Health & Beauty Online: more than just a Pretty Face.

“The adage ‘age before beauty’ has taken on new meaning for health and beauty marketers. Every year for the next 10 years, more than four million Americans will turn 21, and even more will turn 50. As boomers chase the Fountain of Youth, the oldest Gen Ys, now 26, are starting careers and families,” says Lisa Phillips, eMarketer senior analyst and the author of the new report, Health and Beauty Marketing: Meet Your Online Customers. “More than 85% of each group is online, and health and beauty marketers are taking notice.”

In addition, eMarketer estimates that 51% of all Internet users in the US are women (five million more than men), and according to a recent Euromonitor report, personal care items are firmly in the top 10 product categories they purchase.

“Personal care marketers have not been big Web advertising spenders,” says Ms. Phillips, “but like their counterparts in the rest of the consumer packaged goods (CPG) industry, they are learning to use the Internet to reach their target audiences in new ways — with microsites and accompanying viral campaigns, sponsoring podcasts and online games, and posting online videos, to name a few.”

Most health and beauty category sales are made through offline grocery and drug stores, mass merchandisers and supercenters, according to Information Resources, Inc. (IRI), and that is not going to change dramatically in the near future. But IRI data show that shopping trips have dropped steadily over the past five years, so that consumers are in stores one time less often per month — down 12 visits per year. As gas prices climbed in 2006 and further impacted consumers’ shopping habits, there are fewer opportunities to influence in-store purchases.

“In fact, Drugstore.com, a pure-play online retailer of pharmacy, vision, health and beauty products, saw its sales grow 6% in the second quarter of 2006, to $102.4 million,” says Ms. Phillips. “Internet Retailer reported that orders hit 1.3 million, the highest second-quarter volume in the company’s history. Repeat customers represented a record 82% of net sales, and the number of active customers grew 13% to 2.1 million, and their average annual spend was $188.”

Forrester Research estimates that 5.6% of all health and beauty sales were made online in 2005, and predicts the Internet channel will grow to 13.8% in 2010.

Online sales of health and beauty products showed growth early in the year, according to comScore Networks. Sales on Valentine’s Day gift-related Web sites increased 22%, to $907 million, in the month leading up to the February holiday. Online health and beauty sales in that period hit $270 million, up 24% over the year before.

“It won’t happen overnight, but the makeup of the advertising and marketing for the health and beauty category will change,” says Ms. Phillips. “The online portion of promotional budgets will grow — because online is, as in so many other categories, where the customers are.”