L’Oreal Doubles Down on Social Commerce Investment

Need to Know

• The beauty and cosmetics giant has acquired a minority stake in Replika Software.
• Replika, which provides turnkey social-selling solutions for brands, lists Sephora, Dior, and Vichy among its existing beauty-brand partners.
• L’Oreal is hoping to increase its e-commerce sales, which already account for 25% of the brand’s revenue.
• L’Oreal has been a pioneer in implementing social commerce strategies such as livestream shopping.

Analysis

L’Oreal is making a push into social selling, acquiring a minority stake in Replika Software, a leader in the social-selling field.

On December 10, L’Oreal announced it had made the investment in Replika, through its corporate venture fund, BOLD Business Opportunities for L’Oréal Development. Terms of the deal were not disclosed.

“Social commerce is an exciting new form of e-commerce that enables consumers, influencers, experts, beauty or shop assistants to sell brands and products on social platforms through formats such as live shopping or livestreaming,” Lubomira Rochet, chief digital officer of L’Oréal, said in a statement. “The rise of social commerce is a great opportunity for our brands to reinvent the consumer beauty experience worldwide.”

L’Oreal has already experimented with social selling, using the platform Livescale to host interactive, shoppable events starting in June of this year. But the Replika Software investment gives the beauty brand a significant leg up in the social-selling arena, as Replika is a leader in the field. The company’s turnkey platform allows brands, brand ambassadors, and social sellers to instantly curate digital stores and engage with customers online and can be seamlessly integrated into any social media network. The company also has a content creation function, allowing brands to build their own shareable media directly within Replika.

“As an industry, we’re just scratching the surface of how powerful social commerce can be when it’s combined with the massive scale offered by the global online community,” Replika Software founder Kareen Mallet said. In an interview earlier this year with AlleyWatch, Mallet said the main goal of Replika is to “build brand loyalty, and create a fulfilling, superior, experience for the customer.”

With Replika, L’Oreal will be able to capitalize on the social selling trend—which involves interactive, online e-commerce, such as live shopping events, that aim to form meaningful connections with customers while also selling to them—that has long been popular in Asian markets. In China, for instance, social selling accounted for 30% of online retail transactions in 2020.

In addition to the Livescale partnership, L’Oreal has been experimenting with augmented reality in order to provide a more engaging e-commerce experience for consumers who are shopping for the brand’s products from home. In August, the beauty brand teamed up with Walmart to offer AR “try-ons” for hair dye, partnering with Canadian AR company ModiFace for the integration. L’Oreal partnered with ModiFace again in June, at that time bringing AR try-on tech to L’Oreal brands on Amazon. The company’s e-commerce sales currently account for 25% of its total revenue.