggest names such as Estee Lauder and Clinique. Those brands are teaming up with Chanel and Clarins to relaunch their gloss.com Web site next year. That powerful team may force a shakeout among the online beauty sites, says Forrester Research Inc. analyst Evie Black Dykema. Whatever happens, rest assured that by then, all the rules will have changed again. By Nanette Byrnes in New York _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ BACK TO TOP					RELATED ITEMS Avon's New Calling COVER IMAGE: The New Avon Lady TABLE: From Ding-Dong to Dot-Com: 114 Years of Avon Ladies RESUME: Andrea Jung CHART: Avon Profits Are Rebounding...But Sales Have Barely Climbed...Making Investors Wary The Man behind Avon's Web Site Panning for Global Gold in Local Markets (int'l edition) INTERACT E-Mail to Business Week Online

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