Bluemercury's Omni-Channel Odyssey

By Matt Pillar, chief editor

July 2015 Integrated Solutions For Retailers

How an ahead-of-its-time, high-end cosmetics merchant moved from purely clicks to an 80-store-andgrowing omni-channel powerhouse.

Barry Beck, COO of luxury cosmetics retailer Bluemercury, admits that he was just a bit too far ahead of a monumental shift in the late 1990’s. In a nutshell, he oversaw the quick rise of a well-funded Internet startup that he and his wife, Marla Malcolm Beck, founded. Back then, the Becks nailed down a million dollars in venture capital to launch a great concept — an e-commerce site for luxury cosmetics from the likes of Chanel, Bobbi Brown, and Fresh. The concept was great, but nobody was buying cosmetics online back then. Nobody was buying much of anything online back then. To boot, in those early days, e-commerce had a somewhat gimmicky feel to it. Those high-end cosmetics suppliers weren’t so sure it would be good for their brand reputations to sell online.

In late 1999, the Becks began shifting their strategy. They purchased a brick-and-mortar store in Georgetown and haven’t looked back. Fast-forward to today, and Bluemercury’s store count is approaching 100 nationwide. Its sales top $100 million. Last year, Macy’s purchased the company for $210 million.

At the surface, the Macy’s purchase looks to fly in the face of the Becks’ anti-department-store-boutique philosophy. “When we opened our first neighborhood store and every store thereafter, we set out to change the way luxury cosmetics were sold,” he says. “We realized women were not satisfied with the cosmetics-purchasing experience. They were often treated poorly, and the boutique-in-a-store business model was not customer centric.” But despite the acquisition by Macy’s, the Becks still run the show, and they run it their way. And that means continuing both its store growth and revisiting the growth of that digital channel that proved problematic nearly 15 years ago.

Gathering Data, Gathering Customers
As e-commerce cosmetics sales trend upward, Bluemercury has embarked on an aggressive strategy to accelerate Web sales, this time armed with a lot of data. “We had a ShopVisiblepowered site that had been deployed years earlier that was not responsive or optimized for mobile traffic. We had come to realize that over 40 percent of our traffic was coming from mobile devices,” says Beck. “That made our e-commerce site difficult to find and difficult to use.” An upgrade was in order, and after evaluating the market, Bluemercury made the choice in early 2014 to stick with Epicor/ShopVisible. Six months later, the retailer had a more searchable, re-architected, Google-oriented, and responsive Web design platform on which, Beck says, Bluemercury could build the omni-channel dream.

The decision was hastened by the fact that Bluemercury was already running Epicor POS — both fixed and mobile — at its brick-and-mortar stores. For years, the retailer had been leveraging that store system for customer acquisition. “More than 80 percent of our customers self-identify at the register, and that’s contributed to the more than 2 million customer records in our system,” says Beck. “Those records tell us who’s buying which products, when they’re buying them, why they love them, where they live, when they’re celebrating a birthday, and more.” Building that data set is no small feat considering the market limitations imposed by those willing to spend upwards of $200 on a four-ounce jar of facial masque. Bluemercury is leveraging those customer records to encourage digital replenishment of the products its guests crave, to send highly targeted gifts, “sneak peek” samples of new products, and to offer other promotions to its most valuable customers. “This large quantity of data also gave us insights into the gaps in product offerings in the skincare market, which launched our own proprietary all-natural vegan and gluten-free brand, M-61 Skincare,” says Beck. “Also, with instant access to purchase histories, we can help customers replenish items or suggest appropriate gift ideas to their spouses, even if they don’t remember what they previously purchased.”

Moving forward, Beck sees continued tech investment in the short term. “We’re in the process of an upgrade to Epicor’s latest release, which will include iPad-enabled mobile checkout,” he says. “That’s another step toward the dream of using technology to immediately recognize our customers and their preferences right when they walk into our stores, to send relevant product suggestions directly to their devices automatically, then allow them to check out online through ShopVisible or bring their devices to the register for in-store checkout. Alternatively, they can simply dump the suggestion in the trash and browse the store on their own. We’re moving there, and we’re moving there quickly.”

In-Stores, Omni-Channel Needs The Network
Bluemercury is able to race to the future quickly due in part to some network legwork Beck took on in stores. “When you get to 8 or 10 stores, you have to start thinking about a private WAN (wide area network) to control traffic flow and for security purposes to enable control of the domains with which associates can engage. We built that private network, with a single point of failure in Georgetown,” says Beck. Previously, if a store’s local Telco provider had an outage, so did that store. “Outages meant the loss of credit card acceptance at stores, and those cards account for more than 90 percent of our sales,” says Beck. The company fixed that by outsourcing to the cloud late in 2014, followed by an upgrade to EVDO wireless backup at all stores. “We also built a WiFi network in stores to support our mobile checkout plans. That supports the ability of the beauty experts we employ at our stores to help customers build the sale using wireless devices.”

Without question, the acquisition of Bluemercury by Macy’s gave the retailer a digital shot in the arm. Macy’s is the seventh-largest and fastest-growing Internet retailer in the country, and Beck fully plans to leverage those resources to exploit the burgeoning omni-channel cosmetics opportunity. Fifteen years ago, his company came dangerously close to falling victim to the Internet Bubble. Today, it’s reinventing beauty retailing — in stores and online.

Editor’s Note: In May 2015, Epicor Software announced the spinoff of Epicor Retail as a separate company. As of press time, the name of the new entity had not been publicly disclosed.

For More Information On Epicor Retail Go To www.epicor.com/retail